Arbitration in Germany

Arbitration in Germany
The Model Law in Practice
The Model Law in Practice
Second Edition
edited by
Karl-Heinz Bckstiegel
Stefan Michael Krll
Patricia Nacimiento
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Foreword to the First Edition
Coming from Germany myself, it was a pleasure for me to see that, during my time as Secretary of the United Nations Commission for International Trade Law (UNCITRAL), in 1998
Germany adopted the UNCITRAL Model Law on Commercial Arbitration.
The Model Law had been the result of years of difficult negotiations involving representatives both of industrialized and developing countries in order to present to states all over the
world a model for a modern law taking into account the growth and development of commercial arbitration as the preferred method of dispute settlement in international trade and
investment. A is well known, by now the Model Law has been introduced in a great number
industrialized and developing countries.
Though German commerce and industry are major users of both domestic and international
arbitration and Germany has a highly developed law of civil procedure, the legal and the
business community agreed that its arbitration law which was and is contained in the 10th
book of its Code of Civil Procedure needed a modernisation. Comparable other industrialized countries, particularly France, England and Switzerland, had already modernized their
arbitration laws though not by accepting the UNCITRAL Model. When, at the initiative
of the German Institution of Arbitration (DIS), the Commission formed by the German
Federal Ministry of Justice started its work on a new arbitration law, two major policy decisions were agreed early: 1. Germany would accept the UNCITRAL Model Law literally and
with as few modifications as possible in order to assure transparency for the non-German
users of the law to whom the UNITRAL Model was well known throughout the world. 2.
The law would be applicable both to domestic and to international arbitration in Germany to
avoid the well known difficulties arising from the distinction between these two. The result is
that, now, Germany has one of the most advanced arbitration laws worldwide which is easily
understandable and usable for foreign readers and practitioners.
The present publication closes a gap by providing the first full and detailed commentary in
the English language on the modern German arbitration law. A commentary is also provided
on the Arbitration Rules of the German Institution of Arbitration (DIS) which are mostly
used in Germany and are available also to foreign parties both for national and international
arbitration. Since the book is edited and authored by the leading arbitration practitioners
and academics in the country, it provides to the foreign reader and user a reliable information
and tool thereby expanding the transparency to the international public even if they are not
familiar with the German language.
I have no doubt that this book will be found to be very useful indeed for the practical users of
arbitration as well as for the academic community interested in the field. This is not limited
to users which are either involved in arbitration proceedings in Germany or want to enforce a
foreign award in Germany. Due to the nearly literal adoption of the Model Law in Germany,
the book can also constitute a work of reference for users engaged in arbitral proceedings or
arbitration related court proceedings in other Model Law countries.
Prof. Dr. Gerold Hermann
President, International Council for Commercial Arbitration (ICCA)
Foreword to the Second Edition
I am proud to have been asked again to write a foreword for the second edition of this important study of German arbitration law under the Model Law. The first edition of this book
was particularly timely and useful after the initial years of development of the law since the
Model Law became effective in 1998, and this edition provides important updates on the
many applications of the law since then.
While Germany is of course a civil law country, the Model Law presents a blending of the
common law and civil law traditions. First, the provisions of the law itself include elements of
both traditions. Second, and most importantly, the Model Law offers all countries that have
adopted it common law and civil law alike the opportunity to use a common, international
system of precedent in applying its terms. With more than 50 jurisdictions having adopted
the Model Law, each has the opportunity to learn from the other. That was the purpose of the
book I wrote a few years ago with Henri Alvarez and Neil Kaplan: Model Law Decisions. In
the book, we compiled court decisions from the countries that had then adopted the Model
Law and organized them by article. In that way, a court or counsel in any Model Law country
may refer to the interpretation and application of that article in other countries. We hope that
the book has aided the Model Laws goal of harmonization.
Germanys adoption of the Model Law has played a significant role in the development of
the Model Law internationally. As a sophisticated legal system in a country with broad international reach, Germanys courts have had to consider many issues arising under the Model
Law. Their decisions will benefit courts and practitioners everywhere. This is particularly
true because Germany adopted the Model Law without significant change and to apply to
both domestic and international disputes.
The second edition of this book will accelerate that learning and development process. Written by leading German lawyers and scholars, the book discusses in detail the many issues that
can arise under the Model Law in a clear and sensible manner. It will be an invaluable source
for understanding the Model Law, not just in the German context but anywhere that the
Model Law has application.
David W. Rivkin
Debevoise & Plimpton LLP
New York and London
Preface
Germany has a long tradition of commercial arbitration and the German business community is one of the primary users of arbitration, as the figures of international arbitration institutions show. The largely verbatim adoption of the UNCITRAL Model Law on
International Commercial Arbitration as the German Arbitration Law in 1998 and several
other initiatives have considerably increased the attractiveness of Germany as a place of arbitration. For parties coming from other Model Law jurisdictions, they will feel on familiar
territory; for parties from other jurisdictions, this makes the access to German arbitration
law easy in both content and application.. For their arbitration proceedings, they find in
Germany a legal framework which is largely similar to that of their home jurisdiction. At the
same time, the relevant rules are applied in Germany by an efficient and generally arbitration friendly judiciary.
The quality of the German system is proven by the fact that courts in other Model Law jurisdictions regularly cite in their argumentation German decisions. Not surprisingly, several
foreign legislators have looked and been influenced by the German experiences with the
UNCITRAL Model Law in their revision of their own arbitration law. In addition, German
case law figures prominently in the UNCITRAL Digest on the Model Law.
Over the years, a considerable number of the leading German decisions have been translated into English or have been reported in the various arbitration journals. Until the first
edition of this book, however, there was no comprehensive and detailed presentation of
the German arbitration law in English. In particular, no easily accessible Article by Article
commentary existed.
The reception of the first edition of this book in practice has been extremely positive and exceeded the expectations of the editors. The format of the book has been taken up in a number of similar publications on the law and leading institutional rules of other jurisdiction.
In addition, the circle of users has been larger than anticipated. Beyond the originally intended audience, the book has also been used by German colleagues and parties to explain
specific features of the German arbitration law and practice to foreign counterparties and
clients.
This positive feedback and the developments since 2007 justified and necessitated an update of the commentary. At the same time we have furthermore added in Part IV a number
of chapters on arbitration in additional important industries (energy, distribution) or on
topics of a general importance (confidentiality, arbitration with insolvent parties)
Purpose and Structure of the Commentary

This commentary provides a comprehensive analysis of German arbitration law. Written by
leading practitioners and academics, it furnishes insights from and for all legal sectors where
arbitration plays a role.
Part I contains a general overview of the practice of arbitration in Germany with cross references to the detailed analysis in Parts II to IV of this commentary. It serves both as a first and
easy reference as well as a guide for finding in depth analysis where required.
Part II is a detailed commentary of each provision of the 10th Book of the ZPO based on
both a detailed analysis of the applicable case law and legal writing. It further contains a
systematic reference to the UNCITRAL Model Law on International Commercial Arbitration and specifically indicates any specific deviation from or addition to the Model Law.
Part III contains a comprehensive commentary in the English language of the Arbitration
Rules of the German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS), the leading institution of arbitration seated in Germany. It is written by
leading practitioners and experts of DIS arbitrations, and thereby ensures a profound
insight into the practice of DIS arbitrations.
To complete the comprehensive analysis of arbitration as practised in Germany, the commentary concludes with the specific issues analysed in Part IV. These are either a specific
branch where arbitration plays a particular role or fields of the law that generate specific
problems in relation to arbitration. Part IV reviews the specific case law and legal writing
related to the relevant branch or sector of law in addition and completion of Part II.
As with the previous edition, the primary intention of this commentary is to provide
comprehensive guidance to all parties either planning to arbitrate in Germany or which
are already involved in arbitral proceedings or arbitration related court proceedings in
Germany. In addition, it may serve as a reference for parties involved in such proceedings in
other countries which have adopted the Model Law or have submitted the recognition and
enforcement of foreign awards to the Convention on the Recognition and Enforcement
of Foreign Arbitral Awards (New York Convention 1958). The German arbitration law is
to a large extent a literal adoption of the Model Law. Consequently, the solutions adopted
in Germany may also be relevant in other Model Law countries, not only those which traditionally have close ties to the legal developments in Germany, such as Austria, Japan or
Turkey, but also others like Singapore or Canada where courts and parties have relied on
German decisions in their reasoning. The same applies for the New York Convention 1958,
for which German law provides a rich jurisprudence.
Acknowledgments
The editors wish to express their grateful thanks to Robert Linder, Esq., MLB, for his valuable assistance in editing this book a task accomplished with great diligence and devotion.
We also thank Vincent Verschoor from our publisher for his patience and continuing support in the publication of the book.
Karl-Heinz Bckstiegel
Stefan Krll
Patricia Nacimiento
Cologne and Frankfurt, October 2014
Summary Table of Contents
vii
Preface
ix
Contributing Authors
xxi
List of Abbreviations
xxix
PART I: GERMANY AS A PLACE FOR INTERNATIONAL AND

DOMESTIC ARBITRATIONS GENERAL OVERVIEW
PART II : COMMENTARY ON THE GERMAN ARBITRATION LAW

(10TH BOOK OF THE GERMAN CODE OF CIVIL PROCEDURE)
51
PART III: COMMENTARY ON THE ARBITRATION RULES OF THE

GERMAN INSTITUTION OF ARBITRATION (DIS RULES)
583
PART IV: SELECTED AREAS AND ISSUES OF

ARBITRATION IN GERMANY
725
Annex I
1083
Annex II
1109
Annex III
1115
Bibliography
1123
Index
1137
Table of Contents
vii
Preface
ix
xxi
xxix
PART I: GERMANY AS A PLACE FOR INTERNATIONAL AND

DOMESTIC ARBITRATIONS GENERAL OVERVIEW
General Overview
Karl-Heinz Bckstiegel / Stefan Krll / Patricia Nacimiento
1
3
PART II : COMMENTARY ON THE GERMAN ARBITRATION LAW

(10TH BOOK OF THE GERMAN CODE OF CIVIL PROCEDURE)
51
Chapter I
General Provisions
53
1025 Scope of Application

Gerhard Wagner
53
1026 Extent of Court Intervention

Gerhard Wagner
67
1027 Loss of Right to Object

Gerhard Wagner
71
1028 Receipt of Written Communications in Case of Unknown Whereabouts

Gerhard Wagner
76
Chapter II
Arbitration Agreement
79
1029 Definition
Rolf Trittmann / Inka Hanefeld
79
1030 Arbitrability
94
xiv
1031 Form of Arbitration Agreement

105
1032 Arbitration Agreement and Substantive Claim Before Court

Peter Huber / Ivo Bach
116
1033 Arbitration Agreement and Interim Measures by Court

Richard Kreindler / Johannes Schmidt
133
Chapter III
Constitution of the Arbitral Tribunal
147
Introduction to 10341039 ZPO*

Patricia Nacimiento / Amelie Abt / Max Stein
147
1034 Composition of Arbitral Tribunal

154
1035 Appointment of Arbitrators

164
1036 Challenge of an Arbitrator

179
1037 Challenge Procedure

194
1038 Failure or Impossibility to Act

203
1039 Appointment of Substitute Arbitrator

209
Chapter IV
Jurisdiction of Arbitral Tribunal
215
1040 Competence of Arbitral Tribunal to Rule on its Jurisdiction

Peter Huber / Ivo Bach
215
1041 Interim Measures of Protection

Jan Schfer
226
Chapter V
Conduct of the Arbitral Proceeding
239
Introduction to 10421050 ZPO

Klaus Sachs / Torsten Lrcher
239
1042 General Rules of Procedure

241
Table of Contents
xv
1043 Place of Arbitration

260
1044 Commencement of Arbitral Proceedings

264
1045 Language of Proceedings

268
1046 Statements of Claim and Defence

272
1047 Oral Hearings and Written Proceedings

278
1048 Default of a Party

287
1049 Experts Appointed by Arbitral Tribunal

292
1050 Court Assistance in Taking Evidence and Other Judicial Acts

297
Chapter VI
Making of the Award and Termination of the Proceedings
301
1051 Rules Applicable to Substance of Dispute

Bettina Schmalz
301
1052 Decision Making by Panel of Arbitrators

Fabian von Schlabrendorff / Anke Sessler
318
1053 Settlement
325
1054 Form and Contents of Award

339
1055 Effect of Arbitral Award

348
1056 Termination of Proceedings

360
1057 Decision on Costs

365
1058 Correction and Interpretation of Award; Additional Award

378
xvi
Chapter VII
Recourse Against the Award
1059 Application for Setting Aside
Stefan Krll / Peter Kraft
Chapter VIII
Recognition and Enforcement of Awards
383
383
421
Introduction to 1060, 1061 ZPO

Stefan Krll
421
1060 Domestic Awards

Stefan Krll
428
1061 Foreign Awards

Stefan Krll
443
Chapter IX
Court Proceedings
505

Hans-Patrick Schroeder / Wiebke Wortmann
505
1062 Jurisdiction
524
1063 General Provisions

532
1064 Particularities Regarding the Enforcement of Awards

538
1065 Legal Remedies

543
Chapter X
Arbitral Tribunals Not Established by Agreement
1066 Mutatis Mutandis Application of the Provisions of the 10th Book
Ulrich Haas
PART III: COMMENTARY ON THE ARBITRATION RULES OF THE
549
549
583
DIS Introduction
Francesca Mazza
585
Section 1 Scope of Application

Jens Bredow / Isabel Mulder
593
Table of Contents
xvii
Section 2 Selection of Arbitrators

Siegfried Elsing
598
Section 3 Number of Arbitrators

Siegfried Elsing
601
Section 4 Requisite Copies of Written Pleadings and Attachments

604
Section 5 Delivery of Written Communications

606
Section 6 Commencement of Arbitral Proceedings

Siegfried Elsing
610
Section 7 Costs upon Commencement of Proceedings

614
Section 8 Delivery of Statement of Claim to Respondent

616
Section 9 Statement of Defence

Siegfried Elsing
618
Section 10 Counterclaim
Siegfried Elsing
620
Section 11 Costs of Filing Counterclaim

623
Section 12 Arbitral Tribunal with Three Arbitrators

625
Section 13 Multiple Parties on Claimant or Respondent Side

629
Section 14 Sole Arbitrator

Klaus-Peter Berger
632
Section 15 Impartiality and Independence

Klaus-Peter Berger
634
Section 16 Acceptance of Mandate as Arbitrator

Klaus-Peter Berger
638
Section 17 Confirmation of Arbitrators

644
Section 18 Challenge of Arbitrator

647
xviii
Section 19 Default of an Arbitrator

651
Section 20 Interim Measures of Protection

Siegfried Elsing
654
Section 21 Place of Arbitration

Jrg Risse
657
Section 22 Language of Proceedings

Jrg Risse
661
Section 23 Applicable Law

Jrg Risse
664
Section 24 Rules of Procedure

Jrg Risse
668
Section 25 Advance on Costs of Arbitral Tribunal

Jrg Risse
672
Section 26 Due Process

Jrg Risse
675
Section 27 Establishing the Facts

Jrg Risse
679
Section 28 Oral Hearing

Jrg Risse
682
Section 29 Records of Oral Proceedings

Jrg Risse
684
Section 30 Default of a Party

Jrg Risse
686
Section 31 Closing of Proceedings

Jrg Risse
688
Section 32 Settlement
Siegfried Elsing
690
Section 33 Rendering of the Arbitral Award

Siegfried Elsing
693
Section 34 Arbitral Award

Siegfried Elsing
696
Section 35 Decision on Costs

699
Table of Contents
xix
Section 36 Delivery of the Arbitral Award

704
Section 37 Interpretation and Correction of Arbitral Award

Siegfried Elsing
706
Section 38 Effect of Arbitral Award

Siegfried Elsing
708
Section 39 Termination of Arbitral Proceedings

Siegfried Elsing
710
Section 40 Costs of Arbitral Proceedings

713
Section 41 Loss of Right to Object

719
Section 42 Publication of the Arbitral Award

721
Section 43 Confidentiality
722
Section 44 Exclusion of Liability

724
PART IV: SELECTED AREAS AND ISSUES OF ARBITRATION IN

GERMANY
725
Ad hoc Arbitration in Germany

Stephan Wilske
727
ICC Arbitration in Germany

Detlev Khner / Gustav Flecke-Giammarco
753
Maritime Arbitration in Germany

Jan Wlper
787
Trade Arbitration in Germany

Rainer Karstaedt / Christian Graf
795
Arbitration of Disputes from Commercial Representation in Germany

David Quinke
817
Construction Arbitration
Christoph Benedict
829
Arbitration in Germany in the Energy Sector

Peter Kraft / Mrton Hagner
847
xx
Arbitration of Banking and Finance Disputes in Germany

Norbert Horn
875
Arbitration of Insurance Disputes in Germany

Hubertus Labes
889
Arbitration of Intellectual Property Related Disputes in Germany

Jan Schfer
907
Arbitration of Corporate Law Disputes in Germany

Christian Duve / Philip Wimalasena
927
Privacy and Confidentiality

Ulrich Haas / Heiner Kahlert
963
Insolvency and Arbitration Effects of Party Insolvency on Arbitral Proceedings in

Germany
Stefan Krll
981
Investment Arbitration and the Participation of State Parties in Germany

Alfred Escher / Patricia Nacimiento / Christoph Weissenborn / Svan Lange
1013
Enforcement of Court Orders Declaring Awards Enforceable in Germany

Stefan Rtzel / Claudia Krapfl
1061
Annex I
1083
Annex II
1109
Annex III
1115
Bibliography
1123
Index
1137
Editors
Bckstiegel, Karl-Heinz
Professor em. of International Business Law, University of Cologne (Germany); Hon. President
(President 1996-2012), German Institution of Arbitration (DIS); Member of ICCA Governing Board and ICC Arbitration Commission. Practice as arbitrator and president of arbitration
tribunal in many national and international arbitrations of the DIS, ICC, ICSID, NAFTA, SCC,
AAA, UNCITRAL and others. He was: President, LCIA (1993-1997); President, Iran-United
States Claims Tribunal (1984-1988); Panel Chairman, United Nations Compensation Commission (UNCC) 1994-1996; President, International Law Association (2004-2006).
Krll, Stefan
Rechtsanwalt, Prof. Dr. iur., LL.M. (London), Honorary Professor Bucerius Law School,
Visiting Reader School of Arbitration, CCLS Queen Mary, London; Director Willem C
Vis Moot, National Correspondent for Germany to UNCITRAL; Member of DIS-Advisory
Board; practice as arbitrator in national and international cases under DIS, ICC, WKO, SCC,
Swiss Rules and UNCITRAL Rules and in other ad-hoc proceedings; member of the board
of editors of the International Arbitration Law Review and of Internationales Handelsrecht
(IHR); author and editor of various books, articles and case notes on arbitration including
co-author of Comparative International Commercial Arbitration.
Website: <www.rechtsanwalt-kroell de>
E-mail: <stefan.kroell@law-school.de>.
Nacimiento, Patricia
Rechtsanwltin, Dr. iur, partner with Norton Rose Fulbright LLP in Frankurt am Main (Germany) where she heads the disputes practice. Practice as arbitrator and counsel in numerous
national and international LCIA, ICC, AAA, Swiss Rules, DIS, SCC, ICSID and ad hoc cases,
including investment disputes and the representation of states; appointed by the German government to the ICSID panel of arbitrators and mediators since 2007; member of the ICC Commission on Arbitration; lecturer at the Universities of Heidelberg, Frankfurt and Saarbruecken;
author of numerous publications, including The New York Convention a Global Commentary.
Website <www.nortonrosefulbright.com>
E-mail <patricia.nacimiento@nortonrosefulbright.com>.
Authors
Abt, Amelie
Rechtsanwltin, Bosch Siemens Hausgerte GmbH, Mnchen (Germany).
Website: <www.bosch.com>.
xxii
Bach, Ivo
Akademischer Rat, Dr. iur., Senior Research and Teaching Assistant Johannes Gutenberg
University, Mainz (Germany).
Website: <www.jura.uni-mainz.de>
E-mail: <ibach@uni-mainz.de>.
Benedict, Christoph
Dr. iur. utr., Rechtsanwalt and Legal Director with ALSTOM Deutschland AG, Mannheim
(Germany); former Legal Counsel of Ed. Zueblin AG, Stuttgart (Germany). Admitted as
Solicitor in England and Wales. Chairman of the German Chapter of the Chartered Institute of
Arbitrators, London. Honorary Professor, Swansea University.
Website: <https://www.xing.com/profile/ChristophG_Benedict>
E-mail: <benedict@lawyer.com>.
Berger, Klaus Peter

Professor, University of Cologne (Germany). Dr. iur., LL.M. (Virginia) Director of the Institute
of Banking Law, and the Center for Transnational Law (CENTRAL), President, German Institution of Arbitration (DIS).
Website: <www.central-koeln.de>
E-mail: <kpberger@netcologne.de>.
Bredow, Jens
Rechtsanwalt in Kln, Gurland Rechtsanwlte, Former Secretary General of German Institution of Arbitration (DIS)
Website: <www.gurland.de>
E-mail:<bredow@gurland.de>.
Duve, Christian
Rechtsanwalt, Prof. Dr. iur., Partner with Freshfields Bruckhaus Deringer, Practice Group
Dispute Resolution, Frankfurt am Main (Germany), honorary professor at University of Heidelberg
Website: <www.freshfields.com>
E-mail: <christian.duve@freshfields.com>.
Elsing, Siegfried H.
Rechtsanwalt and Attoney-at-Law (New York), Dr. iur., LL.M. (Yale), Partner with Orrick,
Herrington & Sutcliff LLP, Dsseldorf (Germany); Member of DIS-Board of Directors
and the Board of AAA/ICDR, Member ICSID Panel of Conciliators; Honorary Professor,
University of Dsseldorf (Germany).
Website: <www.orrick.com>
E-mail: <selsing@orrick.com>.
xxiii
Escher, Alfred
Rechtsanwalt, Dr. iur., Partner with ESCHER Rechtsanwlte, Frankfurt am Main (Germany).
Website: <www.escherlaw.de>
E-mail: <alfred.escher@escherlaw.de>.
Flecke-Giammarco, Gustav
Rechtsanwalt, Counsel, Secretariat of the ICC International Court of Arbitration, Paris
(France).
Website: <www.iccwbo.org>
E-mail: <gfo@iccwbo.org>.
Graf, Christian
Director Legal Department, Hamburg Chamber of Commerce, Member of DIS-Board of
Directors. Website: <www.hk24.de>, E-mail <Christian.Graf@hk24.de>.
Haas, Ulrich
Professor, Dr. iur., University of Zurich (Switzerland), Off-Counsel with Netzle Rechtsanwlte (Zurich, Switzerland), Board Member DIS.
Website: <http://www.rwi.uzh.ch/lehreforschung/alphabetisch/haas.html>
<http://www.netzle.com/de-ch/team/ulrich-haas.html>
E-mail:<Ulrich.Haas@rwi.uzh.ch>.
Hagner, Mrton
Rechtsanwalt and Solicitor (admitted in England and Wales), LL.M. (Queen Mary University, London), Head of General Civil and Construction Law, Center of Competence Legal,
E.ON SE, Essen (Germany).
Website: <www.eon.com>
E-mail: <marton.hagner@eon.com>.
Hanefeld, Inka
Rechtsanwltin and Attorney-at-Law (New York), Dr. iur., LL.M. (NYU), Partner with
Hanefeld Rechtsanwlte Rechtsanwaltsgesellschaft mbH, Hamburg (Germany).
Website: <www.hanefeld-legal.com>
E-mail: <hanefeld@hanefeld-legal.com>.
Horn, Norbert
Professor em. of German and international banking and business law; Director em., Institute
of Banking Law, University of Cologne (Germany); Director, ADIC Arbitration Documentation and Information Center, Kln (Germany); independent arbitrator and legal counsel.
E-mail: <norbert.horn@uni-koeln.de>.
xxiv
Huber, Peter
Professor, Johannes Gutenberg University, Mainz (Germany).
Website: <www.jura.uni-mainz.de/huber>
E-mail: <peter.huber@uni-mainz.de>.
Kahlert, Heiner
Rechtsanwalt, Dr. iur., Martens Rechtsanwlte, Munich (Germany).
Website:<http://www.martens-lawyers.com>
E-mail:<h.kahlert@martens-lawyers.com>.
Karstaedt, Rainer
Former Professor of International Commercial Law, Leuphana University, Lueneburg
(Germany); Independent Arbitrator, Fellow of the Chartered Institute of Arbitrators,
Chartered Arbitrator, GAFTA.
E-mail: <karstaedt@tsa-consultants.eu>.
Kraft, Peter
Rechtsanwalt, E.ON SE, Center of Competence Legal General Civil and Construction
Law, Essen (Germany).
Website: <www.eon.com>
E-mail:<peter.kraft@eon.com>.
Krapfl, Claudia
Rechtsanwltin, Dr. iur., Gleiss Lutz, Stuttgart (Germany).
Website: <www.gleisslutz.com>
E-mail: <claudia.krapfl@gleisslutz.com>.
Kreindler, Richard
Attorney at Law (New York) and Avocat (Paris); Dr. iur., Partner with Cleary Gottlieb
Steen & Hamilton LLP, Frankfurt am Main (Germany); Honorary Professor, University of
Mnster (Germany).
Website: <www.cgsh.com>
E-mail: <rkreindler@cgsh.com>.
Khner, Detlev
Rechtsanwalt/Avocat au Barreau de Paris, Partner BMH Avocats, Paris (France); former
Counsel at the ICC International Court of Arbitration.
Website: <www.bmhavocats.com>
E-mail: <dkuehner@bmhavocats.com>.
xxv
Labes, Hubertus
Rechtsanwalt, Dr. iur, Chairman of the Board, Hamburger Internationale Rckversicherung
AG in Rellingen (Germany); Member of the Advisory Board of August-Maria-BergesStiftung-fr-Arbitrales-Recht.
Website: <www.hir.de>
E-mail: <hubertus.labes@hir.de>.
Lange, Sven
Ass. iur. with Norton Rose Fulbright LLP in Frankfurt am Main (Germany).
E-mail <sven.lange@nortonrosefulbright.com>.
Lrcher, Torsten
Rechtsanwalt, Dr. iur., Partner with CMS Hasche Sigle, Cologne (Germany); head of the
CMS Dispute Resolution Practice Group.
Website: <www.cms-hs.com>
E-mail: <torsten.loercher@cms-hs.com>.
Mazza, Francesca
Dr.iur., Secretary General, German Institution of Arbitration (DIS), Berlin/Cologne (Germany); Editor-in-chief of SchiedsVZ/German Arbitration Journal (2015)
Website: <www.dis-arb.de>
E-mail: <FM@dis-arb.de>.
Mulder, Isabel
Rechtsanwltin, Kln (Germany).
Quinke, David
Rechtsanwalt, Dr. iur., LL.M., Partner with Gleiss Lutz, Dsseldorf (Germany); Member
of DIS-Advisory Board.
E-mail: <david.quinke@gleisslutz.com>.
Risse, Jrg
Rechtsanwalt, Dr. iur., LL.M. (Berkeley), Professor at the University of Mannheim (Germany), Partner with Baker & McKenzie, Frankfurt am Main (Germany); Editor-in-chief of
SchiedsVZ/German Arbitration Journal;
Website: <www.bakermckenzie.com>
E-mail: <joerg.risse@bakermckenzie.com>.
xxvi
Rtzel, Stefan
Rechtsanwalt, Dr. iur., LL.M., Partner with Gleiss Lutz, Frankfurt am Main (Germany).
E-mail: <stefan.ruetzel@gleisslutz.com>.
Sachs, Klaus
Rechtsanwalt, Prof. Dr. iur., Partner with CMS Hasche Sigle, Mnchen (Germany); VicePresident ICC Court; Vice-President LCIA; Member of DIS-Board of Directors and of
ASA Board; honorary professor at Ludwig Maximilians University Munich.
E-mail: <Klaus.Sachs@cms-hs.com>.
Schfer, Erik
Rechtsanwalt, COHAUSZ & FLORACK Partnerschaftsgesellschaft, Dsseldorf (Germany), acts as counsel and arbitrator; member of DIS, ASA, CEA, GRUR, LES, ICC
Commission on ADR; Chairman Task Force IT & Arbitration; Co-Chair Task Force ICC
Expertise Proceedings (ICC).
Website: <www.cohausz-florack.de>
E-mail: <eschaefer@cohausz-florack.de>.
Schfer, Jan K.
Rechtsanwalt, LL.M. (National University of Singapore), Partner with King & Spalding
LLP, Practice Group International Arbitration, Frankfurt am Main (Germany).
Website: <www.kslaw.com>
E-mail: <jschaefer@kslaw.com>,
Schlabrendorff, Fabian von

Rechtsanwalt, Dr. iur., Clifford Chance, Frankfurt am Main (Germany); Member of DISAdvisory Board.
Website: <www.cliffordchance.com>
E-mail: <fabian.schlabrendorff@cliffordchance.com>.
Schmaltz, Bettina
Rechtsanwltin, Dr. iur., Practice Group Dispute Resolution, Freshfields Bruckhaus Deringer LLP, Frankfurt am Main (Germany).
E-mail: <bettina.schmaltz@freshfields.com>.
xxvii
Schmidt, Johannes
Rechtsanwalt, Dr. iur., Associate with Cleary Gottlieb Stehen & Hamilton LLP, Frankfurt
am Main (Germany).
Website: <www.cgsh.com>
E-mail: <joschmidt@cgsh.com>.
Schroeder, Hans-Patrick
Rechtsanwalt, Dr. iur., MLE, Solicitor England and Wales, Certified Mediator (CVM),
Partner with Freshfields Bruckhaus Deringer, Practice Group Dispute Resolution, Hamburg (Germany).
E-mail: <patrick.schroeder@freshfields.com>.
Sessler, Anke
Rechtsanwaltin, Dr. iur. Partner with Skadden, Arps, Slate, Meagher & Flom LLP in
Frankfurt am Main (Germany); Member of ICC Arbitration Commission, Member of
DIS-Board of Directors, ASA Board, AAA Board of Directors and ICCA Board.
Website: <www.skadden.com>
E-mail:<anke.sessler@skadden.com>.
Stein, Max
Rechtsanwalt, Associate with Norton Rose Fulbright LLP, Frankfurt am Main (Germany).
E-mail <max.stein@nortonrosefulbright.com>.
Trittmann, Rolf
Rechtsanwalt, Prof. Dr.iur.; LL.M. (Berkeley), Partner with Freshfields Bruckhaus Deringer,
Practice Group Dispute Resolution, Frankfurt am Main (Germany).
E-mail: <rolf.trittmann@freshfields.com>.
Wagner, Gerhard
Professor, Humboldt University at Berlin (Germany), Chair in Private Law, Commercial
Law and Law & Economics; Member of DIS-Board of Directors.
Website: <http://wagner.rewi.hu-berlin.de>
E-mail: <sekretariat.wagner@rewi.hu-berlin.de>.
Weissenborn, Christoph
Dr. iur., Partner von HFK Rechtsanwlte LLP, Munich (Germany),
Website <www.hfk.de>
E-mail: <Weissenborn@hfk.de>.
xxviii
Wilske, Stephan
Rechtsanwalt and Attorney-at-Law (New York), Dr. iur., Matre en Droit, LL.M. (The University of Chicago), FCIArb Partner with Gleiss Lutz, Stuttgart (Germany).
E-mail: <stephan.wilske@gleisslutz.com>.
Wimalasena, Philip
Rechtsanwalt, Associate with Freshfields Bruckhaus Deringer LLP, Frankfurt (Germany).
E-mail: <philip.wimalasena@freshfields.com>.
Wlper, Jan
Rechtsanwalt, CMS Hasche Sigle, Hamburg (Germany); Chairman, German Maritime
Arbitration Association (GMAA).
E-mail: <Jan.Woelper@cms-hs.com>.
Wortmann, Wiebke
Rechtsanwltin, Freshfields Bruckhaus Deringer, Practice Group Dispute Resolution,
Hamburg (Germany).
E-mail: <wiebke.wortmann@freshfields.com>.
AAA
American Arbitration Association
ADIC
Arbitration Documentation and Information Center e.V.
ADR
Alternative Dispute Resolution
AG
Amtsgericht (Local Court)
AG
Aktiengesellschaft (Stock Corporation)
AG
Die Aktiengesellschaft (Journal)
AGA
Auslandsgeschftsabsicherung der Bundesrepublik Deutschland

(Foreign Trade and Investment Promotion Scheme)
AGB
Allgemeine Geschftsbedingungen (Standard Terms and

Conditions)
AHB
Allgemeine Bedingungen fr die Haftpflichtversicherung (General

Standard Insurance Terms for Liability Insurance)
AIDA
Association Internationale de Droit des Assurances
AJIL
American Journal of International Law
AktG
Aktiengesetz (German Stock Corporation Act)
Am. Rev. Intl Arb.
American Review of International Arbitration
Am. U. Intl L. Rev.
American University International Law Review xxviii
Ann. Rev. Banking L. Annual Review of Banking Law

AnwBl.
Anwaltsblatt
AO
Abgabenordnung (German Tax Code)
ARB
Allgemeine Bedingungen fr die Rechtsschutzversicherung

(General Conditions for Legal Costs Insurance)
Arb.Int.
Arbitration International
ArbGG
Arbeitsgerichtsgesetz (Act governing the Employment Courts)
ARGE Baurecht
Arebeitsgemeinschaft Bau- und Schiedsordnung fr Baustretigkeiten

(Conciliation and Arbitration Code for Construction Disputes)
ARIAS
AIDA Reinsurance and Insurance Arbitration Society
Art.
Article
ASA
Swiss Arbitration Association
ASA Bulletin
The Bulletin of the Swiss Arbitration Association
AWD
Auenwirtschaftsdienst
B2B
Business to Business
B2C
Business to Consumer
xxx
BaFin
Bundesanstalt fr Finanzdienstleistungsaufsicht (German Federal

Financial Services Supervisory Authority)
BAG
Bundesarbeitsgericht (Federal Labour Court)
BAnz.
Bundesanzeiger (German Federal Gazette)
BauR
Baurecht
BauRB
Der Bau-Rechtsberater
BayObLG
Bayerisches Oberstes Landesgericht (Bavarian Highest Regional

Court)
BayObLGZ
Entscheidungen des Bayerischen Obersten Landesgerichts in

Zivilsachen
BB
Betriebsberater
BBG
Bundesbeamtengesetz (Act on Federal Civil Servants)
BDI
Bundesverband der Deutschen Industrie (Federation of German

Industries)
BGB
Brgerliches Gesetzbuch (Civil Code)
BGBl.
Bundesgesetzblatt (Federal Law Gazette)
BGH
Bundesgerichtshof (Federal Court of Justice)
BGHZ
Entscheidungen des Bundesgerichtshofs in Zivilsachen
BIMCO
Baltic and International Maritime Conference
BIT
Bilateral Investment Treaty
BKR
Zeitschrift fr Bank und Kapitalmarktrecht
BLI
Business Law International
BrsG
Brsengesetz (Stock Exchange Act)
BOT
Build Operate Transfer
BPatG
Bundespatentgericht (German Federal Patent Court)
BRAGO
Bundesrechtsanwaltsgebhrenordnung (Federal Statute Regulating

Attorneys Fees)
BRAK-Mitt.
Bundesrechtsanwaltskammer Mitteilungen
BRRG
Beamtenrechtsrahmengesetz
BSG
Bundessozialgericht
BT-Drs.
Bundestags-Drucksache
BTR
Der Bautrger
BuB
Baurecht und Baupraxis
BVerfG
Bundesverfassungsgericht (German Constitutional Court)
BVerfGE
Entscheidungen des Bundesverfassungsgerichts (Decisions of the

German Constitutional Court)
BWNotZ
Zeitschrift fr das Notariat in Baden-Wrttemberg
CAFTA
Central American Free Trade Agreement
xxxi
CAS/TAS
Court of Arbitration for Sport
CDREG
Community Designs Regulation
Chap.
Chapter
CIF
Cost, Insurance, Freight (Incoterms)
CISG
United Nations Convention on Contracts for the International Sale

of Goods
CJEU
Court of Justice of the European Union
CLOUT
Case Law on UNCITRAL Texts
CMR
Convention on the Contract for the International Carriage of Goods

by Road (Convention Relative au Contrat de Transport International de Marchandises par Route)
CTMR
Community Trademark Regulation
DABs
Dispute Adjudication Boards
DAS
Deutscher Ausschuss fr Schiedsgerichtswesen
DAV
Deutscher Anwaltverein (German Lawyers Association)
DAX
Deutscher Aktien Index (German Stock Market Index)
DB
Der Betrieb
DIHK
Deutscher Industrie- und Handelskammertag (German Association

of Chambers of Industry and Commerce)
DIS
Deutsche Institution fr Schiedsgerichtsbarkeit (German Institution

of Arbitration)
DIS-SchO
DIS Arbitration Rules
DIS-SRCOLD
DIS Supplementary Rules for Corporate Law Disputes
DNotZ
Deutsche Notar-Zeitschrift
DOCDEX
ICC Rules for Documentary Credit Dispute Resolution Expertise
DPMA
Deutsches Patent- und Markenamt (Federal Patent and Trademark

Office)
DRBs
Dispute Resolution Boards
DRiG
Deutsches Richtergesetz (German Law on Judges)
DRiZ
Deutsche Richterzeitung
DZWiR
Deutsche Zeitschrift fr Wirtschaftsrecht
e.g.
exempli gratia
EBOLR
European Business Organization Law Review
EC
European Community
ECC
European Commodity Clearing
ECC
European Contract for Coffee
ECF
European Coffee Federation
ECHR
European Convention on Human Rights
xxxii
ECJ
European Court of Justice
ECSC
European Contract for Spot Coffee
ECT
Energy Charter Treaty
ECtHR
European Court of Human Rights
EDCC
European Delivery Contract for Coffee
EEG
Erneuerbare-Energien-Gesetz (Renewable Energy Sources Act)
EEIG
European Economic Interest Groupings (Europische Wirtschaftsvereinigung (EWiV))
EEX
European Energy Exchange
EFCACC
European Free Carrier Contract for Coffee
EFET
European Federation of Energy Traders
EGBGB
Einfhrungsgesetz zum Brgerlichen Gesetzbuch (Introductory

Law to the German Civil Code)
EGStGB
Einfhrungsgesetz zum Strafgesetzbuch (Introductory Law to the

Criminal Code)
EJIL
European Journal of International Law
ELJ
European Law Journal
EnWG
Energiewirtschaftsgesetz (Energy Industry Act)
EPC
Convention on the Grant of European Patents
EPC
Engineering, Proceurement and Construction
EStG
Einkommenssteuergesetz (Income Tax Law)
EU
European Union
EuGVO
Council regulation No. 44/2001 of December 22, 2000, on jurisdiction and the recognition and enforcement of judgements in civil and
commercial matters
EUR
Euro
Eur. Rev. Priv. Law
European Review of Private Law
EuZW
Europische Zeitschrift fr Wirtschaftsrecht
EVU
Energieversorgungsunternehmen (energy utilities)
EWiR
Entscheidungen zum Wirtschaftsrecht
EWiV
Europische Wirtschaftsvereinigung (European Economic Interest

Grouping (EEIG))
EWiVAG
Gesetz zur Ausfhrung der EWG-Verordnung ber die Europische

wirtschaftliche Interessenvereinigung (Act for the Implementation
of the EU Regulation applying to the European Economic Interest
Association)
FamFG
Gesetz ber das Verfahren in Familiensachen und in den Angelegenheiten der freiwilligen Gerichstbarkeit (Family Matter Proceedings
and Non-Contentious Proceedings Act)
xxxiii
FamRZ
Zeitschrift fr das gesamte Familienrecht
FCA
Free Carrier (Incoterms)
FCPA
Foreign Corrupt Practices Act
FEED
front end engineering design
FET
fair and equitable treatment
FGG
Gesetz ber die freiwillige Gerichtsbarkeit (Act on Matters Subject

to Voluntary Jurisdiction)
FIAC
Frankfurt International Arbitration Center
FOB
Free On Board (Incoterms)
FWB
Frankfurter Wertpapierbrse (Frankfurt Stock Exchange)
GAFTA
Grain and Feed Trade Association
GasNZV
Gasnetzzugangsverordnung (Gas Grid Access Regulation)
GATS
General Agreement on Trade in Services
GbmG
Gebrauchsmustergesetz (German Act on Utility Models)
GbR
Gesellschaft brgerlichen Rechts (civil code company)
GDV
Gesamtverband der Deutschen Versicherungswirtschaft (German

Insurance Association)
GenG
Genossenschaftsgesetz (Act on Cooperative Societies)
GeschmMG
Gesetz ber den rechtlichen Schutz von Mustern und Modellen

(Geschmacksmustergesetz) (German Act on Registered Designs)
GG
Grundgesetz (German Constitution)
GKG
Gerichtskostengesetz (Court Fees Act)
GMAA
German Maritime Arbitration Association
GmbH
Gesellschaft mit beschrnkter Haftung (Limited Liability Company)
GmbHG
Gesetz betreffend die Gesellschaft mit beschrnkter Haftung (Act

on Limited Liability Companies)
GmbHR
GmbH Rundschau
Grofor
German Wholesalers Federation for Oil, Fat and Oil Raw Materials
GRUR
Gewerblicher Rechtsschutz und Urheberrecht
GRURInt
Gewerblicher Rechtsschutz und Urheberrecht / Internationaler Teil
GVG
Gerichtsverfassungsgesetz (Act on the Constitution of the Courts)
GVGA
Geschftsanweisung fr Gerichtsvollzieher (Rules for Bailiffs)
GWB
Gesetz gegen Wettbewerbsbeschrnkungen (Antitrust Act)
GWG
Geldwschegesetz (Money Laundering Act)
HalbleiterschutzG
Gesetz ber den Schutz von Topographien (German Act on the

Protection of Semiconductor Designs)
Harv. L. Rev.
Harvard Law Review
xxxiv
HGB
Handelsgesetzbuch (Commercial Code)
i.e.
id est
IBA
International Bar Association
ibid.
ibidem
IBR
Immobilien- und Baurecht
ICC
International Chamber of Commerce
ICC ICArb. Bull.
International Chamber of Commerce International Court of

Arbitration Bulletin
IPR
German Private International Law
ITLOS
International Tribunal for the Law of the Sea
KostO
Kostenordnung (Cost Register)
KTS
Zeitschrift fr Konkurs-, Treuhand- und Schiedsgerichtswesen
KV
Kostenverzeichnisses
LCIA
London Court of International Arbitration
LG
Landgericht (Regional Court)
LIRMA
London International Insurance and Reinsurance Market Association
M&A
Merger & Acquisition
MarkenG
Markengesetz (German Trademark Act)
MDR
Monatsschrift fr deutsches Recht
Mealeys I.A.R.
Mealeys International Arbitration Report
MedArb
Mediation Arbitration
MedG
Mediationgesetz (2012 Mediation Act)
MFN
most-favoured-nation
ML
Model Law (UNCITRAL Model Law on International Commercial

Arbitration)
MMR
Multimedia und Recht
MVM
Magyar Villamos Mvek Zrt
N.Y.U. Envtl. L. J.
New York University Environmental Law Journal
NAFTA
North American Free Trade Agreement
NJW
Neue Juristische Wochenschrift
NJW-RR
Neue Juristische Wochenschrift Rechtsprechungsreport
No.
Number
NotBZ
Zeitschrift fr die notarielle Beratungs- und Beurkundungspraxis
NYC
New York Convention (Convention on the Recognition and

Enforcement of Foreign Arbitral Awards)
NZBau
Neue Zeitschrift fr Baurecht und Vergaberecht
xxxv
NZG
Neue Zeitschrift fr Gesellschaftsrecht
NZV
Neue Zeitschrift fr Verkehrsrecht
OECD
Organisation for Economic Cooperation and Development
OGH
Oberster Gerichtshof (Austria)
oHG
Offene Handelsgesellschaft (General Commercial Partnership)
OHIM
Office for the Harmonization in the Internal Market Trade Marks

and Designs
OLG
Oberlandesgericht (Higher Regional Court)
OLG-NL
OLG-Rechtsprechung Neue Lnder
OLGR
OLG-Rechtsprechung
OTC
Over-the-Counter
VVG
sterreichisches Versicherungsvertragsgesetz
p. / pp.
page/pages
para. / paras
paragraph/paragraphs
PatG
Patentgesetz (German Patent Act)
PCA
Permanent Court of Arbitration
PCT
Patent Cooperation Treaty
PPA
Power Purchase Agreement
PSC
Product sharing contracts
RAA
Reinsurance Association of America
Rev.Arb.
Revue de lArbitrage
RG
Reichsgericht
RIW
Recht der internationalen Wirtschaft
RKS
Rechtsprechung kaufmnnischer Schiedsgerichte (formerly

Handelsrechtliche Schiedsgerichtspraxis)
RNotZ
Rheinische Notar-Zeitschrift
ROA
Reinsurance Offices Association
Rpfleger
Rechtspfeger
RPS
Recht und Praxis der Schiedsgerichtsbarkeit
RVG
Rechtsanwaltsvergtungsgesetz (Lawyers Fees Act)
s.
section
SCC
Arbitration Institute of the Stockholm Chamber of Commerce
SchiedsO
Schiedsordnung
SchiedsVfG
Gesetz zur Neuregelung des Schiedsverfahrensrechts (Arbitration

Law Reform Act)
SchiedsVZ
Zeitschrift fr Schiedsverfahren
SchlHA
Schleswig-Holsteinische Anzeigen
xxxvi
Schufa
Schutzgemeinschaft fr allgemeine Kreditsicherung
SE
Societas Europea
SGO Bau
Schiedsgerichtsordnung fr das Bauwesen, einschlielich Anlagenbau (Arbitration Code for Construction, including Plant Engineering)
SIAR
Stockholm International Arbitration Review
SignG
Signaturgesetz (German Signature Act)
SL Bau
Dispute Resolution Rules for the Construction Industry
SOBau
Schlichtungs- und Schiedsordnung fr Baustreitigkeiten (Conciliation and Arbitration Code for Construction Disputes)
SortSchG
Sortenschutzgesetz (German Act on the Protection of Plant Variants

and Seeds)
StGB
Strafgesetzbuch (Criminal Code)
Swiss PIL
Swiss Private International Law
TFEU
Treaty on the Functioning of the European Union
TranspR
Transportrecht
TRIM
Agreement on Trade Related Investment Measures
TRIPS
Agreement on Trade-Related Aspects of Intellectual Property Rights
UG
Unternehmergesellschaft (entrepreneurial company)
UK
United Kingdom
UN
United Nations
UNCITRAL
United Nations Commission on International Trade Law
UNCLOS
United Nations Convention on the Law of the Sea
UNCTAD
United Nations Conference on Trade and Development
URDG
ICC Uniform Rules for Demand Guarantees
UrhG
Urheberrechtsgesetz (German Copyright Act)
US
United States
USA
United States of America
U.S.C.
United States Code
UWG
Gesetz gegen den unlauteren Wettbewerb (German Unfair Trade

Practices Act)
VAG
Versicherungsaufsichtsgesetz (Insurance Supervisory Law)
VAT
Value Added Tax
VCLT
Vienna Convention on the Law of Treaties
VersR
Versicherungsrecht
VG
Verwaltungsgericht (Administrative Court)
VIAC
Vienna International Arbitration Center
xxxvii
VO
Verfahrensordnung (Rules of Procedure)
Vol.
Volume
VV
Vergtungsverzeichnis (Cost Schedule)
VVG
Versicherungsvertragsgesetz (Insurance Contract Law)
VW
Versicherungswirtschaft
VwGO
Verwaltungsgerichtsordnung (Rules of the Administrative Court)
VwVfG
Verwaltungsverfahrensgesetz (German Code of Administrative

Procedure)
WIPO
World Intellectual Property Organization
WM
Wertpapier-Mitteilungen
WpHG
Wertpapierhandelsgesetz (Securities Trading Act)
WUB
Entscheidungssammlung zum Wirtschafts- und Bankrecht
WuW
Wirtschaft und Wettbewerb
Yearbook
Yearbook of Commercial Arbitration
YILJ
Yearbook of International Law and Jurisprudence
ZaVR
Zeitschrift fr auslndisches ffentliches Recht und Vlkerrecht
ZBB
Zeitschrift fr Bankrecht und Bankwirtschaft
ZEV
Zeitschrift fr Erbrecht und Vermgensnachfolge
ZfBR
Zeitschrift fr deutsches und internationales Bau- und Vergaberecht
Zf V
Zeitschrift fr Versicherungswesen
ZGR
Zeitschrift fr Unternehmens- und Gesellschaftsrecht
ZHR
Zeitschrift fr das gesamte Handelsrecht und Wirtschaftsrecht
ZInsO
Zeitschrift fr das gesamte Insolvenzrecht
ZKM
Zeitschrift fr Konfliktmanagement
ZPO
Zivilprozessordnung (Code of Civil Procedure)
ZSEG
Gesetz ber die Entschdigung von Zeugen und Sachverstndigen

(Law on Compensation of Witnesses and Experts)
ZVG
Gesetz ber die Zwangsversteigerung und Zwangsverwaltung (Law

on Compulsory Sale and Administration)
ZVglRWiss
Zeitschrift fr vergleichende Rechtswissenschaft
ZZP
Zeitschrift fr Zivilprozess
ZZPInt
Zeitschrift fr Zivilprozess international
PART I
GERMANY AS A PLACE FOR INTERNATIONAL AND
DOMESTIC ARBITRATIONS
GENERAL OVERVIEW
General Overview*
Karl-Heinz Bckstiegel / Stefan Krll / Patricia Nacimiento
Short Bibliography: See general bibliography.
Para.
Arbitration in Germany: Past and Present. 1
A. The History of Arbitration and the
Road to the New Law . . . . . . . . . . . . . . . . 1
B. The Present Practice of Arbitration . . . 5
C. Information about Arbitration in
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
II. The Legal Framework of Arbitration in
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
A. The German Arbitration Law . . . . . . . . 11
1. The 10th Book of the ZPO . . . . . . . 12
2. Transitional Provisions and Old
Arbitration Law . . . . . . . . . . . . . . . . . . 15
B. Other Relevant National Provisions . 16
C. International Arbitration Conventions to which Germany is a Party. . . . 18
1. The New York Convention
on the Recognition and
Enforcement of Foreign Arbitral
Awards 1958 . . . . . . . . . . . . . . . . . . . . . 19
2. The European Convention on
Inter-national Commercial
Arbitration. . . . . . . . . . . . . . . . . . . . . . . 20
3. The Washington Convention
on the Settlement of Investment
Disputes between States and
Nationals of other States. . . . . . . . . . 21
4. Energy Charter Treaty . . . . . . . . . . . 23
5. Bilateral Commerce, Friendship
and Investment Protection
Treaties . . . . . . . . . . . . . . . . . . . . . . . . . . 24
III. The Arbitration Infrastructure . . . . . . . . . . . 26
A. Institutional Arbitration ad hoc
Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . 26
1. Leading Institutions . . . . . . . . . . . . . . 26
2. Ad hoc Arbitration in Germany . . . 31
B. German State Courts. . . . . . . . . . . . . . . . 32
IV. Characteristic Features of German
Arbitration Law. . . . . . . . . . . . . . . . . . . . . . . . . 34
A. Territoriality . . . . . . . . . . . . . . . . . . . . . . . . 35
B. Party Autonomy with Few Limits . . . . 36
I.
Para.
1. General Principles . . . . . . . . . . . . . . . 36
2. Arbitrability . . . . . . . . . . . . . . . . . . . . . 37
3. Conduct of Proceedings . . . . . . . . . . 39
C. Wide Discretion of the Tribunal in
the Conduct of the Proceedings . . . . . 40
D. Limited Court Intervention and
Swift Court Proceedings . . . . . . . . . . . . 41
E. Jurisdiction and Early Determination of Tribunals Jurisdiction by
the Courts . . . . . . . . . . . . . . . . . . . . . . . . . . 43
F. Prevention of Delay and Obstructive Behaviour . . . . . . . . . . . . . . . . . . . . . . 44
G. Promotion of Amicable Solutions. . . . 45
V. The Arbitration Agreement . . . . . . . . . . . . . 47
A. Legal Nature and Necessary
Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
B. Separability . . . . . . . . . . . . . . . . . . . . . . . . . 49
C. Form Requirements. . . . . . . . . . . . . . . . . 50
1. Form Requirements of 1031
ZPO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
2. Agreements Providing for
Arbitration Abroad. . . . . . . . . . . . . . . 56
D. Parties to the Agreement . . . . . . . . . . . . 57
1. No Restriction as to Parties
State Parties. . . . . . . . . . . . . . . . . . . . . . 57
2. Non-signatory Parties . . . . . . . . . . . . 60
E. Effects of the Agreement . . . . . . . . . . . . 63
1. Jurisdictional and Contractual
Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
2. The Interpretation of the
Arbitration Agreement and
the Admissibility of Summary
Court Proceedings . . . . . . . . . . . . . . . 65
3. Summary Proceedings for
Recovery of Debt
(Mahnverfahren) . . . . . . . . . . . . . . . . . 68
VI. The Arbitral Tribunal . . . . . . . . . . . . . . . . . . . 69
A. Appointment of Arbitrators . . . . . . . . . 70
B. Challenge and Dismissal of
Arbitrators . . . . . . . . . . . . . . . . . . . . . . . . . . 74
This parts draws on the Country Report Germany in the ICCA International Handbook on Commercial Arbitration, Deventer 2013.
Para.
C. The Arbitrators Contract . . . . . . . . . . . . 78
VII. The Arbitral Procedure. . . . . . . . . . . . . . . . . . 86
A. General Principles . . . . . . . . . . . . . . . . . . 86
B. Commencement and Conduct . . . . . . 89
C. Security for Costs . . . . . . . . . . . . . . . . . . . 92
D. Evidence. . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
E. Record of Oral Hearing . . . . . . . . . . . . . 99
F. Default Proceedings . . . . . . . . . . . . . . . .100
G. Representation and Legal
Assistance . . . . . . . . . . . . . . . . . . . . . . . . .101
VIII. Interim Relief and Interim Measures of
Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102
IX. The Award. . . . . . . . . . . . . . . . . . . . . . . . . . . . .106
A. Types of Awards . . . . . . . . . . . . . . . . . . .107
B. Making of the Award . . . . . . . . . . . . . . .109
C. Form and Delivery of the Award . . . .110
D. The Law Applicable to the
Decision on the Merits . . . . . . . . . . . . .112
E. The Decision on Costs . . . . . . . . . . . . .116
F. Correction and Interpretation of
the Award and Additional Awards . .118
X. German State Courts and Arbitration . .120
A. General Principles . . . . . . . . . . . . . . . . .120
B. Supervisory Function of the Courts 123
C. Supportive Functions of the Courts.124
Para.
D. Autonomous Procedure for the
Taking of Evidence (selbststndiges
Beweisverfahren) . . . . . . . . . . . . . . . . . . .129
XI. Recourse against Awards . . . . . . . . . . . . . . .130
B. The Setting Aside Proceedings
Pursuant to 1059 ZPO . . . . . . . . . . .134
1. General Principles . . . . . . . . . . . . . .134
2. Grounds for Setting Aside . . . . . . .136
3. Procedure . . . . . . . . . . . . . . . . . . . . . .142
4. Other Means of Recourse . . . . . . .144
XII. Recognition and Enforcement of
Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .146
B. Domestic Awards . . . . . . . . . . . . . . . . . .148
C. Foreign Awards . . . . . . . . . . . . . . . . . . . .149
1. Enforcement under
International Instruments . . . . . . .150
2. Enforcement under the National
Regime for Recognition and
Enforcement . . . . . . . . . . . . . . . . . . . .152
3. Grounds to Refuse
Enforcement . . . . . . . . . . . . . . . . . . . .155
XIII. Multi-Party Arbitrations . . . . . . . . . . . . . . .159
XIV. Insolvency of a Party . . . . . . . . . . . . . . . . . . .162
I.
Arbitration in Germany: Past and Present1
A.
The History of Arbitration and the Road to the New Law
1 Arbitration has a long tradition in Germany. As in many other legal systems, the state court
system actually developed from ad hoc tribunals based on consent.2 But also after state courts
with compulsory jurisdiction had been established, arbitral tribunals based on an agreement
between the parties were widely considered to be a useful supplement, particularly in commercial matters.3
2 In light of this, the first codification of arbitration law on a federal level in the 10th Book of
the Code of Civil Procedure (Zivilprozessordnung ZPO) (1025 et seq. ZPO) in 1879
adopted a very favourable approach to arbitration. The fairly liberal law, consisting of 24 sections only, was to a large extent already based on the same principles which today underlie the
UNCITRAL Model Law on International Commercial Arbitration (ML) party autonomy
and limited court intervention. Arbitration agreements, whether concluded before or after
the disputes had arisen, were enforced as a matter of course and led to the exclusion of the
jurisdiction of the state courts.4 Awards were given the same effect between the parties as
1
2
3
Cases without further citations are available for free on the DIS Database, <www.dis-arb.de>.
Krause, Die geschichtliche Entwicklung des Schiedsgerichtswesens in Deutschland, Berlin 1930, p.3.
Krause, Entwicklungslinien des deutschen Schiedsgerichtswesens, in: Nubaum (ed.), Internationales
Jahrbuch fr Schiedsgerichtswesen, Vol. III, Berlin 1931, pp.220 (234 et seq.).
1027a ZPO pre-1998; Schtze/Tschernig/Wais (1990), paras128 et seq.
General Overview Bckstiegel/Krll/Nacimiento
judgments of the state courts5 and were enforced unless one of the few grounds to resist enforcement could be proven.6 There was no scrutiny of awards on the merits and considerable
freedom was given to the parties in organizing their proceedings. While these principles are
widely recognized today, at the time when the law entered into force this favourable attitude
to arbitration was in stark contrast to the scepticism with which arbitration was treated in
other legal systems. With some minor amendments, particularly concerning the recognition
and enforcement of foreign awards, the law remained in force and largely unchanged until 1
January 1998, when the new German arbitration law came into force.
Efforts to modernize German arbitration law had started shortly after the adoption of the 3
UNCITRAL Model Law by the General Assembly of the United Nations in December
1985. It was a widely held belief that the incomplete and sometimes outdated provisions of
the old arbitration law, irrespective of their arbitration friendliness, considerably diminished
the attractiveness of Germany as a place for international arbitrations. It was impossible to
be certain of German arbitration law from the text of the statute and some of the default
provisions contained in the law, such as the appointment of two-member tribunals, were no
longer in line with arbitration practice.
The revision was intended to make German arbitration law more user-friendly and to bring 4
it in line with international practice. To these ends, a comprehensive and easily understandable arbitration law was to be devised. A primary objective was to allow potential users to
derive the conduct of arbitral proceedings including the arbitration-related court proceedings from the wording of the statute. Furthermore, to make the law easily accessible
for foreign users, the drafters decided to mirror as closely as possible the wording of the
Model Law. Consequently, the 41 sections of the new German arbitration law contained in
the 10th Book of the Code of Civil Procedure (10251066 ZPO) are to a large extent a
verbatim adoption of the Model Law. The new law was accompanied by a detailed explanatory note which describes the rationale underlying each article7 and is a valuable tool for
interpreting the law.
B.
The Present Practice of Arbitration
Today, arbitration is widely used in most areas of business and commerce. The entry into 5
force of the new German Arbitration Law and a number of high profile cases well reported
in the general media have increased the awareness of arbitration as a dispute resolution
mechanism beyond the regular users. Numerous standard form contracts suggested by
industry organizations or the major form books for contract drafting now contain arbitration
clauses.8 Unfortunately, there is only limited empirical data available, as a large proportion
of arbitrations particularly domestic arbitrations are still conducted on an ad hoc basis
5
6
7
8
1040 ZPO pre-1998; Schtze/Tschernig/Wais (1990), para.526 seq.

1041 (1) ZPO pre-1998; Schtze/Tschernig/Wais (1990), paras530 et seq.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274.
Kreuzer, in: Langenfeld (ed.), Mnchener Vertragshandbuch, Vol. 6, 6th edn, Mnchen 2010, chapter
VIII (Wohnungseigentum) no. 1 para. 36; Nieder/Otto in: Langenfeld (ed.), Mnchener Vertragshandbuch, Vol. 6, 6th edn, Mnchen 2010, chapter XVI (Testamente, Erbvertrge) no. 27 para. 36;
Roquette/Otto, Vertragsbuch Privates Baurecht, 2nd edn, Mnchen 2011, chapter D II paras 12, 22, 43;
Hoffmann-Becking/Rawert, Becksches Formularbuch Brgerliches, Handels- und Wirtschaftsrecht, 11th
edn, Mnchen 2011, chapter XII (Schiedsverfahren und Alternative Streitbeilegung) no. 1, 2, 5.
with awards being rarely published. From the available data,9 some general inferences can
be drawn. First, it is evident that there is a much stronger incentive to resort to arbitration
in international cases than in purely national transactions. For the latter, the relatively efficient German judicial system with its specialized commercial chambers in general provides
comparatively expeditious and competent dispute resolution. However, there appears to be
a direct correlation between the complexity of the dispute and the incentive to go to arbitration. Furthermore, there are some areas (e.g. such as shipping, M&A and to a certain degree
construction) where arbitration is the norm, while the finance and banking sector tend to
resort less often to arbitration. The figures of the leading non-specialized German arbitration
institution, the German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS), also show a steady increase in the number of cases. From its creation in 1992
from two already existing institutions, the number of cases initiated per year with the DIS
has increased from only 20 in 1992, to 125 cases in 2012, with a total value of approximately
EUR 939 million.10
6 The growing importance of arbitration is also reflected in the increase in arbitration-related
literature and events, which have to a certain extent been fuelled by the new German arbitration law.
7 The case law of recent years11 shows the clear tendency of the German state courts to respect
and enforce the choice of the parties to opt out of the judicial system in favour of arbitration.
The decisions of the state courts reflect the readiness to support arbitral tribunals and their
findings. State court intervention has been mainly supportive, thus restricting the scope of
judicial control. The range of disputes subject to arbitration has also grown considerably to
encompass numerous fields of law previously excluded from arbitration. It is for example
now beyond doubt that provided the arbitral proceedings are structured accordingly all
types of corporate law disputes may be submitted to arbitration.12
10
11
12
Surveys conducted by Price Waterhouse Coopers/Queen Mary, University of London, School of International Arbitration, Corporate Choices in International Arbitration Industry Perspectives, London
(2013); Queen Mary, University of London, School of International Arbitration, 2010 International Arbitration Survey: Choices in International Arbitration; Price Waterhouse Coopers/Europa-Universitt
Viadrina Frankfurt (Oder), Commercial Dispute Resolution Konfliktbearbeitungsverfahren im
Vergleich, Frankfurt 2005; Ebbing (2003), p.39; Hesse, Schiedsgerichtsbarkeit in der Investitionsgterindustrie eine empirische Untersuchung, in: Briner/Fortier/Berger/Bredow (eds), FS-Bckstiegel, 2001,
p. 277; Schmidt-Diemitz, Internationale Schiedsgerichtsbarkeit eine empirische Untersuchung, DB
1999, 369; see further Hoffmann, Schiedsgerichte als Gewinner der Globalisierung?, SchiedsVZ 2010,
96.
In its record year 2011 the DIS had 178 new cases with a total aggregate amount in dispute of approximately 3.946 million.
Annual or bi-annual summaries of arbitration-related case law are published in the NJW by Krll (2001,
1173; 2003, 791; 2005, 194; 2007, 743; 2009, 1183; 2011, 1265; 2013, 3135) and the SchiedsVZ (2004,
113; 2005, 139; 2006, 203; 2007, 145; 2008, 62; 2008, 112; 2009, 161; 2009, 217; 2010, 144; 2010;
213; 2011, 131; 2011, 210; 2012, 136; 2012; 201; 2013, 185; 2013, 289); for an evaluation of the jurisprudence on selected issues see Krll/Kraft, Ten Years of UNCITRAL Model Law in Germany, (2007)
World Arbitration and Mediation Review 439 et seq.
See BGH 06.04.2009, NJW 2009, 1962 clarifying its former misleading jurisprudence; for a detailed
account see the contributions by Haas, 1066 and Part IV, Duve/Wimalasena, Arbitration of Corporate
Law Disputes in Germany.
C.
Information about Arbitration in Germany
There is an abundance of literature on arbitration in German. Most of it can be found in the 8

online catalogue of the Arbitration Documentation and Information Center (ADIC),13 the
specialized arbitration library created and maintained by the DIS.14 Regular reports on current developments and new decisions are published in the German Journal for Arbitration
(Zeitschrift fr Schiedsverfahren SchiedsVZ), as well as other law journals.15
In addition, the DIS maintains an excellent and freely accessible database where the full text 9
of nearly all arbitration-related German court decisions can be found. For the most important decisions, an English abstract, which can be freely accessed via the DIS website, also
exists. Full English text translations of the most important German decisions can be found
in the Yearbook of Commercial Arbitration. Furthermore, the International Arbitration Law
Review publishes regularly annotated summaries of relevant German decisions in English
and numerous case abstracts can be found in UNCITRALs freely accessible CLOUT database.16 Last but not least, the German jurisprudence is heavily reported in UNCITRALs
Digest on the Model Law.17
Awards may be published only with the consent of both the arbitral tribunal and the par- 10
ties involved. On the rare occasions awards are published, the names of those involved are
usually deleted. Published awards or at least reports of awards can be found in the following
publications:
SchiedsVZ (from 2003 onwards);
Recht und Praxis der Schiedsgerichtsbarkeit (RPS) by the Deutsche Institution fr

Schiedsgerichtsbarkeit (DIS), semi-annual supplement to the Betriebs-Berater (until
2001);
Handelsrechtliche Schiedsgerichts-Praxis (Collection of Awards and Judgments on Arbitration) by Straatmann/Ulmer (eds);18
Recht der Internationalen Wirtschaft (RIW); and
Yearbook of Commercial Arbitration (Yearbook).
13
14
15
16
17
18
See <www.adic-germany.de>.
See <www.dis-arb.de>.
These are, in particular, the Neue Juristische Wochenschrift (NJW); Betriebs-Berater (BB); Internationales Handelsrecht International Commercial Law (IHR); Praxis des Internationalen Privat- und
Verfahrensrechts (IPRax); Recht der Internationalen Wirtschaft (RIW); Zeitschrift fr den Zivilprozess
(ZZP); Deutsche Zeitschrift fr Wirtschaftsrecht (DZWiR).
The abbreviation CLOUT stands for Case Law on UNCITRAL Texts, a system for collecting and
disseminating information on court decisions and awards relating to the Conventions and Model
Laws that have emanated from the work of the Commission; cf. http://www.uncitral.org/uncitral/en/
case_law.html. Important CLOUT cases are available from the CISG-online.ch Website < http://www.
globalsaleslaw.org/index.cfm?pageID=28 >.
Available at: http://www.uncitral.org/uncitral/en/case_law/digests/mal2012.html.
Continued online on the website of the Hamburg Chamber of Commerce at <http://www.hk24.de/
produktmarken/recht_und_fair_play/schiedsgerichtemediationschlichtung/schiedsspruchsamm
lung/index.jsp>.
II.
The Legal Framework of Arbitration in Germany
A.
The German Arbitration Law
11 The core of the German arbitration law is integrated in the German Code of Civil Procedure
where it constitutes its 10th Book. It is supplemented by a few arbitration-specific provisions
in other statutes relating primarily to the non-arbitrability of certain disputes. Furthermore,
some of the other provisions of the ZPO may become applicable in arbitration-related court
proceedings in support or in supervision of the arbitration.19 These sources of a purely national background are supplemented by the provisions in international instruments such as
the New York Convention 1958 or the numerous bilateral treaties to which Germany is a
party and which often provide for dispute resolution by arbitration.20
1.
The 10th Book of the ZPO
12 The current version of the 10th Book of the ZPO, which entered into force on 1January
1998, is to a large extent a literal adoption of the UNCITRAL Model Law in its original
version. The few amendments made to the Model Law were considered necessary either
to facilitate the application of the law, to provide even greater room for party autonomy
or to take into account the established German arbitration practice. In particular, German
arbitration law does not distinguish between national and international cases but provides
a single regime for both types of arbitrations. The German legislature held the view that, in
light of the few differences between national and international cases, a single regime for all
arbitrations is justifiable. It avoids the sometimes difficult distinctions between national and
international cases and thereby serves the needs of practice better than two different regimes.
For the same reason, the limitation to commercial arbitration contained in the Model Law
was also dropped so that the German law would apply to all types of arbitration. Thus, users
of arbitration do not have to worry about the sometimes difficult and controversial definition
of the term commercial, for which a footnote to Article 1 (1) ML attempts to provide some
guidance.
13 A second important amendment made to the Model Law concerns a considerable easing
of the form requirements for the arbitration agreement in 1031 (2) ZPO. It allows for the
so-called half written form, such as arbitration agreements in letters of confirmation. As a
consequence of this change, as well as an addition of a provision regulating the enforcement
of interim relief ( 1041 (2) ZPO), the German legislator saw no need to amend the German law to reflect the changes made to the Model Law in 2006. Other important additions
to the Model Law concern a special procedure to determine the admissibility of arbitral
proceedings (1032 (2) ZPO), additional supportive powers of the courts in relation to
appointment (1025 (3) ZPO) and a provision dealing with awards on costs ( 1057).
Furthermore, the expiration of the three-month time limit for the initiation of setting aside
proceedings can also affect the availability of possible defences in proceedings for a declaration of enforceability (1060 (2) sentence 3 ZPO).
14 The new German arbitration law applies to all arbitrations having their place of arbitration
in Germany. The procedural theory followed by the old law has been abolished by the new
arbitration law. It is, however, still possible to conduct proceedings under German arbitration
19
20
For details see below, Part II, Schrder/Wortmann, Introduction to 1062-1065 paras 4 et seq.
For the interpretation of the various provisions see Krll/Kraft, Ten Years of UNCITRAL Model Law in
Germany (2007) World Arbitration and Mediation Review 439 (444 et seq.).
law where the place of arbitration is in a different country. Furthermore, 1025 (2) ZPO lists
a number of provisions which are also applicable when the place of arbitration is either not in
Germany or has not yet been determined.
2.
Transitional Provisions and Old Arbitration Law
Pursuant to the transitional provisions contained in the Bill of the Arbitration Law Reform 15
Act, the revised version of the 10th Book of the ZPO applies to all arbitral proceedings or
arbitration related court proceedings started after 1January 1998. Thus, given the lapse of
time, the provisions of the old German arbitration law have largely lost their practical importance. The only questions for which they are still of relevance are the conclusion and validity
of the arbitration agreement. Arbitration agreements entered into before 1 January 1998 are
still governed by the former German arbitration law. This is of particular importance given
the differences in the form requirements between the old and the new law.21 The former law,
inter alia, allowed commercial parties to validly conclude an arbitration clause without any
form requirements.22
B.
Other Relevant National Provisions
In addition to 1025-1066 ZPO, other provisions of the ZPO may become applicable in the 16
various supportive or supervisory court proceedings provided for in the 10th Book, as long
as they do not conflict with the specific rules of the 10th Book.23 1026 ZPO merely states
that courts may not intervene in matters governed by 10251061 ZPO except where so
provided in the 10th Book, but does not exclude the application of other ZPO provisions in
connection with the functions specifically entrusted to the courts.
Furthermore, there are few provisions in other laws dealing with sector-specific restrictions 17
of party autonomy. Generally, these have a consumer protection or public policy background
and either exclude the arbitrability of certain disputes (e.g. 37h Securities Trading Act
(Wertpapierhandelsgesetz WpHG)) for certain financial service contracts24 or limit the
parties freedom in devising their own arbitration procedure (e.g. 307 Civil Code (Brgerliches Gesetzbuch BGB))25 for arbitration agreements contained in standard conditions.
C.
International Arbitration Conventions to which Germany is a Party
The above rules of national origin are supplemented by the provisions of various inter- 18
national instruments to which Germany is a party. The most important of these are the New
York Convention 1958 (NYC),26 the European Convention on International Commercial
21
22
23
24
25
26
See Part II, Trittmann/Hanefeld, 1031, especially para.5.

Lachmann (2008), para.326; Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.39.
BGH 27.03.2002, IHR 2003, 43 (provision on legal representation 80 et seq. ZPO); BayObLG
11.11.2004 (provisions on separation of costs 91 et seq. ZPO); for details see Part II, Schroeder/Wortmann, Introduction to 1062-1065.
For details see Part IV, Horn, Arbitration of Banking and Finance Disputes in Germany, paras7 et seq.; cf.
Quinke, Brsenschiedsvereinbarungen und prozessualer Anlegerschutz, Kln 2005.
See on the issue Hanefeld/Wittinghofer, Schiedsklauseln in Allgemeinen Geschftsbedingungen,
SchiedsVZ 2005, 217; OLG Bremen 28.06.2006; cf. OLG Bremen 30.10.2008, NJOZ 2009, 1188 = MDR
2009, 465 (based on 879 (3) ABGB (Austrian Civil Code); for details see Part II, Trittmann/Hanefeld,
1029 para.16.
New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, implementing legislation in BGBl. 1961 II, 121; withdrawal of the originally declared reservation under Art.I
10
Arbitration,27 the International Centre for Settlement of Investment Disputes (ICSID)

Convention28 and the Energy Charter Treaty.29 In addition to these multilateral treaties,
Germany has also concluded numerous bilateral commerce, friendship and investment protection treaties that contain arbitration-related provisions. Due to their public international
law character, these treaties prevail, in principle, over the national provisions, as also stated
explicitly in 1064 (3) ZPO. However, most of these treaties contain an explicit opening for
more favourable national provisions. Thus, their practical relevance is largely limited to the
rare cases where the treaty contains more favourable provisions than the German law (e.g.
restrictions of the grounds to refuse recognition and enforcement) or where the authority
of the tribunal has to be based on provisions of the treaty. In principle, each treaty defines its
own scope of application which may, however, be enlarged by virtue of the most favoured
national treatment clause contained in another treaty.30
1.
The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards
1958
19 The New York Convention of 10 June 1958 provides for the recognition and enforcement
of international arbitration agreements and foreign awards. In Germany, the Convention
entered into force on 28 September 1961.31 While Germany never availed itself of the commercial matters reservation, it originally declared the reciprocity reservation in Article I (3)
NYC. With the entry into force of the new German law, the reciprocity reservation was withdrawn with effect as of 1 September 1998.32 Pursuant to 1061 ZPO, the recognition and
enforcement of foreign awards is now generally subject to the New York Convention 1958.
Apart from questions of enforcement of foreign awards, the provisions of the Convention
may also become relevant where a party challenges the jurisdiction of the German courts,
relying on an arbitration agreement providing for arbitration outside Germany.
2.
The European Convention on International Commercial Arbitration
20 The European (Geneva) Convention on International Commercial Arbitration of 21 April

1961 was aimed at safeguarding international arbitration, notably in East-West commercial
transactions, and in particular with regard to the interference of state courts.33 It entered into
force on 7 January 1964 and was ratified by Germany on 25 January 1965.34 The practical
importance of this convention was always rather limited and its importance diminished after
the political changes in the Eastern European countries.35 In Germany, however, it may still
be relevant for the recognition of awards which were set aside in their country of origin for
27
28
29
30
31
32
33
34
35
(3) NYC, BGBl. 1999 II, 7.

European Convention on International Commercial Arbitration of 1961, implementing legislation in
BGBl. 1964 II, 425.
Convention on the Settlement of Investment Disputes Between States and Nationals of Other States of
1965, implementing legislation in BGBl. 1969 II, 369.
Energy Charter Treaty, (1994) 33 ILM 360.
OLG Dresden 31.01.2007 11 Sch 18/05, application of the European Convention to award between an
American and a Belorussian party.
BGBl. 1961 II, 122.
Bekanntmachung ber den Geltungsbereich des bereinkommens ber die Anerkennung und Vollstreckung auslndischer Schiedssprche vom 03.12.1998, published in BB 1999, Beilage No. 4, p.3.
Lionnet/Lionnet (2005), p.93; Stein/Jonas-Schlosser (2002), Anhang 1061 para.165.
Baumbach/Lauterbach (2013), SchlAnh VI A 2; Lionnet/Lionnet (2005), p.93.
Weigand-Weigand (2002), Germany, paras78 et seq.
11
local reasons pursuant to its Article IX.36 Furthermore, the Conventions Article IV provides
a procedure to solve uncertainties as to the chosen institution in the case of pathological
arbitration clauses.
3.
The Washington Convention on the Settlement of Investment Disputes Between States and
Nationals of Other States
The Washington Convention on the Settlement of Investment Disputes between States and 21
Nationals of other States (ICSID Convention) was promoted by the World Bank in 1965 and
created the International Centre for the Settlement of Investment Disputes (ICSID)37 for resolving investment disputes between a state and national individuals or entities. The ICSID
Convention entered into force in Germany on 18 May 1969. As a consequence, ICSID
proceedings may be brought against Germany by foreign investors or by German investors
against any other member state, provided that a valid submission to ICSID arbitration exists.
As of July 2014, two ICSID proceedings have been brought against Germany, while German
investors have initiated ICSID proceedings on several occasions.38
Since December 2005 parties have the opportunity, without the need for specific prior 22
approval, to conduct ICSID proceedings at the Frankfurt International Arbitration Centre
(FIAC) jointly established by the DIS and the Frankfurt Chamber of Industry and Commerce. This is the result of a cooperation agreement under Article 63 of the ICSID Convention concluded between the DIS and ICSID.
4.
Energy Charter Treaty
The Energy Charter Treaty (ECT), currently composed of 52 members, was concluded in 23
December 1994 and has been in force since April 1998.39 The treaty was entered into by
countries from Western, Central and Eastern Europe, Japan and Australia.40 It aims to provide a multilateral legal framework for continuous cross-border cooperation between the
contracting states in the energy sector and is thus an instrument of investment protection
within that field.41 It also provides for a mechanism of dispute resolution and grants direct
36
37
38
39
40
41
See Nienaber (2002), pp.32 et seq.; cf. OLG Dresden 31.01.2007 11 Sch 18/05.
See < https://icsid.worldbank.org/ICSID/Index.jsp >.
Vattenfall AB, Vattenfall Europe AG, Vattenfall Europe Generation AG v. Federal Republic of Germany
(ICSID Case No. ARB/09/6), on 17.04.2009 the acting Secretary-General registered a request for the
institution of arbitration proceedings, on 11.03.2011 the Tribunal rendered its award embodying the
parties settlement agreement, pursuant to ICSID Arbitration Rule 43(2); Vattenfall AB and others v.
Federal Republic of Germany (ICSID Case No. ARB/12/12) was registered on 31.05.2012 (still pending); see also Slovak Gas Holding BV, GDF International SAS and E.ON Ruhrgas International GmbH
v. Slovak Republic (ICSID Case No. ARB/12/7); Utsch M.O.V.E.R.S. International GmbH, Erich Utsch
Aktiengesellschaft, and Mr. Helmut Jungbluth v. Arab Republic of Egypt (ICSID Case No. ARB/13/37);
Gelsenwasser AG v. Peoples Democratic Republic of Algeria (ICSID Case No. ARB/12/32); Fraport
AG Frankfurt Airport Services Worldwide v. Republic of the Philippines (ICSID Case No. ARB/11/12).
BGBl. 1997 II, 4.
See also Part IV, Escher/Nacimiento/Weissenborn/Lange, Investment Arbitration and the Participation of
State Parties in Germany, paras33 et seq.
Detailed references in Wlde, Investment Arbitration Under the Energy Charter Treaty From Dispute
Settlement to Treaty Implementation, Arb.Int. 1996, 429; Turner, Investment Protection through Arbitration: The Dispute Resolution Provisions of the Energy Charter Treaty, (1998) Int.A.L.R. 166.
12
rights to non-state parties to initiate claims.42 Since the security of energy supply is one of
Germanys major economical and political issues, one cannot overestimate the importance
of the Energy Charter Treaty, particularly in light of the fact that growing East-West energy
dependency has caused a significant increase in the number of disputes in recent years.
5.
Bilateral Commerce, Friendship and Investment Protection Treaties
24 Germany has concluded numerous bilateral treaties with foreign states, including the US, the
UK, Switzerland, Austria, Belgium, Greece and Italy. In particular, the various investment
protection treaties contain offers by both states to submit certain disputes with the other
state or its nationals to arbitration. Furthermore, these treaties often contain provisions for
the recognition and enforcement of awards in the territory of the state. Some merely refer
to the New York Convention 1958; others provide that recognition and enforcement may
be refused only if recognition and enforcement would be contrary to public policy. German
and foreign parties have, on several occasions, relied on such treaties either to initiate arbitral
proceedings or to have awards declared enforceable in Germany. In the latter case, some treaties may be more favourable than the German law insofar as they limit the possible grounds
to refuse recognition due to public policy43 or allow recognition of settlements concluded
during arbitral proceedings but not rendered in the form of an award on agreed terms.44
25 A complete list of the various bi- and multilateral friendship, commerce and investment
protection treaties can be found on the website of the DIS.45
III. The Arbitration Infrastructure

A.
Institutional Arbitration ad hoc Arbitration
1.
Leading Institutions
26 There are numerous arbitration institutions in Germany, most of which are specialized on
certain sectors. The most important general arbitration institution is the German Institution
of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit e. V. DIS).46 It was formed on
1 January 1992 by a merger of two pre-existing institutions, the German Arbitration Committee (Deutscher Ausschu fr Schiedsgerichtswesen DAS) whose arbitration rules were
traditionally used in Germany, and the German Institute of Arbitration (Deutsches Institut fr
Schiedsgerichtswesen DIS), which had been established by the German commercial and
legal community for the study and promotion of arbitration.47
42
43
44
45
46
47
Wlde, Investment Arbitration Under the Energy Charter Treaty From Dispute Settlement to Treaty
Implementation, Arb.Int. 1996, 429; Lew/Mistelis/Krll (2003), para.28-34.
BGH 23.02.2006, SchiedsVZ 2006, 161 (164) = IHR 2006, 125 = (2006) Int.A.L.R. N-59; (GermanSoviet Treaty of 25.04.1958) reliance on procedural defect not possible as not a separate ground for
refusal.
BayObLG 05.07.2004, BayObLGR 2004, 381 (enforcement of a settlement under the Bilateral Treaty
with Austria).
<www.dis-arb.de>.
Deutsche Institution fr Schiedsgerichtsbarkeit e.V., Beethovenstrae 5-13, 50674 Kln, Tel.: +49 (0)2
21/ 28 55 20, Fax: +49 (0)2 21 / 28 55 22 22; for further information see Part III or <www.dis-arb.de>.
On the various features of the DIS Rules and the functions of the DIS, see Part III Mazza; Kuckenburg/
Shackelton, The German Institution of Arbitration issues new Arbitration Rules, (1998) 13(7) Mealeys
I.A.R. 37; Schtze, Im Portrt: Deutsche Institution fr Schiedsgerichtsbarkeit, SchiedsVZ 2003, 178.
13
The presently valid DIS Arbitration Rules (referred to as DIS Rules), in force since 1 July 27
1998, are applicable both to national and international arbitrations.48 They are available
in German, English, French, Spanish, Russian, Chinese, Turkish and Arabic versions. The
DIS Rules have been revised in light of the new German law and closely follow the rules of
the law. Under the DIS Rules, the role of the DIS focuses on the procedure for establishing
the arbitral tribunal as well as on serving the request for arbitration and the award. There is
no general monitoring of the proceedings or scrutiny of the draft awards. In addition to its
general Arbitration Rules, the DIS offers supplementary arbitration rules for corporate law
disputes and for expedited proceedings, as well as a number of other dispute resolution rules.
These include, inter alia, the DIS Conflict Management Rules under which a pre-selected
conflict manager decides on the most appropriate form of dispute resolution for the parties
dispute. Since 2008, the DIS offers the German Court of Arbitration for Sport (Deutsches
Sportschiedsgericht), which deals with sport related disputes (including doping).
The DIS does not only administer arbitral proceedings under its own rules; it also regularly 28
acts as appointing authority for UNCITRAL or other ad hoc proceedings and gives general
advice on the selection of arbitrators. Furthermore, it has been one of the driving forces behind the revision of the German arbitration law and is actively involved in the continuing
development of the law, inter alia, through regular conferences, seminars and lectures on
the topic, as well as its database of arbitration-related court proceedings. In 2002, the DIS
founded DIS40, an organization for practitioners under 40 years of age. The DIS is also the
co-operation partner for the German Arbitration Journal (Zeitschrift fr Schiedsverfahren
SchiedsVZ), which has been in publication since the beginning of 2003.
Further specialized institutions are:
Waren-Verein der Hamburger Brse e.V.

Groe Bckerstrae 4, 20095 Hamburg
Tel: +49 (0)40 / 37 47 19-0
Fax: +49 (0)40 / 37 47 19-19
E-mail: info@waren-verein.de
Website: www.waren-verein.de/de/schiedsgericht
Schiedsgericht der Handelskammer Hamburg

Adolphsplatz 1, 20457 Hamburg
Tel: +49 (0)40 / 36138-343
Fax: +49 (0)40 / 36138-533
E-mail: petra.sandvoss@hk24.de
Website: < www.hk24.de/recht_und_steuern/schiedsgerichtemediationschlichtung/
Schiedsgericht/schiedsgericht_handelskammer/364006/schiedsgericht.html >
(The Schiedsgericht der Handelskammer Hamburg also acts as appointing authority for
ad hoc proceedings under the Rules of the Hamburger freundschaftliche Arbitrage)49
48
49
For a commentary on the DIS Rules, see Part III; for a German Commentary see Theune, DIS, in: Schtze
(ed.), Institutionelle Schiedsgerichtsbarkeit, 2006, pp.159 et seq.
For details see Korte, Die Hamburger freundschaftliche Arbitrage ein berblick anlsslich des 100-jhrigen Jubilums des 20 Platzusancen fr den hamburgischen Warenhandel, SchiedsVZ 2004, 240.
29
14
German Maritime Arbitration Association50

Willy-Brandt-Strae 57, 20457 Hamburg
Tel: +49 (0)40 / 5 700 700
Fax: +49 (0)40 / 5 700 70 200
E-mail: c.hasche@fleet-hamburg.com
Website: www.gmaa.de
Schlichtungs- und Schiedsgerichtshof deutscher Notare

Sekretariat SGH
Kronenstrae 73, 10117 Berlin
Tel: +49 (0)30 / 20 61 57 40
Fax: +49 (0)30 / 20 61 57 50
E-mail: kontakt@dnotv.de
Website: www.dnotv.de/Schiedsgerichtshof/Schiedsgerichtshof.html
Gruppe Deutsche Brse

Deutsche Brse AG
60485 Frankfurt am Main
Tel: +49 (0)69 / 2 11-0
Fax: +49 (0)69 / 2 11-1 20 05
E-mail: info@deutsche-boerse.com
Website: <www.deutsche-boerse.com/dbg/dispatch/de/kir/dbg_nav/home >
30 In addition, there are special arbitration institutions at the various stock and commodity
exchanges, and some of the regional chambers of commerce also offer arbitration services.
2.
31 Ad hoc arbitration is widely used in Germany, particularly in corporate disputes.51 Under

German arbitration law, the parties are largely free to devise their own rules for their arbitral
proceedings, subject to the very few mandatory provisions ensuring due process and equal
treatment of the parties. Above all in corporate matters, it is possible to find fairly detailed arbitration clauses in practice. In the majority of cases, however, the parties generally only agree
on the bare minimum, such as the number of arbitrators and the way they are appointed.
Agreements on special arbitration rules for ad hoc proceedings, such as the UNCITRAL
Arbitration Rules or the Hamburger freundschaftliche Arbitrage, are generally limited to international cases, commodity contracts or construction contracts.52 In all other cases and to the
extent the parties have not made use of their party autonomy, the German law provides the
necessary fall back rules to ensure the proper conduct of the proceedings, in particular the
constitution of the tribunal. Pursuant to 1042 (4) sentence 1 ZPO, the arbitral tribunal is
empowered to decide on all open points of the arbitral proceedings left unregulated by the
parties, such as the place of arbitration (1043 (1) ZPO), the language of the proceedings
(1045ZPO) and the governing law (1051 ZPO).53
50
51
52
53
For information see <www.gmaa.de> or contact its Honorary Secretary, Dr. Christoph Hasche, WillyBrandt-Strae 57, 20457 Hamburg, Tel. +49 (0)40 5 700 700, Fax + 49 (0)40 5 700 70 200.
See generally Part IV, Wilske, Ad hoc Arbitration in Germany.
See generally Part IV, Karstaedt/Graf, Commodity Arbitration; Benedict, Construction Arbitration.
See Part IV, Wilske, Ad hoc Arbitration in Germany, para.19.
B.
15
German State Courts
Under German arbitration law, state courts perform important supportive and supervisory 32
functions for arbitral proceedings. In exercising these functions and in line with the spirit of
German arbitration law, courts usually adopt a very favourable attitude towards arbitration.
Whenever it is clear that the parties have agreed on arbitration, courts will try to uphold the
parties agreement despite any defects.54 Additionally, concerning disputes covered by the
arbitration agreement, courts have generally opted for a wide interpretation of the arbitration agreement, covering also tort claims55 or disputes with former shareholders.56 Other
examples of this pro-arbitration attitude are the jurisprudence of the Federal Court of Justice
(Bundesgerichtshof BGH) with regard to the admissibility of arbitration agreements in
consumer contracts,57 the strict enforcement of time limits concerning the appointment and
challenge of arbitrators58 and the narrow interpretation of the various grounds for setting
aside an award or refusing its enforcement, often precluding defences which were not raised
in time.59
The interpretation in favour of arbitration, however, does not extend to the question of 33
whether the dispute resolution mechanism agreed upon is arbitration or not. Unlike the
other methods of alternative dispute resolution (ADR), arbitration amounts to a waiver of
the right of access to the state court system. Thus, in cases of doubt courts have normally
applied a presumption that at least where the dispute is of domestic nature the parties did
not want to completely exclude recourse to the courts.60
54
55
56
57
58
59
60
E.g. BGH 25.01.2007, IHR 2007, 78; KG Berlin, 02.09.2012 (reference to a non-existing German Chamber of Commerce); id. 15.10.1999, Yearbook XXVI (2001), 328 = (2000) Int.A.L.R. N-70 = CLOUT
373 (German Central Chamber of Commerce); OLG Oldenburg 20.06.2005, SchiedsVZ 2006, 223
(International Court of Arbitration in Austria); OLG Karlsruhe 04.04.2007, NJOZ 2007, 5365 (holding
that an arbitration clause does not become inadmissible if it refers to a non-existing court of arbitration, as gap-filling interpretation allows to identify the competent court of arbitration); OLG Hamburg
24.01.2003, SchiedsVZ 2003, 284 (Arbitration, Hamburg); OLG Hamm 27.9.2005, IHR 2006, 261 =
Yearbook XXXI (2006), 685 (conflicting clauses); cf. Krll, Pathological Arbitration Agreements before
German Courts, IHR 2006, 255.
For further examples of tort claims, see BGH 24.11.1964, NJW 1965, 300; OLG Koblenz, 15.06.2010,
BeckRS 2010, 33238; OLG Kln 19.12.2001, BeckRS 2011, 26960.
BGH 19.06.2004, NJW 2004, 2898 (2899); id. 04.10.2001; OLG Schleswig 19.10.2000; OLG Stuttgart
06.03.2001, OLGR Stuttgart 2002, 57; KG Berlin 15.10.1999; OLG Hamm 07.03.2000, ZIP 2000, 1013;
OLG Kln 19.01.2001.
BGH 13.01.2005, SchiedsVZ 2005, 95.
BGH 04.03.1999, NJW 1999, 2370 (no challenge after award has been rendered); id. 01.02.2001, RPS
2/2001, 14; BayObLG 27.05.2003.
OLG Celle 19.02.2004, OLGR Celle 2004, 396 (reliance on procedural irregularity excluded since not
raised in time); OLG Karlsruhe 29.11.2002 (possible effect of alleged violation of public policy on award
not apparent); id. 27.03.2006, SchiedsVZ 2006, 335 (preclusion of defences in enforcement proceedings
in Germany, if remedies at place of arbitration not used); BGH 08.02.2011, NJW-RR 2011, 1188 (holding that in time means before the oral pleadings start, according to 137 (1) ZPO); see also BGH
10.05.2011, NJW 2001, 2176.
KG Berlin 11.07.2002; BayObLG 13.05.2003, MDR 2003, 1132; OLG Mnchen 07.08.2006, SchiedsVZ
2006, 286; cf. BGH 01.03.2007, NJW-RR 2007, 1511 commented by Krll, Die schiedsrechtliche Rechtsprechung 2007, SchiedsVZ 2008, 62 (63).
16
IV. Characteristic Features of German Arbitration Law

34 From the various provisions of the law, some characteristic features of the German arbitration law can be deduced. These include the principle of territoriality, the prevailing role of
party autonomy, the guarantee of due process and effective proceedings and the limitation
of court interference. In concert with the generally arbitration friendly approach adopted by
German courts, these features shape the practice of arbitration in Germany.61
A.
Territoriality
35 In line with the UNCITRAL Model Law, the German arbitration law adopts a territorial
approach with the place of arbitration as the decisive element. Pursuant to 1025 (1) ZPO,
the German arbitration law applies to all arbitrations having their places of arbitration in
Germany. It is no longer possible to submit those arbitrations to a foreign arbitration law,
to the exclusion of even the mandatory provisions of the German law. By contrast, only few
provisions of the German arbitration law will apply to arbitrations with a place of arbitration
in a different country or where the place of arbitration has not yet been determined. These
provisions are listed in 1025 (2)(4) ZPO and concern the enforcement of arbitration
agreements and awards, as well as some measures of court support. The determination of the
place of arbitration is, pursuant to 1043 ZPO, subject to party autonomy and, if the parties
fail to agree, will be determined by the arbitral tribunal. As the legal base of the arbitral proceedings, the place of arbitration must be distinguished from the place where the hearings are
held. 1043 (2) ZPO explicitly authorizes the arbitral tribunal, in the absence of agreement
between the parties to the contrary, to meet at any place it considers appropriate for an oral
hearing, for hearing witnesses, experts or the parties, for consultation among its members or
for inspection of goods or documents.
B.
Party Autonomy with Few Limits
1.
General Principles
36 German arbitration law is, to a large extent, governed by party autonomy.62 There are few
restrictions on the parties ability to have their disputes resolved by a method agreed between
them. With few exceptions, the provisions of German arbitration law are of a non-mandatory
nature. They are default rules that apply only where the parties have either not regulated an
issue in their arbitration agreement or when they have not already submitted their arbitration
to a set of different arbitration rules or other rules, such as the IBA Rules on Taking Evidence
in International Arbitration.
2.
Arbitrability
37 Nearly all commercially relevant disputes are arbitrable, as the general rule in 1030 (1)
ZPO that any claim involving an economic interest (vermgensrechtlicher Anspruch) can be
subject of an arbitration agreement, applies. The requirement of the old German arbitration
law, that the parties must be able to conclude a settlement on the issue in dispute, applies
61
62
OLG Frankfurt 20.07.2007, BeckRS 2007, 18839.

For the extent of party autonomy also in relation to the effects of the award see BGH 01.03.2007.
17
under the reformed law only to a limited number of those claims which do not involve an
economic interest.63
There are only few exceptions to this general rule. In the 10th Book itself, only disputes relat- 38
ing to the existence of a lease of residential accommodation within Germany are directly
declared non-arbitrable (1030 (2) ZPO). Furthermore, 1030 (3) ZPO provides that
limitation of arbitrability contained in other laws shall not be affected by the general rule
of arbitrability. These limitations include disputes concerning the representation of a child
( 1822 No. 12 BGB) as well as 101110 Labour Courts Act (Arbeitsgerichtsgesetz
ArbGG). By contrast, disputes concerning the violation of German or European competition or antitrust law are now arbitrable. The former limitation under 91 (1) Antitrust Law
(Gesetz gegen Wettbewerbsbeschrnkungen GWB) has been revoked by the new German
arbitration law.64 The same applies, in general, for disputes related to intellectual property65
and company law matters,66 particularly disputes as to the validity of decisions of shareholder
meetings. Despite the possible effects on third parties, such disputes are considered to be
arbitrable.67
3.
Conduct of Proceedings
Concerning the proceedings as such, 1042 (3) ZPO provides as the basic rule that, subject 39
to the mandatory provisions of this book, the parties are free to determine the procedure
themselves or by reference to a set of arbitration rules. The limits imposed by the few existing
mandatory provisions are intended to ensure that the basic requirements of due process are
fulfilled, i.e. that the parties are treated equally and that each party has the opportunity to
present its case. Finally, the law to be applied to the merits as well as to the arbitration agreement itself may also be determined by the parties (1051 ZPO). In addition, the parties
may determine the court which has jurisdiction for the various supportive and supervisory
actions either through a specific forum selection clause or by determining the place of arbitration (1062 (1) ZPO).
C.
Wide Discretion of the Tribunal in the Conduct of the Proceedings
Where parties have not made use of their freedom to regulate issues, the tribunal has wide 40
discretion in relation to all questions arising during the proceedings. It is only limited by the
few mandatory provisions contained in 10251066 ZPO. Pursuant to 1043 (1) ZPO,
63
64
65
66
67
For constitutional concerns raised by such a broad definition of objective arbitrability and in favour of
a restrictive interpretation, see Voit, Privatisierung der Gerichtsbarkeit, JZ 1997, 120 et seq.; Hesselbarth,
Schiedsgerichtsbarkeit und Grundgesetz, Lichtenberg 2004, pp.131 et seq.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.70.
Controversial at least for disputes as to validity of a patent or trade mark where the still prevailing view
denies arbitrability in light of the possible effects on third parties; Bill of the Arbitration Law Reform Act,
BT-Drs. 13/5274, p.35; with convincing arguments in favour of arbitrability of all intellectual property
disputes see Frost, Schiedsgerichtsbarkeit im Bereich des geistigen Eigentums, Mnchen 2001, pp.40 et
seq.; Stein/Jonas-Schlosser (2002), 1030 para.3; for details see Part IV, Schfer, Arbitration of Intellectual
Property Law Disputes in Germany, paras16 et seq.
BGH 06.04.2009, NJW 2009, 1962 clarifying the often misunderstood restrictions in BGH 29.03.1996,
BGHZ 132, 278 (282 et seq.) with note by Schlosser, JZ 1996, 1020 et seq.; cf. Musielak-Voit (2013), 1030
para.2; for details see Part IV, Duve/Wimalasena, Arbitration of Corporate Law Disputes in Germany,
paras5 et seq.
For a detailed discussion of arbitrability see Part II, Trittmann/Hanefeld, 1030.
18
the arbitral tribunal may determine the place of arbitration and thereby potentially the law
governing the arbitral proceedings. Furthermore, in relation to the conduct of the proceedings, 1042 (4) ZPO provides as a general rule that the arbitral tribunal shall conduct the
arbitration in such a manner as it considers appropriate. That includes, inter alia, as in part
also set out specifically in other sections the taking of evidence, the language of the proceedings, time limits for submissions, the necessity of an oral hearing and the appointment
of experts. Such discretion guarantees the necessary flexibility in shaping the proceedings in
light of the specific exigencies of the dispute at issue. Furthermore, the wide discretion also
has the effect that challenges to the final award based on alleged procedural mistakes are very
difficult to establish. This is reinforced by the fact that, under German law, deviations from an
agreed procedure will only justify the setting aside of an award or the refusal of its recognition
if this presumably affected the award.68
D.
Limited Court Intervention and Swift Court Proceedings
41 1026 ZPO expressly limits the extent of court intervention to the instances regulated in the
10th Book. There is no inherent jurisdiction of the courts to supervise the arbitral proceedings or even their outcome. No review of the awards on the merits is possible and German
courts have been very cautious in making use of the few supervisory powers granted to them.
42 Furthermore, the various court proceedings in support and in supervision of the arbitral
proceedings are regulated in such a way so as to ensure that they are conducted in a fast and
efficient manner. Pursuant to 1062 ZPO, the jurisdiction for nearly all arbitration-related
proceedings is concentrated in the Higher Regional Courts (Oberlandesgericht OLG);69
most Federal States (Bundeslnder) have assigned one senate at a particular Higher Regional
Court to deal with these matters.70 Only assistance in taking evidence and other judicial acts
are left to the Local Courts of first instance (Amtsgericht AG), which are usually closer
to the parties. All decisions are taken in the form of an order with the consequence that,
generally, no oral hearing is required (1063 (1) ZPO).71 In addition, to limit the potentially disruptive effects of court proceedings, they are usually restricted to one instance. At
the pre-award stage, complaints on points of law (Rechtsbeschwerde) to the Federal Court
of Justice (Bundesgerichtshof BGH) are limited to actions relating to the admissibility or
non-admissibility of arbitral proceedings or the determination of the tribunals jurisdiction.
Even in these cases, the remedy is, pursuant to 1065, 574 (1), (2) ZPO, admissible only if
it is either of primary importance or necessary to develop the law or a decision of the Federal
Court of Justice is required to ensure consistent jurisprudence.
E.
Jurisdiction and Early Determination of Tribunals Jurisdiction by the Courts
43 Challenges to the tribunals jurisdiction are a common occurrence in arbitration. Under the
previous German arbitration law, parties could also refer disputes regarding the tribunals
68
69
70
71
OLG Braunschweig 12.05.2005, SchiedsVZ 2005, 262; OLG Celle 19.02.2004, OLGR Celle 2004, 396;
OLG Mnchen 22.06.2009, SchiedsVZ 2010, 169; OLG Frankfurt 17.02.2011, SchiedsVZ 2013, 49; for
details see Part II, Krll/Kraft, 1059 paras67 et seq.
The underlying rationale for proceedings relating to arbitration being initiated before these Courts of
Appeal is that the function of the first instance is performed by the arbitral tribunal; see the official report
A list may be downloaded from the website of the DIS <www.dis-arb.de>.
Cf. 128 (4) ZPO.
19
jurisdiction to arbitration for a final determination.72 It becomes clear from the legislative
materials and has been confirmed by the Federal Court of Justice that this possibility no
longer exists and courts are not bound by the tribunals determinations in relation to its
own jurisdiction.73 While the tribunal has the power to rule on its own jurisdiction (Kompetenz-Kompetenz), the final decision now lies with the courts. That entails the risk that the
parties spend time and money in arbitral proceedings only to find out at the post-award stage
that the tribunal lacked the necessary jurisdiction. The German legislature and the courts
have tried by several means to minimize this risk and to ensure a final decision on the tribunals jurisdiction by the courts at an early stage. The most obvious tool is the introduction
into German law of 1032 (2) ZPO, according to which a party may, prior to the constitution of the tribunal, i.e. until the last arbitrator has been appointed,74 apply to the courts
to determine the admissibility or non-admissibility of arbitral proceedings. Furthermore,
Articles 17 and 8 ML have been adopted with a slightly amended wording, showing a clear
preference for an early decision by the courts on the tribunals jurisdiction. Thus, courts have
always engaged in a full review of the arbitration agreement when its existence and validity
became an issue in proceedings in the context of 1032 ZPO. Unlike in other countries,
the right of the tribunal to engage in the first comprehensive review of its jurisdiction has
never been accepted.75 There is no negative Kompetenz-Kompetenz. At the same time, a party
must challenge a preliminary ruling in which the tribunal confirmed its jurisdiction within
the one month provided for in 1040 (3) ZPO. Contrary to the situation in other countries,
a party cannot wait until the final award on the merits is rendered and then invoke the lack of
jurisdiction in setting aside proceedings.76
F.
Prevention of Delay and Obstructive Behaviour
The German arbitration law contains several provisions to prevent parties or party appointed 44
arbitrators from engaging successfully in delaying tactics or obstructive behaviour. Firstly, the
various fall-back provisions contained in 1034 et seq. ZPO ensure that the arbitral tribunal
may be constituted despite a partys failure to cooperate or to take the necessary steps in the
appointment proceedings. The required appointments will then be made by the courts, not
only in cases where the place of arbitration is in Germany, but also in cases where it has not
yet been fixed.77 Secondly, 1048 ZPO provides explicitly for default proceedings where
72
73
74
75
76
77
BGH 05.05.1977, BGHZ 68, 356 (366); id. 26.05.1988, NJW-RR 1988, 1526; Ahrendt, Der Zustndigkeitsstreit im Schiedsverfahren, Tbingen 1996, pp.18 et seq.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.44; BGH 13.01.2005, SchiedsVZ 2005, 95=
NJW 2005, 1125.
BayObLG 10.12.1998, RPS 1/99, 18; id. 09.09.1999, RPS 1/2000, 16 with note by Sessler, p.9; Schroeter,
Antrag auf Feststellung der Zulssigkeit eines schiedsrichterlichen Verfahrens, SchiedsVZ 2004, 288
(290 et seq.).
See, in particular, BGH 13.01.2005, SchiedsVZ 2005, 95; different views exist whether a full review is also
justified in case of a challenge to the arbitration agreement in actions in support of arbitration; in favour
of full review in appointment proceedings see OLG Naumburg 16.09.2005; only prima facie review OLG
Mnchen,15.11.2012; cf. on the issue of jurisdiction Krll/Kraft, Ten Years of UNCITRAL Model Law in
Germany, (2007) World Arbitration and Mediation Review 439 (452 et seq.).
BGH, 27.03.2003, SchiedsVZ 2003, 133; for the opposite view see Singapore Court of Appeal, PT First
Media TBK v. Astro Nusantara International BV and others [2013] SGCA 57.
In this respect, the Model Law has been supplemented to ensure also that in the cases where the place of
arbitration has not yet been fixed, the arbitration agreement cannot be frustrated by non-participation in
the appointment process. In their pro-arbitration attitude, German courts have interpreted the provision
20
one party does not take the necessary steps in the arbitral proceedings. Though the failure
of the respondent to submit its defence shall not in itself be treated as an admission of the
claimants allegations, the tribunal may, however, continue the proceedings and make the
award based on the evidence before it. The same applies to all other failures to take the steps
required in the proceedings. Thirdly, and consistently with the second point, the tribunal
may, pursuant to 1046 (2) ZPO, exclude any belated amendments or additions to claims
and defences that may lead to additional delay.78 Fourthly, the potential for derailment of
the arbitral proceedings through court proceedings has been limited by various means. In
particular, arbitral proceedings may be commenced, continued and an award rendered irrespective of the fact that the admissibility of the proceedings, the tribunals jurisdiction or the
impartiality of its members is challenged in court proceedings or that parallel proceedings on
the merits are pending in the courts.79 Furthermore, to limit the potentially disruptive effects
of court proceedings, arbitral proceedings are usually restricted to one instance. In addition,
pursuant to 1064 (2) ZPO, decisions declaring an award enforceable may themselves be
declared provisionally enforceable. Thus, even the initiation of a complaint on a point of law
to the Federal Court of Justice does not generally prevent the preliminary execution of the
award insofar as it is necessary to secure the applicants rights.
G.
Promotion of Amicable Solutions
45 It is a salient feature of German arbitration practice that, during the proceedings, parties frequently agree on a settlement to their dispute. This is to a great extent due to the fact that, at
least in domestic arbitrations, the parties expect the arbitrators to promote, at an appropriate
time, an amicable settlement and play an active role in this process.80 Thus, when in their
view an appropriate time has come during the arbitral procedure, the arbitrators may ask the
parties whether they could be helpful in this regard. If the parties then agree, the arbitrators
may discuss this further with the parties and suggest an amicable settlement.81
46 According to 1053 ZPO, such a settlement may be recorded in the form of an award on
agreed terms, if so requested by the parties. This frequently occurs in practice and the tribunal
may only refuse to issue an award on agreed terms if the content of the settlement is in violation of public policy (ordre public), including the non-arbitrability of the dispute.82 Awards
on agreed terms shall have the same effect as any other award on the merits of the case and
are, in general, subject to the same form requirements as any other award. Thus, the award
is enforceable according to 1060 and 1061 ZPO and may also be set aside under 1059
ZPO, if e.g. the settlement was obtained by fraud.83 If declarations contained in the award
78
79
80
81
82
83
very broadly, e.g. BayObLG 05.10.2004, SchiedsVZ 2004, 316, note by Wagner = (2005) Int.A.L.R. N-47
with note by Krll.
For details see Part II, Sachs/Lrcher, 1046 paras9 et seq.
See, in particular, 1032 (3), 1034 (2) sentence 3, 1037 (3), 1040 (3) ZPO,
In line with the practice in court proceedings several arbitration rules require explicitly that the arbitral
tribunal should encourage settlement at any stage of the proceedings; see s.32 (1) DIS Rules; RaeschkeKessler/Berger (1999), paras803 et seq.
Berger, Integration mediativer Elemente in das Schiedsverfahren, RIW 2001, 881 (886 et seq.); cf.
Raeschke-Kessler, The Arbitrator as Settlement Facilitator, Arb.Int. 2005, 523.
Mankowski, Der Schiedsspruch mit vereinbartem Wortlaut, ZZP 2001, 37 (61 et seq.); for a slightly
broader right of refusal Bilda, Beendigung des Schiedsverfahrens durch Vergleich: Probleme des Schiedsspruchs mit vereinbartem Wortlaut, DB 2004, 171 (174 et seq.).
BGH 02.11.2000, NJW 2001, 373 (374); for this case see also notes by Voit, Anmerkung zu BGH vom
02.11.2000, ZZP 2001, 351 et seq.; Krll, Geltendmachung der arglistigen Tuschung im Verfahren zur
21
on agreed terms would normally require notarization to be binding (such as the transfer of
immovable property), the award itself fulfils this requirement (1053 (3) ZPO).84
V.
The Arbitration Agreement
A.
Legal Nature and Necessary Contents
The arbitration agreement, as an indispensable prerequisite for all arbitrations, is defined 47

in 1029 (1) ZPO as an agreement by the parties to submit to arbitration all or certain
legal disputes which have arisen or which may arise between them in respect of a defined
legal relationship. The Federal Court of Justice has classified the arbitration agreement as a
substantive contract concerning procedural rights.85 It is procedural in its main effects: the
transfer of jurisdiction to the tribunal and the limitation of the jurisdiction of the courts. It is
contractual in its conclusion and resulting mutual obligations. As a consequence, its validity
will be determined both by procedural and by substantive law. While the former determines
the admissibility and the necessary form requirements, the other questions of its conclusion
are governed by substantive contract law.86
As to the minimum content of an arbitration agreement, German law imposes very few 48
requirements. It is only necessary that the parties intention to submit their disputes to arbitration and to opt out of state court proceedings can be clearly deduced from the agreement.
The further requirement of a defined legal relationship to which the agreement must relate
is interpreted so broadly that it poses no problems in practice.87 The necessary details such as
the number of arbitrators, their appointment or the place of arbitration are provided for by
the 10th Book or the applicable institutional rules. Thus, courts have enforced minimalistic
agreements such as Arbitration: Hamburg.88 Furthermore, courts have usually made considerable efforts to give a workable meaning to vague or inconsistent arbitration agreements
referring, for example, to non-existing institutions such as the German Central Chamber of
Commerce,89 or agreements which were seemingly in conflict with other dispute resolution
clauses.90
84
85
86
87
88
89
90
Vollstreckbarerklrung, WUB 2001, 351.

For details, see Part II, von Schlabrendorf/Sessler, 1053 paras38 et seq.; cf. Part II, Krll, 1060 para.9 for
the controversy concerning entries into public registers.
BGH 30.01.1957, BGHZ 23, 198 (200); for an analysis of the jurisprudence on the arbitration agreement
see Krll/Kraft, Ten Years of UNCITRAL Model Law in Germany, (2007) World Arbitration and Mediation Review 439 (457 et seq.).
In the literature, the view that the arbitration agreement is a procedural contract is gaining ground; see, for
example, Wagner (1998), pp.578 et seq.; Reithmann/Martiny-Hausmann(2010), para.3218; Geimer, Das
Schiedsvereinbarungsstatut in der Anerkennungsperspektive, IPRax 2006, 233.
OLG Bremen 28.06.2006, SchiedsVZ 2007, 51 = (2007) Int.A.L.R. N-20.
OLG Hamburg 11.03.2003, SchiedsVZ 2003, 284; OLG Brandenburg 12.02.2001 (unpublished); OLG
Dresden 26.10.2004.
KG Berlin 15.10.1999, RPS 1/2000, 12 = Yearbook XXVI (2001), 328 = (2000) Int.A.L.R. N-70 =
CLOUT 373; cf. OLG Kln 26.10.2004, SchiedsVZ 2005, VI; OLG Frankfurt 24.10.2006; but see also
for a case where the agreement was invalid since it was not possible to determine which institution was
chosen BayObLG 28.02.2000, RPS 1/2000, 15 = (2002) Int.A.L.R. N-41.
BGH 12.01.2006, SchiedsVZ 2006, 52; BGH 25.01.2007, IHR 2007, 78; OLG Hamm 27.09.2005, IHR
2006, 261 = Yearbook XXXI (2006), 685; cf. Krll, Pathological arbitration agreements before German
Courts, IHR 2006, 255.
22
B.
Separability
49 Arbitration agreements may, pursuant to 1029 (2) ZPO, either take the form of a separate
agreement or be included in a contract as one clause among others. Even in these latter cases,
the arbitration clause is considered to be a separate contract, independent from the main
contract in which it is included. 1040 (1)ZPO provides explicitly that for the purpose
of the tribunals jurisdiction an arbitration clause which forms part of a contract shall be
treated as an agreement independent of the other terms of the contract. Thus, the termination, repudiation or initial invalidity of the main contract in itself does not affect the validity of
the arbitration agreement. In general, even the joint termination by all parties of a contractual
relationship is not interpreted as extending to the arbitration clause. Rather, the arbitration
clause is considered to retain its validity for all disputes which arise at a later stage out of the
terminated relationship.91 This separability does not, however, exclude that both agreements
may be affected by the same defect. In particular, lack of consent to the main contract will, in
general, also affect the arbitration agreement included in it.
C.
Form Requirements
1.
Form Requirements of 1031 ZPO
50 1031 (1) ZPO provides that the arbitration agreement:

shall be contained either in a document signed by the parties or in an exchange of
letters, telefaxes, telegrams or other means of telecommunication which provide a
record of the agreement.
51 While this wording is a literal adoption of Article 7 (2) sentence 2 ML, the form requirements of the German arbitration law are in fact much more lenient than those of the original
version of the Model Law.92 1031 (2) ZPO abolishes for a number of cases the necessity of
a double written form contained in the exchange requirement and allows for the so-called
half written form. Pursuant to that provision, the form requirement of subsection (1) is also
deemed to have been complied with if the arbitration agreement is contained in a document
transmitted from one party to the other party, provided that, in accordance with common
usage, that document is considered to become part of the contract if no objection is raised.
Consequently, arbitration agreements concluded orally and confirmed later by one party in
a confirmation letter, not simply an invoice, will fulfil the form requirement.93 By contrast,
unilateral references to arbitration agreements concluded orally which do not make them
part of the contract do not suffice.94
91
92
93
94
OLG Koblenz 28.07.2005, SchiedsVZ 2005, 260 (261); that has to be distinguished from cases where a
new relationship was formed which does not provide for arbitration and where the question then arises
whether the existing arbitration agreement covers also the new relationship: denied in OLG Thringen
24.10.2012.
It is, however, stricter than the form requirement under Option I of the 2006 version of the Model Law.
See, OLG Hamburg 14.05.1999, OLGR 2000, 19; OLG Bremen 10.01.2002, where the arbitration clause
contained in a bill of lading sent to the other party was considered to be included into the charter party;
OLG Hamburg 25.01.2008, SchiedsVZ 2009, 71; KG Berlin 20.01.2011, SchiedsVZ 2011, 285 (arbitration clause included in the documents that were sent to the other party is valid, if the other party does not
object to it).
BGH 21.09.2005, SchiedsVZ 2005, 306; OLG Hamburg 07.08.2003, OLGR Hamburg 2004, 66; OLG
Mnchen 12.10.2009, SchiedsVZ 2009, 340.
23
The form requirement is also fulfilled, according to 1031 (3) ZPO, by a reference to general 52
conditions containing an arbitration clause in a contract complying with the form requirements of subsections (1) and (2), provided that the reference is such as to make that clause
part of the contract. Whether this is the case remains to be decided under the law applicable
to the arbitration agreement.95
Stricter form requirements are imposed by 1031 (5) ZPO when a consumer is involved. 53
In such case, the arbitration agreement must be contained in a separate document which
has been personally signed by the parties and which does not contain any other agreement,
unless it is notarized. Electronic signature is allowed.96
According to the prevailing view, arbitration agreements contained in articles of associations 54
of companies or other legal persons and organizations do not have to meet the form requirements of 1031 ZPO, as they are considered to fall within the ambit of 1066 ZPO.97 Their
inclusion into the relevant statutes or articles of association is therefore sufficient, even if the
statute is not signed by all members and no exchange of documents or records has taken
place.98
Generally, non-compliance with the form requirement will render the arbitration agreement 55
invalid. Pursuant to 1031 (6) ZPO, formal defects are cured where a party enters into the
argument on the substance of the dispute in arbitral proceedings without challenging the
formal validity of the agreement. A general challenge to the tribunals jurisdiction is not
sufficient to preserve the right of a party to rely on the formal invalidity of the arbitration
agreement.99
2.
Agreements Providing for Arbitration Abroad
Different views exist as to the form requirements relevant for German courts when they 56
have to decide on the formal validity of an arbitration agreement providing for a place of
arbitration outside Germany.100 1031 ZPO is not listed in 1025 (2) ZPO as one of the
provisions which are also applicable when the place of arbitration is abroad. It has been
submitted, in particular at the pre-award stage, that when the arbitration agreement is raised
as a defence in court proceedings, courts must refuse jurisdiction only when the arbitration
agreement meets the form requirements of Article II NYC. As this would impose de facto
higher form requirements for arbitration agreements in proceedings with a foreign place of
arbitration, others support an extension of the scope of application of 1031 ZPO to these
cases. A third view, which has been followed by the Federal Court of Justice in proceedings
to declare a foreign award enforceable under the New York Convention 1958, goes even
further. According thereto, an arbitration agreement providing for arbitration abroad is
95
96
97
98
99
100
See, for a reference to arbitration contained in conflicting general terms, OLG Frankfurt 26.06.2006;
on the whole issue, see Hanefeld/Wittinghofer, Schiedsklauseln in Allgemeinen Geschftsbedingungen,
SchiedsVZ 2005, 217 et seq.; cf. BGH 30.09.2010, SchiedsVZ 2010, 332.
See Part II, Trittmann/Hanefeld, 1031 para.27.
BGH 27.05.2004, SchiedsVZ 2004, 205 (207); Zller-Geimer (2012), 1066 para.2; for the opposite
view, see Schwab/Walter (2005), Chap.32 para.5.
OLG Hamm 10.02.1999, RPS 2/1999, 10; a different question is whether parties who have not consented
to a later amendment of the statute including an arbitration clause are bound by this clause; against the
binding force BGH 03.04.2000, NJW 2000, 1713; for details see Part II, Haas, 1066 paras31 et seq.; see
Part IV, Duve/Wimalasena, Arbitration of Corporate Law Disputes in Germany, paras100 et seq.
BGH 29.06.2005, SchiedsVZ 2005, 259.
See for a summary of the different views Epping (1999), pp.59 et seq.
24
formally valid if it conforms either to Article II NYC, 1031 ZPO or the form requirements
of the law determined by application of Article 11 Introductory Law to the German Civil
Code (Einfhrungsgesetz zum Brgerlichen Gesetzbuch EGBGB) the general conflict of
laws provision for the form of contracts.101 As a consequence of the reference to Article 11
EGBGB, an arbitration agreement is also considered to be formally valid if it either meets the
form requirements of the law governing the arbitration agreement or the form requirements
of the law of the place where the agreement was concluded. Thus, if either law allows for oral
arbitration agreements, they would have to be considered valid by German courts. In light
of this, the second view seems to be the best solution. It has the advantage of applying the
same form requirement to all arbitration agreements in Germany, irrespective of the place
of arbitration, which may not be fixed at the time the arbitration agreement was concluded.
D.
Parties to the Agreement
1.
No Restriction as to Parties State Parties
57 In principle, there are no restrictions as to which persons, natural or legal, may resort to
arbitration. Generally, unlike other legal systems, consumers in Germany may also submit to
arbitration and are only protected by special form requirements. For certain financial service
contracts, however, this right is limited by 37h WpHG to the time after the dispute has
arisen.
58 There are no restrictions for the state or its agencies to resort to arbitration, be it in domestic
or international cases. Arbitration agreements entered into by state parties are thus valid and,
additionally, considered to be a waiver of the defence of sovereign immunity from adjudication. Germany adheres to the doctrine of limited sovereign immunity, so that immunity
applies to acta de jure imperii only. At the same time, it does not extend to acta jure gestionis,
that is, to acts with a commercial background.102
59 The waiver contained in the arbitration agreement is not limited to the arbitral proceedings
in a narrow sense as such, but also extends to court proceedings related to the arbitration.
This also applies to proceedings that declare an award enforceable. The exequatur proceedings are as such not yet part of the execution proceedings. However, they belong to the
Erkenntnisverfahren, i.e. the proceedings to determine the existence of a right or claims. Thus,
state parties can neither invoke lack of jurisdiction if they have consented to arbitration, nor
does their potential immunity from execution play a role. 103
2.
Non-signatory Parties
60 Pursuant to the governing basic principle, an arbitration clause is binding only between the
parties to it.104 Third parties are considered to be bound only in exceptional circumstances,
either on the basis of a special contractual agreement with one of the parties or as a partys
101
102
103
104
BGH 21.09.2005, SchiedsVZ 2005, 306; OLG Mnchen 12.10.2009, SchiedsVZ 2009, 340; BGH
30.09.2010, SchiedsVZ 2010, 332.
See Part IV, Escher/Nacimiento/Weissenborn/Lange, Investment Arbitration and the Participation of State
Parties in Germany, paras69 et seq.
See KG Berlin 16.02.2001, SchiedsVZ 2004, 109; OLG Frankfurt 08.07.1999; for questions of immunity
from execution see section on execution below; cf. BGH 30.01.2013, SchiedsVZ 2013, 110.
For details see Part II, Trittmann/Hanefeld, 1029 paras 36 et seq. and for corporate issues see Part
IV, Duve/Wimalasena, Arbitration of Corporate Law Disputes in Germany, paras88 et seq.; Kreindler/
Schfer/Wolff (2006), para.173; OLG Dsseldorf 19.05.2006, SchiedsVZ 2006, 332 et seq.
25
successor by the operation of law.105 Examples are legal succession such as inheritance,106
assignment where the arbitration clause is held to be part of the right assigned, or accession
to a contract.107 The insolvency administrator and the executor of a will are also bound by an
arbitration clause concluded by the insolvent company108 or testator.
Beyond these cases, third parties are generally not considered to be bound by the arbitration 61
agreement. This also applies to different members of a group of companies which have their
own legal personality. German law does not recognize any doctrine of groups of companies
which goes beyond the ordinary rules of interpreting agreements.109
Arbitration is based on the agreement of the parties and any compulsion and absence of 62
consensus could be a basis for setting aside or for non-recognition of the award. It is therefore
generally accepted that the rules providing for joinder of parties in court proceedings do not
apply to arbitral proceedings.110
E.
Effects of the Agreement
1.
Jurisdictional and Contractual Effects
The main effects of the arbitration agreement are that it confers jurisdiction on the arbitral 63
tribunal and excludes the jurisdiction of state courts for the decision on the merits. A state
court must refuse jurisdiction and declare the court action as inadmissible if an arbitration
agreement is invoked by the defendant, unless the arbitration agreement is null and void,
inoperative or incapable of being performed (1032 (1) ZPO). The objection may be raised
until the beginning of the oral hearing on the merits, independent from time limits set by the
court for a submission of the statement of defence.111 This even applies where the defendant
has already submitted written pleadings on the merits without challenging the jurisdiction
of the court.
Beyond these jurisdictional effects, the arbitration agreement also has contractual effects.112 64
Each party is obliged to initiate arbitration for the settlement of disputes. A breach of this
obligation may lead to a claim for damages covering the expenses incurred in state court
proceedings.113 Furthermore, the parties are obliged to participate in good faith in the arbitral
proceedings which includes, in particular, the obligation to pay its share of an advance on
105
106
107
108
109
110
111
112
113
OLG Frankfurt 31.07.2006.

A case of general legal succession, see BGH 05.05.1977, BGHZ 68, 356 (359); BayObLG, BayObLGZ
1999, 255 (266 seq.).
BGH 02.03.1978, BGHZ 71, 162 (165); id. 20.03.1980, BGHZ 77, 33 (35); id. 03.05.2000, NJW 2000,
2346; id. 02.10.1997, NJW 1998, 371.
BGH 20.11.2003; OLG Frankfurt 31.07.2006.
Busse, Die Bindung Dritter an Schiedsverfahren, SchiedsVZ 2005, 118 (122); id., (2005) Int.A.L.R. 95;
Massuras, Dogmatische Strukturen der Mehrparteienschiedsgerichtsbarkeit, Frankfurt 1998, p. 257;
MnchKommZPO-Mnch (2013), 1029 para.53; Sachs, Erstreckung von Schiedsvereinbarungen auf
Konzernunternehmen, DIS-Materialien 2001, p.50.
On the whole issue of participation of third parties see Bckstiegel/Berger/Bredow (eds), Die Beteiligung
Dritter am Schiedsverfahren, Kln 2005.
BGH 10.05.2001, NJW 2001, 2176; for an English summary of the case see Krll, German Federal Court
of Justice: Missed Deadline Does not Bar Defendant From Invoking Existence of Arbitration Clause,
(2002) 17(4) Mealeys IAR 25 et seq.
Controversial; against such contractual effects Wagner (1998), pp.587 seq.
Sandrock, Schiedsort in Deutschland, Gerichtskosten in den USA: Sind letztere hier erstattungsfhig?,
IDR 2004, 106 (110).
26
costs. German courts have continuously held that this obligation can be enforced in summary proceedings on a documents only basis before state courts.114
2.
The Interpretation of the Arbitration Agreement and the Admissibility of Summary Court
Proceedings
65 Generally, arbitration agreements are interpreted broadly.115 The courts assume that the
parties did not want to submit different parts of the same dispute to different tribunals.
Furthermore, German law does not distinguish between right and remedy in the same way
as many common law systems. Thus, the arbitration clause in a contract generally also covers
related actions in tort.116
66 The parties intention in concluding the arbitration is also decisive for the question as to
whether the parties may rely on summary proceedings existing in state courts for the facilitated enforcement of claims which can be proven by documents, despite the arbitration
agreement. Pursuant to 592 et seq. ZPO, in such summary proceedings only defences
which can be proven by documents would be admissible at a preliminary stage, while all
other defences can only be raised in the subsequent main proceedings. The prevailing view is
that failing an agreement to the contrary, the arbitration agreement also excludes such summary proceedings and its effects are not restricted to the stage of the main proceedings.117
67 While this applies for the ordinary summary proceedings on a document only basis, the
arbitration agreement is generally not considered to also exclude the special summary court
proceedings for payment claims under cheques or bills of exchange. As such modes of payment would lose much of their attractiveness without the summary proceedings for enforcement, it is assumed that the parties, by concluding an arbitration agreement, did not want to
renounce the right to make use of the summary enforcement procedure but merely wanted
to refer the subsequent main proceedings, where all evidence is admissible, to arbitration.118
This leads, however, to numerous procedural problems, particularly with regard to the preliminary judgment and how it can be set aside in the arbitral proceedings.119
3.
Summary Proceedings for Recovery of Debt (Mahnverfahren)
68 An arbitration agreement does not prevent the parties from resorting to summary proceedings for the recovery of debt. Under German law, a creditor may file an application for a payment order (Mahnbescheid) with the local court. Particularly regarding undisputed claims,
such summary proceedings are a rapid and cost-efficient way for the creditor to either receive
114
115
116
117
118
119
OLG Frankfurt 07.10.2010, AG Dsseldorf 17.06.2003, SchiedsVZ 2003, 240; LG Bielefeld 21.10.2003;
for an obligation to inform the other party about a change of address OLG Dresden 15.03.2006, SchiedsVZ
2006, 166.
BGH 13.01.2009, SchiedsVZ 2009, 122; OLG Mnchen 13.10.2004, NJW 2005, 832; OLG Dsseldorf
27.02.2004, SchiedsVZ 2004, 161; KG Berlin 21.04.2008, NJW 2008, 2719; id. 03.09.2012, SchiedsVZ
2012, 337; OLG Mnchen 29.03.2012, SchiedsVZ 2012, 159.
BGH 24.11.1964, NJW 1965, 300; OLG Kln 19.12.2001; OLG Koblenz 15.06.2010, BeckRS 2010,
33238; OLG Kln 19.12.2011, BeckRS 2011, 26960.
BGH 12.01.2006, SchiedsVZ 2006, 101; OLG Celle 25.08.2005, SchiedsVZ 2006, 52; for a different view
see OLG Bamberg 19.05.2004, OLGR 2005, 79; see Wolf, Summarische Verfahren im neuen Schiedsverfahrensrecht, DB 1999, 1101 (1104); for a detailed analysis see Part II, Huber/Bach, 1032 para.42.
See BGH 28.10.1993, NJW 1994, 136; Stein/Jonas-Schlosser (2002), 1032 para.7.
Pursuant to Stein/Jonas-Schlosser (2002), 1029 para.23, the arbitral tribunal is empowered to set aside
the provisional judgment issued by the state court.
27
payment from the debtor or acquire an enforceable title.120 If the debtor objects, the default
summons and the entire proceedings are automatically transferred to the court having jurisdiction.121 Only after the opening of proceedings may the party seeking arbitration ask the
court to refer the parties to arbitration.122 The party must make this application before the
first court hearing on the merits of the dispute. Otherwise, silence may be interpreted as a
waiver of the arbitration agreement.123
VI. The Arbitral Tribunal

The possibility to tailor an arbitral tribunal in accordance with the specific needs and ele- 69
ments of the case is generally considered to be one of the major advantages of arbitration.
Consequently, German arbitration law allows for ample party autonomy in the composition
of the arbitral tribunal. As a rule, the parties are free to agree on the numbers of arbitrators
(1034 (1) ZPO), their qualifications and the procedure for their appointment (1035 (1)
ZPO), as well as their challenge (1037 (1) ZPO). German arbitration law imposes limitations only where it is necessary to ensure fair and equitable treatment of the parties.
A.
Appointment of Arbitrators
The parties are free to determine the number of arbitrators (1034 (1) ZPO) and may in 70
principle also agree on an even number of arbitrators or an umpire system. In the absence
of an agreement by the parties, the number of arbitrators shall be three (1034 (1) ZPO),
which is also the number provided for in the DIS Rules (Section3 DIS Rules). Under the
ZPO,124 the parties are free to determine the procedure of appointment (1035 ZPO). In the
absence of an agreement on an appointment procedure or where the agreed procedure fails,
1035 ZPO provides for a mechanism to ensure that the tribunal can be established and the
parties arbitration agreement enforced without further delay.125
The German arbitration law deviates from the equivalent provisions of the Model Law with 71
regard to the relevant sphere of application. 1034, 1035 ZPO are not only applicable in
cases where the place of arbitration is in Germany, but also where the place of arbitration has
not yet been determined and at least one of the parties has its place of business or habitual
residence in Germany.126
Given the importance of the composition of an arbitral tribunal, German law traditionally 72
puts great emphasis on an equal influence of the parties on the composition of the tribunal.
While under the old law pursuant to 1025 (2) ZPO pre-1998 an unequal influence on the
composition of the tribunal could even lead to the invalidity of the arbitration agreement,
the new law has supplemented the UNCITRAL Model Law by a provision to ensure equal
treatment of the parties in the composition of the tribunal. Pursuant to 1034 (2) ZPO, a
party may request the court to appoint the arbitrator in deviation from the nomination made,
120
121
122
123
124
125
126
Baumbach/Lauterbach (2013), 688 paras1 et seq.

Baumbach/Lauterbach (2013), 694 paras1 et seq.
Stein/Jonas-Schlosser (2002), 1032 para.7.
Zller-Geimer (2012), 1032 para.1.
For the appointment under DIS Rules see Part III, Bredow/Mulder, s. 12 paras1 et seq.
For details see Part II, Nacimiento/Abt/Stein, 1035 paras21 et seq.
To ensure that a tribunal can be constituted, courts have interpreted their powers in this regard broadly,
BayObLG 05.10.2004, SchiedsVZ 2004, 316 with note by Wagner as well as Krll in (2005) Int.A.L.R.
N-47.
28
or from the agreed nomination procedure, if the arbitration agreement grants preponderant
rights to one party with regard to the composition of the arbitral tribunal.127 In this regard,
it suffices that the requesting party has reason to believe that it is placed at a disadvantage
because the arbitral tribunal may not be balanced due to the predominance of the other
party.128 The application must be filed within two weeks after obtaining knowledge of the
composition of the arbitral tribunal (1034 (2) ZPO). Where the party is represented by
counsel, the time begins to run when counsel acquires this knowledge.129
73 German law does not require any specific qualifications for arbitrators. However, it does
require that the arbitrator be independent and impartial (1037 ZPO). Neither is it required
that the arbitrator be admitted to the bar. In practice, however, the parties increasingly tend to
choose persons with a legal background as arbitrators. Section2.2 DIS Rules explicitly provides that a sole arbitrator or the chairman of the tribunal must be a lawyer, unless otherwise
agreed by the parties. Furthermore, some of the arbitration rules of the specialized arbitration
organizations, particularly in the commodity sector, require that the arbitrator must be on
their list of arbitrators or be a member of that organization.130 No restrictions apply as to the
nationality or residence of arbitrators so that foreigners may be appointed without limitation.
Judges and civil servants may also act as arbitrators. They are in practice, especially in domestic cases, frequently appointed subject to the prior approval by the competent supervising
authority. Such permission is generally granted to civil servants, provided that the fulfilment
of their duties is not impeded. As for judges, 40 (1) German Law on Judges (Deutsches
Richtergesetz DRiG) imposes stricter requirements for active judges.131 An authorization
may not be lawfully given to an active judge who was not appointed by both parties, as required by 40 (1) sentence 2 DRiG. Because active judges must act under all circumstances
so as to preserve confidence in their independence, such appointment must be based on a
mutual agreement of both parties or derive from a neutral appointing authority.132
127
128
129
130
131
132
BGH 01.03.2007, SchiedsVZ 2007, 163; OLG Celle 04.11.1999, OLGR 2000, 57, ruled that the requirements of 1034 (2) ZPO are not fulfilled if the arbitrator has been nominated by one party in the
general terms and conditions that were part of the contract, see very critical comment by Mankowski, Zur
formularmigen Schiedsrichterbenennung, EWiR 2000, 411 et seq.; Krll, Das neue deutsche Schiedsverfahrensrecht vor staatlichen Gerichten: Entwicklungslinien und Tendenzen 1998-2000, NJW 2001,
1173 (1178); for details see Part II, Nacimiento/Abt/Stein, 1034 paras15 et seq.
Critical issues arise in particular with regard to arbitration governed by the rules of associations (Verbandsschiedsgerichtsbarkeit), see in detail Part II, Nacimiento/Abt, 1034 paras 16 et seq.; LG Bonn
03.11.1995, NJW 1996, 2168.
Stein/Jonas-Schlosser (2002), 1034 para.7; for the irrelevance of the knowledge of secretary or other
non-legal staff OLG Mnchen 07.08.2006, SchiedsVZ 2006, 286 = GmbHR 2006, 1269.
See on that BayObLG 24.02.1999, BayObLGZ 1999, 55; cf. 4 (2) Arbitration Rules Waren-Verein
Hamburger Brse.
As to the consequences of a missing authorization see Nacimiento/Geimer, Eins zu Null fr die Verbandsschiedsgerichtsbarkeit des Deutschen Fuballbundes, SchiedsVZ 2003, 90; for details see Part II,
Nacimiento/Abt/Stein, 1035 paras13 et seq.
See KG Berlin 06.05.2002, SchiedsVZ 2003, 185 et seq. with note by Mecklenbrauck; the court held that
arbitral proceedings were inadmissible due to impossibility where the arbitration clause provided for an
arbitral tribunal consisting of three judges and the parties were not able to find a mutual agreement on the
choice of the arbitrators.
B.
29
Challenge and Dismissal of Arbitrators
Pursuant to 1036 (2) ZPO, an arbitrator may be challenged if either circumstances exist 74
that give rise to justifiable doubts as to his impartiality or independence or if he does not
possess the qualifications agreed upon by the parties. Therefore, it is not required that the
arbitrators partiality or lack of independence be established, but rather that sufficient objective grounds exist on which to base the concern that the arbitrator may lack the required
impartiality and independence.133 In determining whether such doubts exist, courts have
taken the various grounds in 41 ZPO regarding the exclusion of judges in court proceedings as a starting point and guideline.134 Not surprisingly, substantial case law exists based
on individual cases.135 Confidence in an arbitrator often requires previous contacts with that
person, such that this provision is to be interpreted narrowly.136 Irrespective of that, doubts
as to the impartiality of an arbitrator exist in all cases where a close relative is involved137
or where the arbitrator or an attorney of the law firm to which he belongs is acting at the
same time as a lawyer for or against a party.138 By contrast, previous activities may not be
sufficient.139 The same applies to joint memberships in professional organizations or clubs.140
Abstract legal statements related to the issue in dispute and which have been published by the
arbitrator prior to the arbitral proceedings are not sufficient unless the statements concern
the specific matter in dispute.141 Settlement proposals by an arbitrator are not considered as
grounds for partiality of arbitrators. Rather, arbitrators have the right to encourage the parties
to settle at any stage of the proceedings, provided however that both parties agree to settlement negotiations.142 The DIS Rules even explicitly provide in Section 32 DIS Rules that the
arbitral tribunal should seek to encourage an amicable settlement of the dispute, unless the
parties have agreed otherwise. The specific manner in which a challenged arbitrator responds
to the challenge by a party may constitute independent grounds for challenge.143
133
134
135
136
137
138
139
140
141
142
143
BGH 18.04.1980, BGHZ 77, 70 (72); OLG Naumburg 19.12.2001, SchiedsVZ 2003, 134 et seq.; KG
Berlin 07.07.2010, SchiedsVZ 2010, 225; OLG Mnchen 03.01.2014, BeckRS 2014, 01198.
However, 41 ZPO does not apply directly, OLG Karlsruhe 04.07.2006 10 Sch 02/06; OLG Frankfurt
13.02.2012, available at <www.juris.de> (concerning 1036 (2) ZPO and Section 18.1 of the DIS Rules).
For details see Part II, Nacimiento/Abt/Stein, 1036, generally paras25 et seq. and especially 35 et seq.
OLG Mnchen 05.07.2006, BauR 2006, 1799; OLG Frankfurt 10.01.2008, SchiedsVZ 2008, 199; KG
Berlin 07.07.2010, SchiedsVZ 2010, 225; for details see Part II, Nacimiento/Abt/Stein, 1036 paras28 et
seq. and also para.15.
OLG Frankfurt 27.04.2006, SchiedsVZ 2006, 330 et seq.; by contrast, the fact that one arbitrator was
the godparent of an attorney in the law firm representing one of the parties does not suffice, see OLG
Mnchen 05.07.2006, BauR 2006, 1799.
See detailed reasoning of arbitral tribunal in the DIS proceedings DIS-SV-217/00, SchiedsVZ 2003, 94 et
seq.
OLG Hamburg 11.03.2003, SchiedsVZ 2003, 191; cf. OLG Hamm 22.07.2003, MDR 2004, 109 (irrelevant that person named as arbitrator in several arbitration clauses); OLG Hamburg 12.07.2005,
SchiedsVZ 2006, 55 et seq.
OLG Naumburg 19.12.2001, SchiedsVZ 2003, 134; OLG Frankfurt 04.10.2007, SchiedsVZ 2008, 96;
Mankowski, Die Ablehnung von Schiedsrichtern, SchiedsVZ 2004, 304 (306); Krll, Die Ablehnung
eines Schiedsrichters nach deutschem Recht, ZZP 2003, 195 (204 et seq.).
Stein/Jonas-Schlosser, 1036 para.25; Lachmann (2008), para.1011.
Raeschke-Kessler/Berger(1999), paras475 et seq; see also OLG Frankfurt 27.04.2006, SchiedsVZ 2006,
329 and cf. OLG Mnchen 03.01.2008, SchiedsVZ 2008, 102.
OLG Bremen 24.05.2006, (2006) Int.A.L.R. N-65 referring to disapproving comments by the challenged
arbitrator vis--vis the challenging counsel.
30
75 1036 (1) ZPO establishes the arbitrators duty to disclose any circumstances that might
cause doubts as to his impartiality or independence. The aim of this procedure is to provide
the parties with the opportunity to find out whether persons chosen as arbitrators are prepared and suitable to take up the function proposed. Although disclosure does not automatically mean that a ground for rejection exists,144 some courts, however, have severely enforced
such obligation because they held it to be a pillar of arbitration.145
76 Under 1037 (1) ZPO, the procedure for challenges is to a large extent submitted to party
autonomy. In the absence of an agreement by the parties, a challenge must be notified in
writing and with reasons to the arbitral tribunal within two weeks after the constitution
of the arbitral tribunal or after any new circumstances in this regard become known to the
party intending to challenge. The arbitral tribunal, including the challenged arbitrator,146
shall decide on the challenge unless the challenged arbitrator withdraws from his office or
the other party agrees to the challenge. If, however, the arbitral tribunal decides to reject the
challenge, the challenging party may, within one month after having received notice of the
decision rejecting the challenge, request the state court having jurisdiction to decide on the
challenge (1037 (3) ZPO).147 The challenge procedure under the DIS Rules (Section18.2
DIS Rules) is identical to that in German law, while under other institutional rules it is the
institution which decides on the challenge.
77 Under 1038 (1) ZPO, an arbitrator can be dismissed from his office if it is legally or factually impossible for him to perform his functions as an arbitrator or he does not perform his
functions without undue delay.148 If the arbitrator does not resign from office and the parties
cannot agree to dismiss him, each party may apply to the state court having jurisdiction to
decide on the termination of the mandate. Although the law does not provide for a specific
time period, an application may be rejected if it is not brought within a reasonable time.149
C.
The Arbitrators Contract
78 The arbitrators contract is to be distinguished from the arbitration agreement and the appointment of the arbitrator.
79 The arbitrators contract is a multilateral contract binding the arbitrator, the party who has
nominated him, as well as the other party or parties.150 It is not subject to any form requirements151 and deals with the respective obligations of the arbitrators and the parties vis--vis
each other. Its legal nature is highly disputed. In any event, there are only minor practical
differences.152 Under the prevailing opinion, the contract with the arbitrator is to be qualified
as an agency contract (Geschftsbesorgungsvertrag, 675 BGB).153
144
145
146
147
148
149
150
151
152
153
Stein/Jonas-Schlosser (2002), 1036 paras35 et seq.

OLG Karlsruhe 14.07.2006, (2007) Int.A.L.R. N-36 German full text available at <www.dis-arb.de>.
It is irrelevant for the decision of the court if the challenged arbitrator nevertheless abstains from the
decision on the challenge, see OLG Mnchen 06.02.2006; OLG Hamm 07.03.2002, SchiedsVZ 2003, 79.
The court proceedings are admissible only if prior challenge proceedings have taken place before the
arbitral tribunal, OLG Dresden 22.02.2001, BB 2001, Beilage No. 6, p.18; OLG Mnchen 28.06.2006.
See examples in OLG Mnchen 23.10.2006.
Stein/Jonas-Schlosser (2002), Vor 1025 para.8; MnchKommZPO-Mnch (2013), Vor 1034 para.12.
MnchKommZPO-Mnch (2013), Vor 1034 para.13; Musielak-Voit (2013), 1035 para.22.
Musielak-Voit (2013), 1035 para.20; Baumbach/Lauterbach (2013), Anh 1035 para.1.
Baumbach/Lauterbach (2013), Anh 1035 para. 1; Thomas/Putzo-Reichold (2013), Vorbem 1029
para.8; Stein/Jonas-Schlosser (2002), Vor 1025 para.7; cf. also Musielak-Voit (2013), 1035 para.20;
31
In arbitral proceedings administered by an arbitration institution, it might not be necessary 80

to enter into a separate arbitrators agreement because the main aspects, especially the costs,
are governed by the institutional rules. It is of utmost importance, however, in ad hoc proceedings where the parties need to agree on the main aspects of the proceedings, including
the financial side.
Consequently, the arbitrators contract should contain clear provisions on the remuneration 81
of the arbitrators. In the absence of applicable institutional fees, it is necessary to establish the
mode of the arbitrators remuneration.154 The arbitrators fees are usually paid at the beginning of the proceedings as an advance covering the whole of the expected fees and ancillary
costs. The parties are jointly and severally liable for the arbitrators fees.155
In return, the arbitrator is obliged to participate in the proceedings with his best efforts and 82
to promote a rapid conclusion of the dispute in accordance with the arbitration agreement.156
The arbitrators contract may also serve to clarify certain issues, such as the validity of the 83
arbitration clause and the correct constitution of the arbitral tribunal.
Additionally, other important procedural issues may be regulated in the arbitrators contract, 84
such as the place of hearings or agreements on the taking of evidence.
The arbitrators contract is terminated where he is replaced by the parties or resigns from of- 85
fice. If the arbitrator refuses to comply with his obligations and thereby resigns from his office
without good cause, he loses his right to remuneration (628 BGB) and may be liable for
damages.157 Generally, liability of arbitrators is limited to a breach of contract not related to
the material or procedural accuracy of the decision. Thus, the arbitrator is not liable because
of fault related to the decision, even in the case of gross negligence.158 The arbitrators contract
may establish other grounds for liability in the case of breach of contractual obligations deriving therefrom.159
VII. The Arbitral Procedure

A.
General Principles
Arbitral proceedings under German law are to a large extent governed by party autonomy. 86
1042 (3) ZPO provides that the parties shall be free to determine the procedure themselves
or by reference to a set of arbitration rules. Such party autonomy is limited by few mandatory
provisions contained in the 10th Book. The most important mandatory provision is 1042
(1) ZPO, which establishes that the parties shall be treated with equality and each party shall
be given a full opportunity to present its case. The latter requires, in particular, that a party is
informed in due time about the submissions of the other side and the facts upon which the
tribunal wants to rely, has sufficient time to present its own case and its submissions are taken
154
155
156
157
158
159
different opinions expressed by MnchKommZPO-Mnch (2013), Vor 1034 para. 5 (contract sui
generis); Schwab/Walter (2005), Chap. 11 para. 9 (two-sided contract with material and procedural
elements).
See Part II, Nacimiento/Abt, Introduction to 10341039, para.27.
Schwab/Walter (2005), Chap.12 para.10; Thomas/Putzo-Reichold (2013), Vorbem 1029 para.10.
Musielak-Voit (2013), 1035 para.23; Baumbach/Lauterbach (2013), Anh 1035 para.5.
Stein/Jonas-Schlosser (2002), Vor 1025 para.15; MnchKommZPO-Mnch (2013), Vor 1034 para.28.
Musielak-Voit (2013), 1035 para.25; Schwab/Walter (2005), Chap.12 para.9.
Cf. Thomas/Putzo-Reichold (2013), Vorbem 1029 para. 9; Stein/Jonas-Schlosser (2002), Vor 1025
para.16.
32
into account by the tribunal when making its decision.160 Furthermore, counsel may not be
excluded from acting as an authorized representative. Other mandatory provisions include
the constitution of the arbitral tribunal and the parties right under 1040 (3) ZPO to request
judicial review by a state court of an arbitral tribunals decision to confirm its jurisdiction.
87 Apart from such restrictions, the parties may freely determine all other procedural rules, such
as the commencement of the arbitral proceedings (1044ZPO), the language of the proceedings (1045 ZPO), time limits for the statements of claim and defence (1046 ZPO),
whether an oral hearing shall take place or the proceedings shall be on a documents only
basis (1047 ZPO), the effect of a default of one party (1048 ZPO) and the appointment
of experts (1049 ZPO). In practice, such choice is often made by the submission of the parties to institutional arbitration or by a choice of at least the basic rules in the ad hoc arbitration
agreement. In these cases, the tribunal is bound to follow the procedure agreed upon and any
deviation may constitute a reason to challenge the award or to resist its enforcement.
88 In the absence of a specific agreement by the parties, the default rules contained in 1044
et seq. ZPO provide for a basic structure. Within this structure, however, the actual conduct
of the proceedings is left largely to the discretion of the arbitral tribunal.161 While for some
issues, such as the admissibility of amendments or supplements to claims or defences, the law
expressly indicates which considerations should play a role, all other cases are to be decided
within the discretion of the arbitral tribunal. It is common practice and advisable, especially
where parties from different legal backgrounds are involved, that the tribunal consults the
parties before taking any definitive decisions. In general, all procedural decisions of a certain
importance will be taken by the whole arbitral tribunal and if necessary by a majority vote.
This does not exclude the possibility to empower the chairman to independently address
procedural decisions of more weight.162
B.
Commencement and Conduct
89 Unless otherwise agreed by the parties, arbitral proceedings commence on the date a request
for arbitration is received by the respondent (1044 ZPO). Such request must contain the
names of the parties, the issue in dispute and reproduce the arbitration agreement. Like most
other institutional rules, Section4 DIS Rules provides that the proceedings commence on
the date when the request is received by the Secretariat of the DIS. Such request must contain, in addition to the requirements under 1044 ZPO, the nomination of an arbitrator or
the request that a sole arbitrator be nominated. As of the commencement of proceedings, the
running of limitation periods is suspended or interrupted.163
90 Subject to agreement by the parties, the arbitral tribunal shall decide whether to hold oral
hearings or whether the proceedings shall be conducted on the basis of documents and other
160
161
162
163
BayObLG 15.12.1999, RPS 2/2000, 16; OLG Hamburg 18.11.2003, OLGR Hamburg 2004, 244; OLG
Kln 03.06.2003; for details see Part II, Sachs/Lrcher, 1042 paras6 et seq. and Krll, 1061 paras70
etseq.; OLG Mnchen 07.05.2008, NJOZ 2008, 4808; id. 22.06.2009, SchiedsVZ 2010, 169; OLG Frankfurt 27.08.2009 26 SchH 3/09, BeckRS 2010, 25197.
The DIS Rules follow the same basic structure but are a little bit more detailed and explicit on certain
issues; for details see Part III.
The German legislator considered it superfluous to explicitly regulate the chairmans prerogative as to
these questions in the law, see Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.54.
204 (1) No. 11 BGB.
33
materials.164 A hearing must be held, however, if requested by one of the parties. Under the
general rule of preclusion (1027 ZPO), a party must object without undue delay to the
tribunals declared intention to proceed on a documents only basis.165
In the absence of an agreement by the parties, the language of the proceedings is determined 91
by the arbitral tribunal. The tribunal may also decide for more than one language, e.g. the
decision for a language might be limited to the submission of documents or the hearing of
witnesses.166 It is, however, consistent jurisprudence of German courts that parties which
have submitted to arbitration in a particular country must be aware that the proceedings
will be conducted in the language of this place of arbitration. If the party does not speak or
understand the language, it is for the party to ensure the necessary translations.167
C.
Security for Costs
There is no specific provision under German arbitration law providing for security for costs. 92
No unified practice is to be observed in Germany and the granting of security for costs may
be rather the exception. Nevertheless, given the general discretion of arbitral tribunals to
conduct the proceedings within the framework of the applicable rules, there is nothing to
prevent the arbitral tribunal from granting such security upon reasoned request of a party.168
D.
Evidence169
The taking of evidence is, like most other procedural issues, largely submitted to party au- 93
tonomy. In particular, the parties are free to decide whether the facts of the case should be
established in a continental-style or an Anglo-American style, whether there should be any
restrictions as to the admissible evidence, how it should be weighed and what standard of
proof the tribunal should apply. Instead of making these decisions directly, the parties may
also submit the whole process to a particular set of rules such as the IBA Rules on Taking
Evidence in International Arbitration. As they are specific, these rules would then prevail
over other more general arbitration rules in relation to evidence.
In the absence of a decision by the parties and specific legal provisions, the arbitral tribunal 94
has discretion to decide on the taking of evidence (1042 (4)ZPO). It is not bound by
the rules of evidence applicable in German state court proceedings. The arbitral tribunal,
however, must respect the parties right to a fair hearing and the opportunity for each to
present its case.170 1042 (4) ZPO and the few provisions in the German arbitration law
dealing with evidentiary matters are obviously based on the assumption that the tribunal
will adopt a more continental-style procedure of actively managing and conducting the
164
165
166
167
168
169
170
Thus, written submissions also become part of the proceedings even if the parties have not explicitly
referred to them in an oral hearing; cf. BGH, 23.02.2006, SchiedsVZ 2006, 161.
OLG Naumburg 21.02.2002, NJW-RR 2003, 71.
See OLG Kln 16.12.1992, Yearbook XXI (1996), 535 (539) (decided under the old law but still valid).
OLG Celle 02.10.2001; cf. BayObLG 09.11.2004, where the parties had, however, agreed on a certain
language; OLG Mnchen 18.10.2010 34 Sch 18/09..
Stein/Jonas-Schlosser (2002), 1057 para.17; Karrer/Desax, Security for Costs in International Arbitration, in: Briner et al. (eds), FS-Bckstiegel, 2001, p.339 (34); Haase, Das Erfordernis der Prozesskostensicherheit i.S.d. 110 ZPO im schiedsgerichtlichen Verfahren, BB 1995, 1252 et seq.
For a detailed discussion see Part II, Sachs/Lrcher, 1042 paras 36 et seq.
Cf. OLG Hamburg 16.09.2004; in this respect confirmed by BGH 29.06.2005, SchiedsVZ 2005, 259.
34
evidentiary proceedings instead of observing passively the adversarial efforts of the parties.171
This includes the decision on whether the evidence submitted is relevant for the outcome
of the dispute and whether evidence is to be taken at all.172 However, that does not allow the
parties to remain inactive; they must still discharge the burden of introducing all the facts
and circumstances relevant to the case into the proceedings. Parties must offer the pertinent
means of evidence.173
95 Generally, there are no restrictions as to the admissibility of evidence. However, problems as
to the admissibility of specific evidence may arise in instances where evidence was obtained
in violation of the right to privacy or any other fundamental right. In these cases, arbitral
tribunals should assess whether the protected right prevails over a partys right to present its
case with all means available.174
96 In the absence of any specific agreement of the parties, the arbitral tribunal, in exercising its
general procedural discretion, also determines how the hearing of witnesses is conducted.
This covers questions as to whether cross-examination will be allowed or written witness
statements shall be provided before the hearing. The same applies in relation to other written
evidence. The arbitral tribunal has no power to compel witnesses or parties to appear and
cannot administer oaths. It may only draw negative inferences from the non-appearance of
a witness or apply to the court for assistance in taking evidence. Concerning the production
of documents, arbitrators are not bound by the restrictions existing in court proceedings for
such requests to produce documents directed to the other party. By contrast, tribunals may,
and do in practice, allow for much broader requests for documents, which may come close to
a limited version of an English-style disclosure of documents.
97 In principle, the tribunal may also rely on its own knowledge in determining the relevant
facts. German courts have consistently held that, in light of the fact that arbitrators are chosen
for their expertise, the restrictions on the use of private knowledge in court proceedings do
not apply to arbitration.175 However, the tribunal must ensure that the right to a fair hearing is
not violated. Thus, it should inform the parties that it wants to rely on its own knowledge and
provide the parties with a chance to respond.176
98 Unless the parties have agreed otherwise, the arbitral tribunal has the power, pursuant to
1049 (1) ZPO, to appoint independent experts on specific issues to be determined by it.
No prior consent of the parties is necessary for such an appointment.177 After delivery of the
experts written or oral report, the parties will usually have the opportunity to put questions
to him, challenge his findings or to present expert witnesses themselves in order to testify on
the points at issue. In acknowledgement of the importance of the experts determinations,
171
172
173
174
175
176
177
See Knoblach, Sachverhaltsermittlung in der internationalen Wirtschaftsschiedsgerichtsbarkeit, Berlin

2003, p.82.
OLG Karlsruhe 27.03.2009 10 Sch 8/08, BeckRS 2011, 08009; OLG Mnchen 29.02.2012, SchiedsVZ
2012, 96.
OLG Naumburg 21.05.2004; OLG Hamburg 31.07.2003, OLGR Hamburg 2004, 97; see also under the
old law OLG Kln 16.12.1996, Yearbook XXI (1996), 535 (540).
See OLG Bremen 10.11.2005, (2007) Int.A.L.R. N-18, where the setting aside of an award allegedly
based on unauthorized video taping was refused since the tribunals solution was only in part based on
this evidence.
BGH 12.12.1963, NJW 1964, 593 (595).
BGH 08.10.1959, BGHZ 31, 43 (46); id. 12.12.1963, NJW 1964, 593; id. 03.07.1975, BGHZ 65, 59
(63); id. 11.11.1982, BGHZ 85, 288 (291), id. 29.09.1983, WM 1983, 1207 (1208).
OLG Koblenz 19.02.2004.
35
the expert appointed by the tribunal is subject to the same requirements as an arbitrator
concerning his independence and impartiality.178
E.
Record of Oral Hearing
There is no typical German-style recording of a hearing. The type of record is one of the is- 99
sues that should be agreed among the parties and the arbitral tribunal as soon as it is feasible.
The types found in practice range from the chairman dictating a summary of the oral witness
testimony and having it approved by the parties over the mere tape recording of the witness
presentation up to live notes prepared by a court reporter. Information on court reporters
may be obtained from the DIS. Generally, very few court reporters are available in Germany,
in particular if the record is to be made in a language other than English.
F.
Default Proceedings179
German arbitration law provides for different measures for counteracting delaying tactics 100
and obstruction. On the rare occasion of a claimants failure to submit a statement of claim
after having initiated arbitral proceedings, the arbitral tribunal must terminate the proceedings (1048 ZPO). This is done by an order without res judicata effect. The proceedings may
be continued where respondent fails to submit its statement of defence (1048 (2) ZPO),
when any party fails to appear at an oral hearing or to produce documentary evidence by a set
time limit (1048 (3) ZPO). A further measure to react to delay is provided by 1046 (2)
ZPO, where late supplements or amendments may be considered as inadmissible. 1048
(4) ZPO, however, grants the parties the possibility to justify any delay to the tribunals
satisfaction.
G.
Representation and Legal Assistance
As far as the representation in arbitral proceedings is concerned, German law contains only a 101
single but mandatory provision. Pursuant to 1042 (2) ZPO, counsel may not be excluded
from acting as authorized representative. Agreements to the contrary, even when concluded
after the dispute has arisen, are not valid and cannot be enforced. This does not, however,
imply that a party must be represented by counsel in arbitral proceedings. Parties are free to
represent themselves in the proceedings or to be represented by non-lawyers.180 However,
the latter may be excluded by the tribunal or an agreement of the parties, as the prohibition of
1042 (2) ZPO extends only to counsel. There is no requirement that counsel be admitted
to the local bar. The parties may, therefore, be represented by foreign or German counsel. In
principle, a power of attorney is required, although in practice proof thereof is only required
if doubts arise in this respect. The same principles apply to proceedings on the basis of the
DIS Rules.
VIII. Interim Relief and Interim Measures of Protection181

German arbitration law provides for concurrent jurisdiction of arbitral tribunals and courts 102
for granting interim relief. This is meant to ensure that in all cases an effective protection
178
179
180
181
1049 (3) ZPO; OLG Koblenz 19.02.2004.

For a detailed discussion see Part II, Sachs/Lrcher, 1048 paras 1 et seq.
For the need for legal representation in the arbitration-related supportive or supervisory court proceedings see BGH 27.03.2002, IHR 2003, 43.
For a detailed discussion see Part II, Kreindler/Schmidt, 1033 as well as Schfer, 1041.
36
can be obtained. Accordingly, in the absence of agreements to the contrary, an application

for interim relief may be made to both the state court and the arbitral tribunal. An arbitration agreement does not, in and of itself, exclude the possibility that a state court may issue
interim relief either prior to or during the arbitration on the application of one of the parties
concerning the subject matter of the arbitration. The same holds true for arbitrations under
the DIS Rules. Possible conflicts between interim relief ordered by a state court and similar
orders by a private arbitrational tribunal are resolved by 1041 (2), 1062 (1) No.3 ZPO,
which provide that the competent Higher Regional Court can admit execution of interim
orders issued by an arbitral tribunal, unless the same party182 has already applied for such
relief to a Local Court (Amtsgericht AG) or Regional Court (Landgericht LG).
103 In practice, the majority of applications are probably still filed with the state courts.183 In particular, when the tribunal has not yet been constituted and when it is likely that the measure
will have to be enforced or ex parte proceedings are needed, state courts are generally the
more appropriate forum.184 However, they may only grant interim relief if the procedural
requirements of the relevant provisions of the ZPO are met, i.e. the court has jurisdiction185
and the ordinary prerequisites for interim relief are fulfilled. Thus, the applicant must show
that he has a substantive claim against the defendant and that his case is urgent. The standard
of proof to be applied is a preponderance of evidence and the measures may be granted ex
parte. Concerning the type of measures to be granted, courts are limited to those types of
attachment measures (Arrest) or interim injunctions (einstweilige Verfgung) which are provided for in 916 et seq.ZPO.
104 In contrast, the arbitral tribunal may, according to 1041 ZPO, order such interim or preventive measures as it considers necessary in respect to the subject matter of the dispute, unless
that power is excluded by the parties. This includes pre-award attachment orders186 as well as
orders as to what should happen to perishable goods, orders to give security in the form of
a bank guarantee or orders not to dispose of the property in dispute.187 Where the measures
ordered are not known in German courts, such as English-style freezing injunctions, they
will not be enforced by the courts but will be converted into measures in line with the German provisions for their enforcement. In exceptional cases, where effective legal protection
182
183
184
185
186
187

OLG Mnchen 26.10.2000, NJW-RR 2001, 711: The court ruled accordingly that at least until the constitution of the arbitral tribunal, the state courts are competent for granting interim measures of protection
since at this stage most arbitral tribunals will not be in the position to grant interim relief. Further court
orders in regard to interim relief are OLG Jena 24.11.1999, BB 2000, Beilage No. 12, p.22 and OLG
Koblenz 15.07.1998, MDR 1999, 502.
See OLG Mnchen 26.10.2000, NJW-RR 2001, 711.
See OLG Kln 12.04.2002, GRUR-RR 2002, 309; OLG Nrnberg 30.11.2004, SchiedsVZ 2005, 50
(international jurisdiction refused since decision on place of arbitration was considered to be a forum
selection clause in favour of the courts at that place); on this issue cf. Krll, Internationale Zustndigkeit
deutscher Gerichte fr einstweiligen Rechtsschutz bei auslndischem Schiedsort, IHR 2005, 142.
Prevailing view in deviation from the situation under the old law; see Bill of the Arbitration Law Reform
Act, BT-Drs. 13/5274, p. 45; Thringisches OLG 24.11.1999, BB 2000, Beilage No. 12, p. 22; Bandel
(2000), p.138.
On the various types of interim relief see Bandel (2000), pp.131 et seq.; Leitzen, Die Anordnung vorlufiger oder sichernder Manahmen durch Schiedsgerichte nach 1041 ZPO, Kln 2002, pp.37 et seq.;
Stein/Jonas-Schlosser (2002), 1041 paras3 et seq.; Schwab/Walter (2005), Chap.17a paras6 et seq.
37
cannot be granted otherwise, the tribunal may also order what is requested in the main
proceedings as an interim measure on a preliminary basis.188
In the case where the interim measure proves to have been unjustified from the outset, the 105
party who obtained its enforcement is liable to the other party for damages (1041 (4)
ZPO).
IX. The Arbitral Award

Pursuant to 1056 (1) ZPO, arbitral proceedings are terminated either by a final award or by 106
an order of the arbitral tribunal. The form of an order is generally used when the proceedings
are terminated without a decision on the claims submitted. In all other cases, the proceedings
should be terminated by a final award.
A.
Types of Awards
In addition to final awards, the tribunal may also render partial and interim awards.189 Partial 107
awards may be rendered where separate claims or parts of the claim can be decided finally so
as to focus the proceedings on the issues in dispute where a final decision is not yet possible.
Being final awards, they must meet the formal requirements of 1054 ZPO so that they are
subject to separate challenge proceedings under 1059 ZPO and may be enforced against
the debtor under 1060, 1061 ZPO.
Interim awards, by contrast, do not dispose of certain parts of the dispute. Rather, they con- 108
cern particular issues of a procedural or substantive matter which are usually relevant to the
dispute as a whole and are steps in arriving at a final decision. Examples are decisions on the
applicable law or on liability in principle. As interim awards do not contain a final decision
on at least parts of the dispute, different views exist as to their legal nature and the formal
requirements for such awards. According to the prevailing view, separate challenge or enforcement proceedings may not be initiated for such awards.190 Decisions as to the applicable
law or whether a claim is statute-barred may be rendered in the form of an interim award or
a partial award if the answer is positive, while interim measures of protection by the tribunal
usually take the form of an order. The legal nature of the tribunals decision on jurisdiction
is discussed controversially. In light of the wording of 1040 (3) ZPO (Zwischenentscheid),
the prevailing view is that it is not an interim award but a preliminary ruling which may be
challenged in the procedure provided for in 1040 (3) ZPO.191
188
189
190
191
OLG Frankfurt 05.04.2001, NJW-RR 2001, 1078; OLG Dsseldorf 10.11.2010 VI-U (Kart) 19/10,
BeckRS 2011, 00535; Bandel (2000), pp.189 et seq.; Leitzen, Die Anordnung vorlufiger oder sichernder
Manahmen durch Schiedsgerichte nach 1041 ZPO, Kln 2002, pp.58 et seq.; Schroth, Einstweiliger
Rechtsschutz im deutschen Schiedsverfahren, SchiedsVZ 2003, 102 (103).
On the different types of awards see Schwab/Walter (2005), Chap.18 paras6 et seq.; Stein/Jonas-Schlosser
(2002), 1055 paras15 et seq.
See Zller-Geimer (2012), 1054 para.3 (formal requirements of 1054 ZPO not applicable and no
challenge in the sense of 1059 ZPO possible); but see Stein/Jonas-Schlosser (2002), 1054 para.3
(1054 ZPO applicable) and Kremer/Weimann, Die Aufhebbarkeit von Schiedssprchen, insbesondere
Zwischen- oder Teilschiedssprchen ber den Anspruchsgrund Widerspruch zu Prinzipien der Prozesskonomie?, SchiedsVZ 2007, 238 (245) (criteria of 1054 ZPO are fulfilled); cf. Weigand-Wagner
(2002), Germany, para.316 (no challenge and enforcement procedure).
Musielak-Voit (2013), 1054 para.2; MnchKomm-Mnch (2013), 1056 para.8; for a different and better view see Stein/Jonas-Schlosser (2002), 1054 para.3; Weigand-Wagner (2002), Germany, para.316.
38
B.
Making of the Award
109 German law does not provide a time limit for making of the award. The prevailing view is that
in practice such time limits have more disadvantages than advantages and German courts
have been reluctant to refuse the enforcement of awards on the ground that time limits have
expired.192 In tribunals with more than one arbitrator and unless otherwise agreed by the
parties, decisions are generally taken by a majority (1059 (1) ZPO). Pursuant to 1052
(2) ZPO, where an arbitrator refuses to take part in the decision, the other arbitrators may
decide without him, provided that the parties have been informed beforehand. Any violation
of this obligation to inform may render the award unenforceable.193 The admissibility of a
dissenting vote is not explicitly regulated in the 10th Book. In light of the confidentiality of
the deliberations between the arbitrators, a strong part of the German literature considers
dissenting opinions not to be permitted (at least in domestic arbitrations) unless the parties
have agreed otherwise.194 The better view, which also finds some support in the legislative
materials, is that dissenting opinions are permissible unless they are explicitly excluded.195
C.
Form and Delivery of the Award
110 According to 1054 ZPO, the award must be made in writing and signed by the arbitrator
or arbitrators. In arbitral proceedings with more than one arbitrator, the signatures of the
majority of all members of the arbitral tribunal will suffice, provided that the reason for any
omitted signature is stated.196 The award must state the reasons upon which it is based, unless
the parties have agreed that no reasons need to be given or the award is an award on agreed
terms. The award must state its date and the place of arbitration. It must be deemed to have
been made on that date and that place, even if for reasons of convenience the arbitrators
have signed the award at another place. Where the date or even the place of arbitration is
not stated and cannot be deduced by interpretation, the award is not null and void. It is then
for the courts to determine where the place of arbitration was, if necessary in setting aside or
enforcement proceedings.197
111 German law no longer requires that awards must be registered or deposited with a court to
become effective. Pursuant to 1054 (4) ZPO, a copy of the award signed by the arbitrators
shall be delivered to each party. In general, service is effected in such a manner, e.g. by courier
or registered mail with return receipt that evidences delivery and the date of delivery.
192
193
194
195
196
197
BayObLG 23.09.2004 (award enforced since defendant could not prove that expiry of time limit had
influence on outcome of the case issue treated as one of an incorrect procedure); cf. BGH 14.04.1988,
BGHZ 104, 178 (182 et seq.) stating that time limits should in general be interpreted that their expiry
does not automatically terminate the mandate of the tribunal but only gives the right to remove arbitrators; cf. OLG Dsseldorf 14.08.2007, BeckRS 2007, 16701 = IBR 2008, 366.
OLG Saarbrcken 29.10.2002, SchiedsVZ 2003, 92 (93).
Schtze (1999), para.204; Lachmann (2008), para.1775; cf. Peltzer (2000), pp.67 et seq. (critical and
suggesting a different solution de lege ferenda).
Weigand-Wagner (2002), Germany, para.331.
OLG Kln 24.04.2006.
OLG Dsseldorf 23.02.2000, EWiR 2000, 795 with note by Krll, (2001) Int.A.L.R. N-25; OLG Mnchen
22.06.2005, SchiedsVZ 2005, 308.
D.
39
The Law Applicable to the Decision on the Merits
The law applicable to the merits of a dispute is governed by 1051 ZPO, which provides for 112
a special conflict of laws provision.198
In general, tribunals shall decide according to rules of law.199 A decision ex aequo et bono or 113
as amiables compositeurs is subject to the explicit authorization of the parties (1051 (3)
ZPO). In that regard, a joint request to the tribunal to submit proposals for a possible settlement does not suffice to assume that the parties have given such authorization.200 In addition,
1051 (4) ZPO expressly provides for the duty of the arbitral tribunal to decide in accordance with the terms of the contract and to take into account the usages of the trade applicable
to the specific transaction.
1051 (1) ZPO is based on party autonomy and thus accepts a choice of rules of law by 114
the parties. 1051 (1) ZPO clarifies that such choice refers to the substantive law and not
to conflict of laws rules, unless the parties have explicitly agreed otherwise. The use of the
modern term rules of law (Rechtsvorschriften) in 1051 (1) ZPO indicates that it is not
limited to the exclusive applicability of national laws and may also extend to such sets of rules
as the UNIDROIT Principles of International Commercial Contracts.201
In the absence of a choice of law by the parties, German arbitration law deviates from the 115
Model Law insofar as it contains a more direct conflict of laws provision providing for the
application of the law of the state with which the subject matter of the proceedings has the
closest connections (1051 (2)ZPO).202 The rather general and internationally well known
closest connection standard is based on Article 4 (1) of the European Convention on the
Law Applicable to Contractual Obligations of 19 June 1980.203 In determining with which
law the closest connection exists, the presumptions in Article 4 European Convention/
Rome I Regulation are not directly applicable but may nevertheless play an important role.204
The law applicable will, therefore, often be the law of the country where the party that fulfils
the characteristic obligation is located.
198
199
200
201
202
203
204
See for details Part II, Schmaltz, 1051; see also Handorn, Das Sonderkollisionsrecht der deutschen
internationalen Schiedsgerichtsbarkeit, Tbingen 2005.
Wagner, Rechtswahlfreiheit im Schiedsverfahren, in: Gottwald/Roth (eds), FS-Schumann, 2002, pp.535
et seq.
OLG Mnchen 22.06.2005, SchiedsVZ 2005, 308 which even held that the form requirements of 1031
ZPO also extend to such an agreement.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.22 (52); cf. Lepschy, 1051 ZPO Das
anwendbare materielle Recht in internationalen Schiedsverfahren, Frankfurt am Main 2003, pp.103 et
seq.
The practical effects of the deviation are limited. While under the Model Law the tribunal may freely
determine the applicable conflict of laws rules, such conflict of laws rules frequently also apply the closest
connection standard.
For the discussions relating to the relevance of the Rome Convention also for arbitral proceedings see
Weigand-Wagner (2002), Germany, paras351 et seq.; Kronke, Internationales Schiedsverfahren nach der
Reform, RIW 1998, 267 (262 seq.); for the comparable discussion concerning the Regulation (EC) No.
593/2008 o the European Parliament and the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) which has replaced the European Convention see Part II Schmaltz 1051.
Musielak-Voit (2013), 1051 para.6; cf. Lepschy, 1051 ZPO Das anwendbare materielle Recht in
internationalen Schiedsverfahren, Frankfurt am Main 2003, pp.173 et seq.
40
E.
The Decision on Costs
116 Unlike the UNCITRAL Model Law, German arbitration law contains in 1057 ZPO a separate provision dealing with decisions on costs. In the absence of an agreement by the parties,
the arbitral tribunal awards the costs of the arbitral proceedings, including the costs incurred
by the parties necessary for the proper pursuit of their claim or defence, by means of an
arbitral award (1057 (1)ZPO). This also applies where the tribunal refuses jurisdiction.205
In most cases, tribunals will allocate the costs in accordance with the principle of costs follow the event. It has, however, discretion to take other factors into account, including which
party was responsible for certain costs. The quota of success under German law is primarily
determined in relation to the amount claimed in the proceedings and not as in other legal
systems purely on whether a claim exists in principle. Where the costs of the arbitration
have already been determined, the tribunal shall also decide in the final award on the amount
to be borne by each party. If the costs have not been fixed or if they can only be fixed once
the arbitral proceedings have been terminated, the final decision on costs must be made in a
separate award (1057 (2) ZPO).
117 It is a generally accepted practice in Germany that the costs of legal assistance are reimbursed
to the winning party. 1057 (1) ZPO explicitly lists the costs incurred by the parties necessary for the proper pursuit of their claim or defences as a type of costs to be allocated
between the parties. A comparable provision can be found in Section35.1 DIS Rules. The
specific allocation lies within the discretion of the arbitral tribunal and often follows the ratio
of success in the merits. Reimbursement, however, may be refused by the arbitral tribunal
where legal costs are considered to be out of proportion to the dispute and higher than the
fees due under the Lawyers Fees Act (Rechtsanwaltsvergtungsgesetz RVG).206
F.
Correction and Interpretation of the Award and Additional Awards
118 At the request of a party, the arbitral tribunal may interpret the award or correct any errors
in computation, any clerical or typographical errors or any errors of a similar nature (1058
ZPO). The list makes it clear that the correction competence of the tribunal is limited to
minor mistakes and should not affect the actual substance of the award.207 In general, the
parties should be heard before the tribunal proceeds to a correction or interpretation.208
119 Pursuant to 1058 (1) No. 3 ZPO, at the request of a party, the tribunal also has the power
to make an additional award as to claims submitted in the arbitral proceedings but omitted
in the award. The request must be submitted within one month after the receipt of the award
and the arbitrators then have two months to make the additional award. There is no power
for the tribunal to render such an additional award upon its own initiative.
205
206
207
208
BGH 06.06.2002, NJW 2002, 3031 (3032 et seq.) = SchiedsVZ 2003, 39 (40); Krll, Recourse against
Negative Decisions on Jurisdiction, Arb.Int. 2004, 55 (69); for a different view Musielak-Voit (2013),
1057 para.2.
See, von Bernuth, Noch einmal: Zur Erstattung von Zeithonorar in Schiedsverfahren, SchiedsVZ 2013,
212; for a more detailed discussion see Lachmann (2008), paras1872 et seq.
OLG Stuttgart 20.12.2001, OLGR Stuttgart 2002, 166; in practice, missing formal requirements such as
the statement of the place of arbitration are usually remedied in proceedings under 1058 ZPO.
OLG Karlsruhe 29.11.2002; for a comprehensive discussion see Christ (2008), p. 15 et seq.
X.
German State Courts and Arbitration
A.
General Principles
41
Notwithstanding the fact that the existence of an arbitration agreement excludes the jurisdic- 120
tion of the courts for the action on the merits (1032 ZPO), courts have important supportive and supervisory functions for the arbitral proceedings. These are enumerated in the
arbitration law.209 In principle, 1026 ZPO excludes any inherent powers by clearly stating
that courts may not intervene in the arbitral proceedings unless explicitly provided for in the
10th Book. Such explicit provisions are largely listed in 1062 (1) Nos. 14 ZPO. Notwithstanding its excessively broad wording, 1062 ZPO does not grant additional powers to the
courts but merely regulates which courts have jurisdiction for the various tasks entrusted to
the courts by other provisions in the 10th Book.
The rule of limited intervention is interpreted strictly, at least in relation to supervisory pow- 121
ers. Courts have generally refrained from intervening in the arbitration process without an
explicit empowerment. By contrast, in relation to the supportive powers, some courts have
favoured a broad interpretation of their powers.210
Pursuant to 1063 ZPO, the court proceedings are terminated by an order of the court. 122
While it is necessary to give the other side a chance to comment on issues, an oral hearing is
not generally necessary. Although the court must terminate its proceedings in the form of an
order pursuant to 1063 ZPO, the provisions of the ZPO preceding the 10th Book must be
applied, despite the fact that some of them are designed for the termination of proceedings
by judgment. In particular, the general rules for the admissibility of court proceedings apply.
These include the capacity to be a party in legal proceedings, standing to sue, absence of res
judicata effect and legitimate interest to sue.211
B.
Supervisory Function of the Courts
The few supervisory powers granted to the courts are intended to provide the constitution- 123
ally required protection of the parties in the arbitration process.212 They are meant to ensure
that the required consent to arbitration exists, that the minimum requirements of a fair trial
are maintained and that the parties are treated equally. The supervision thus concentrates on
the composition of the tribunal (challenge of an arbitrator, 1037 ZPO, equal influence on
composition, 1034 (2) ZPO, and termination of an arbitrators appointment, 1038 ZPO)
and the judicial review of an arbitral tribunals decision on its jurisdiction (1040 (3)ZPO)
and the arbitral process (1059 (2) No. 1 (b)(d) ZPO). By contrast, the substantive outcome of the proceedings is, in principle, beyond the control of the court. There will be no
review of the merits of an award.213
209
210
211
212
213
For details see Part II, Schroeder/Wortmann, Introduction to 10621065 paras 2 et seq.
BayObLG 05.10.2004, SchiedsVZ 2004, 316 with note by Wagner = (2005) Int.A.L.R. N-47 (appointment of arbitrator for proceedings with place of arbitration in Japan which was however not determined
in detail); MnchKommZPO-Mnch (2013), 1062 para. 5.
For details see Part II, Schroeder/ Wortmann, Introduction to 10621065 paras 16 et seq.
For details see Part II, Krll/Kraft, 1059 para. 2.
42
C.
Supportive Functions of the Courts
124 The various supportive functions provided for in the German arbitration law are primarily
intended to remedy the two deficiencies of arbitration: the lack of coercive powers and the
non-existence of a readily available tribunal.214
125 One of the most important supportive functions of state courts in arbitral proceedings relates
to the constitution of the arbitral tribunal. In the absence of an agreement by the parties or
where the agreed procedure of appointment fails, the arbitrator or the presiding arbitrator is
appointed upon request of a party by the competent OLG.215
126 Given the absence of compulsory powers of an arbitral tribunal over the parties to the arbitration, much less over third parties, state courts may support arbitrations and act on behalf
of the arbitral tribunal where the latter is not empowered to act. This applies with regard to
the taking of evidence, where witnesses or experts are not willing to appear voluntarily before
the arbitral tribunal or where an oath is to be taken.216 It further encompasses enforcement of
interim measures ordered by an arbitral tribunal if they are not complied with voluntarily.217
Furthermore, courts may themselves grant at any time interim relief when requested by a
party.218
127 In addition, pursuant to 1032 (2) ZPO parties may seek the support of the court to determine before the tribunal has been appointed whether or not arbitral proceedings are admissible. This last power, as well as some of the other supportive powers of the courts, such as
the support in taking of evidence, are not limited to arbitral proceedings having their place of
arbitration in Germany but may also be granted to parties of foreign arbitral proceedings.219
128 Before or after an arbitral tribunal is constituted, parties may apply to the state courts for
interim measures (1033 ZPO).220
D.
Autonomous Procedure for the Taking of Evidence (selbststndiges Beweisverfahren)
129 German procedural law provides for the possibility to initiate autonomous proceedings for
the taking of evidence (485 et seq. ZPO), both in addition to pending court proceedings
or before any proceedings have been initiated. Where no proceedings are pending, an expert
may be requested to evaluate certain issues, such as the status or value of things or damage.
Where an arbitral tribunal has been constituted, it may conduct such autonomous procedure
upon request.221 Otherwise, jurisdiction lies with the locally competent state court.222
214
215
216
217
218
219
220
221
222
For details see Part II, Nacimiento/Abt/Stein, 1035 paras 34 seq.
For details see Part II, Sachs/Lrcher, 1050 paras 4 et seq.
See Part II, Kreindler/Schmidt, 1033.
See for example OLG Frankfurt 24.10.2006 (determinination of admissibility of Belgian proceedings);
OLG Oldenburg 20.06.2005, SchiedsVZ 2006, 223.
See Part II, Kreindler/Schmidt, 1033 para.13.
Kreindler/Schfer/Wolf (2006), para.766.
For application in the construction sector, see Part IV, Benedict, Construction Arbitration in Germany.
43
XI. Recourse against Awards

A.
General Principles
Under the principle of party autonomy which governs the arbitral proceedings in the proper 130
sense, the parties are free to agree on a second arbitral instance. While this is rarely done in a
separate agreement, the arbitration rules of a number of specialized arbitration institutions,
in particular in the area of commodity arbitration, provide for such a second arbitral instance.223 In most cases, they allow for a true appeal in the sense of a full review on the merits
of the first tribunals decision. In general, the decision of the first tribunal only constitutes an
enforceable award when it has either been confirmed by the second instance or the time for
an appeal has expired.
Under the principle of party autonomy, it is also possible to make the binding force of an 131
award dependent on the fact that no court proceedings on the same dispute are initiated
within a certain time.224
By contrast, German arbitration law does not allow for an appeal to the courts against awards. 132
While the law does not expressly say so, this follows from 1059 ZPO, which states that
recourse to a court against an arbitral award may be made only by an application for
setting aside in accordance with subsections 2 and 3 of this section
which does not allow for a review on the merits. The only ground for setting aside where the 133
content of the award may, at least indirectly, become relevant is public policy. Furthermore,
it follows, inter alia, from 1026 ZPO (which excludes any court intervention not explicitly
provided for in the 10th Book) that the parties may not agree on an appeal to the courts.
While party autonomy governs the arbitral proceedings as such, that does not apply for the
state court proceedings in supervision of arbitration. Consequently, parties may not extend
the grounds for a potential setting aside of the award. When they do so, the question arises
whether they have at all opted for arbitration, which, according to the German understanding, requires a final and binding decision by the tribunal instead of the state courts.225
B.
The Setting Aside Proceedings Pursuant to 1059 ZPO226
1.
General Principles
Setting aside proceedings in German law are largely governed by the same rules as those un- 134
der the Model Law. 1059 ZPO is a nearly verbatim adoption of Article 34 ML, with some
minor amendments that clarify issues left open in the Model Law. Only subsection 5, which
deals with the effects of the setting aside on the arbitration agreement, has no equivalent in
the Model Law. It provides that, in the absence of indications to the contrary, the arbitration agreement becomes operative again after the award has been set aside. The setting aside
223
224
225
226
See for example 28 et seq. Arbitration Rules Waren-Verein Hamburger Brse; cf. OLG Hamburg
04.09.1998, NJW-RR 2000, 806.
BGH 01.03.2007; overruling OLG Frankfurt, 20.12.2005; critical comment by Wolf 26 ASA Bulletin
3/2008, p. 626.
OLG Naumburg 20.05.2005, SchiedsVZ 2006, 103 (clause providing for arbitration with the possibility
of a court review considered to be a conciliation agreement).
For a more detailed analysis see Part II, Krll/Kraft, 1059.
44
proceedings are only available against domestic awards, i.e. awards resulting from proceedings with a place of arbitration in Germany.227
135 The right to bring an action for setting aside cannot be validly excluded before the dispute
has arisen. While under the old law it was possible to grant the tribunal a binding Kompetenz-Kompetenz and thereby at least de facto exclude reliance on those grounds relating to the
tribunals jurisdiction, this is no longer possible.228
2.
Grounds for Setting Aside
136 The grounds for setting aside are conclusively enumerated in 1059 (2) ZPO. They are
largely identical to those grounds under which the enforcement of a domestic or foreign
award can be refused. Since a rvision au fond is not permitted, neither an error in law nor an
error in fact is, as such, a ground for setting aside the award.
137 A distinction is made between grounds which are only considered if the applicant shows
sufficient cause and those which have to be considered ex officio. That, however, only affects
the burden of pleading229 and not the burden of proof. The latter rests with the applicant for
all grounds, including those to be considered ex officio.230
138 Those grounds which must be pleaded by the parties either relate to the tribunals jurisdiction
(No. 1 (a) lack of a valid arbitration agreement and (c) excess of jurisdiction) or the conduct
of the proceedings (No. 1 (b) violation of special emanations of the right to be heard and
(d) incorrect proceedings or incorrectly composed tribunal). For the latter types of grounds
relating to the conduct of the proceedings, it is furthermore required that the incorrectness
has affected the outcome of the proceedings in order to avoid that minor mistakes without
any influence on the award lead to its setting aside.
139 The grounds to be taken into account by the courts ex officio are the lack of arbitrability of
the dispute and the violation of public policy. In connection with the latter, the courts are
limited to verifying whether the result is compatible with the fundamental principles of the
German legal system.231 Even severe misapplications of the law will only constitute a violation of public policy when they lead to completely arbitrary decisions, which are so contrary
to the fundamental principles of law that they would seriously damage confidence in dispute
resolution by arbitration. Procedural public policy may be violated where a partys right to be
heard has not been respected.232
140 Courts have, in general, applied the various grounds in a restrictive manner. Particularly in
relation to the often alleged violation of the right to be heard, the courts have imposed strict
227
228
229
230
231
232
OLG Dsseldorf 23.02.2000, EWiR 2000, 795 with note by Krll, (2001) Int.A.L.R. N-25.
BGH 13.01.2005, SchiedsVZ 2005, 95 = NJW 2005, 1125.
Courts have on occasion imposed strict requirements as to the specificity of the pleadings and have
required an explicit reference to a particular ground, considering the mere pleading of the facts to be
insufficient; see BGH 02.11.2000, ZIP 2000, 2270 (2271); OLG Hamburg 14.05.1999, OLGR 2000,
19 et seq.; Ehricke, Die Beschleunigung der Finalitt von Schiedssprchen nach dem neuen deutschen
Schiedsverfahrensrecht, ZZP 2000, 453 (457).
OLG Dsseldorf 21.07.2004, IPRspr 2004, 443.
BGH 15.07.1999, BGHZ 142, 204 (206) = NJW 2000, 2974; BGH 30.10.2008, NJW 2009, 1215;
OLG Frankfurt 17.02.2011, SchiedsVZ 2013, 49; OLG Dresden 13.02.2012 3 Sch 1/12; OLG Kln
28.06.2011, SchiedsVZ 2012, 161.
Found to exist in OLG Hamburg 16.09.2004 (award rendered before expiry of deadline up to which party
could comment on crucial witness statement).
45
standards. There is, in general, a presumption that even where certain issues are not explicitly
mentioned in the reasoning of the award, they have been taken into consideration by the
tribunal.233 Furthermore, the applicant must state in detail how the procedural defect has
affected the award.234
In addition, reliance on the various grounds mentioned in 1059 (2) No. 1 ZPO may be 141
excluded when a party has participated in the arbitral proceedings without a timely objection.235 The same applies when a party has not made use of existing remedies during the
arbitral proceedings, in particular its right to have a preliminary ruling of the tribunal review
by the courts.
3.
Procedure
1059 ZPO provides for separate and autonomous setting aside proceedings which may be 142
initiated outside any exequatur proceedings. The grounds for setting aside, however, may also
be invoked as defences in proceedings to have an award declared enforceable. If successful,
they will also lead to the setting aside of the award (only for domestic awards). Thus, once
enforcement proceedings have been initiated, both actions will be combined and there will
normally no longer be a need for separate challenge proceedings.236
Pursuant to 1059 (3) ZPO and in line with Article 34 (3) ML, actions for setting aside 143
must be brought within three months after the applicant has received the award. After that
period, no setting aside proceedings may be initiated, not even for a violation of public policy.
However, public policy and the non-arbitrability of a dispute may, despite the expiration of
the time limit, still be raised as a defence in proceedings to have the award declared enforceable. When successful, they may lead to a setting aside of the award within the framework of
the enforcement proceedings. No application for setting aside the award may be made once
the award has been declared enforceable by a German court.
4.
Other Means of Recourse
1059 (1) ZPO clearly provides that setting aside proceedings are the only available means 144
of recourse. Where setting aside proceedings have been initiated, the court may, pursuant
to 1059 (4) ZPO, set aside the award and remit the case to the appropriate tribunal. In
deviation from the Model Law, remittance is possible only after the award has been set aside.
Otherwise, its res judicata effect would prevent any new decision on the matter.
233
234
235
236
OLG Hamburg 18.11.2003, OLGR Hamburg, 244; id. 31.07.2003, OLGR Hamburg 2004, 97; OLG
Mnchen 07.05.2008, NJOZ 2008, 4808; cf. OLG Frankfurt 27.08.2009 26 SchH 3/09, BeckRS 2010,
25197.
OLG Celle 19.02.2004, OLGR Celle 2004, 396; OLG Karlsruhe 29.11.2002 (public policy defence);
OLG Mnchen 23.01.2012, SchiedsVZ 2012, 107 (blatant incompatibility with fundamental principles
of German law).
E.g. BGH 29.06.2005, SchiedsVZ 2005, 259 (260) holding that challenges to the tribunals jurisdiction
are limited to the particular ground raised and do not prevent preclusion in relation to other grounds.
OLG Hamburg 24.01.2003, SchiedsVZ 2003, 284; OLG Mnchen 25.09.2006 34 Sch 12/06, OLGR
2006, 906 = BeckRS 2006, 11342; OLG Frankfurt 30.09.2010 26 Sch 6/10 and 26 Sch 22/10, available
at <www.juris.de>; BayObLG 16.01.2004, SchiedsVZ 2004, 163 (164); cf. OLG Naumburg 21.05.2004,
(2006) Int.A.L.R. N-61.
46
145 In exceptional cases, where the award has been obtained by deceit or fraud, a party may have
a claim for damages under substantive law according to 826BGB for wilful harm caused.237
As this claim is directed at making good the harm caused by the deceit, namely the rendering
of an award, it will have the same effect as an action for setting aside.
XII. Recognition and Enforcement of Awards

A.
General Principles
146 In deviation from the Model Law, German arbitration law provides for different legal regimes
for the enforcement of domestic and foreign awards, respectively. The nationality of an award
is linked to the place of arbitration. Thus awards resulting from proceedings with their place
of arbitration in Germany are considered as domestic awards while awards resulting from
proceedings with a foreign place of arbitration are classified as foreign awards.238 The practical
relevance, however, is limited because the grounds to refuse enforcement under both regimes
are virtually identical and the procedure is largely governed by the same provisions.
147 An award as such does not constitute an enforceable title until it has been declared to be
enforceable. The functional jurisdiction for such a declaration of enforceability lies, pursuant
to 1062 (1) No. 4 ZPO, with the Higher Regional Court. Local jurisdiction has either the
Higher Regional Court chosen by the parties or that court with jurisdiction for the place
of arbitration.239 In contrast to setting aside proceedings, no time limit applies for initiating
proceedings to obtain a declaration of enforceability. In fact, in relation to domestic awards,
the initiation of proceedings after the expiration of the three month time period for the initiation of setting aside proceedings will even lead to the exclusion of all defences but those of
public policy and the lack of objective arbitrability.
B.
Domestic Awards
148 In the presence of one of the grounds for setting aside listed under 1059 (2)ZPO, an application for a declaration of enforceability shall be refused and the award set aside. These
grounds are the invalidity of the arbitration agreement, violations of the right to be heard and
to fairly present ones case, the tribunal exceeding its jurisdiction, incorrect constitution of the
tribunal or incorrect arbitral proceedings, violation of public policy and the non-arbitrability
of the dispute. However, pursuant to 1060 (2) sentences 2 and 3 ZPO, which constitute
an addition to the Model Law, a party may be prevented from relying on such grounds for
setting aside in either of the two following situations: if, at the time when the application for
a declaration of enforceability is served, a request for setting aside based on such grounds has
been finally rejected or if the three month time limit for initiating setting aside proceedings
has expired. Even after the expiration of the deadline, however, the grounds of violation of
public policy and arbitrability of the dispute may be submitted and must be examined ex
officio.
237
238
239
BGH 02.11.2000, WM 2001, 104 with note by Krll, WUB 2001, 351; English summary (2002)
Int.A.L.R. N-12; for details see Part II, Krll/Kraft, 1059 paras98 seq.
For the reasons for different regimes see Part II, Krll, Introduction 1060, 1061 paras6 et seq.
For details on the court proceedings see infra Part II, Schroeder/Wortmann, 1062 paras 4 et seq.
C.
47
Foreign Awards
Foreign awards may be enforced in Germany either on the basis of international instruments, 149
in particular the New York Convention 1958, or under the autonomous national enforcement regime for foreign awards as set out in 1061 et seq. ZPO. Unlike under the old law,
where the national regime contained its own list of grounds for refusal that deviated from
those of the New York Convention 1958, the national enforcement regime largely consists of
a reference to the New York Convention 1958. As a consequence, the New York Convention
1958 may in principle become applicable by virtue of its public international law character or
as part of the national enforcement regime. In the latter case, however, the requirements as to
the documentation accompanying an application for enforcement are much lower.
1.
Enforcement under International Instruments
Germany has ratified numerous multilateral international conventions in the field of 150
arbitration, particularly the New York Convention 1958 and the European Convention.
Furthermore, Germany has concluded more than 100 bilateral treaties, a great number of
which include provisions which might be relevant for the enforcement of foreign awards.240
Pursuant to 1061 (1) ZPO, the national rules on the recognition and enforcement, according to which the issue is governed by the New York Convention 1958, leave the application
of provisions of other state treaties on recognition and enforcement of arbitral awards
unaffected. Consequently, the provisions of such international instrument must be applied
ex officio by the German judges when they are more favourable than the national law.241
In practice, this is rarely the case because the bilateral treaties themselves often only provide 151
that recognition and enforcement shall be governed by the New York Convention 1958.
Bilateral treaties, however, may be relevant for the enforcement of settlements concluded
during arbitral proceedings but not recorded in the form of an award on agreed terms. Some
of the bilateral treaties still allow for the enforcement of such settlements, while under the
autonomous regime this is no longer possible.242 Furthermore, a number of bilateral treaties
further limit the possible grounds to refuse the recognition of the award due to public policy
or a lack of jurisdiction of the tribunal. Thus, even awards rendered in proceedings which do
not conform to the agreed procedure may be enforced under such treaties.243
2.
Enforcement Under the National Regime for Recognition and Enforcement
It follows from 1061 ZPO and the reference to the New York Convention 1958 contained 152
therein, that on the basis of Article III NYC all foreign awards will be recognized and enforced in Germany unless the objecting party can prove that one of the grounds for refusal
enumerated in Article V NYC exists. In this rare case, the court declares that the award is not
recognized in Germany. However, it has no competence to set aside the award.
240
241
242
243
A complete list can be found on the DIS website at <www.dis-arb.de>; for a list of the various BIT see
annex.
BGH 25.09.2003, SchiedsVZ 2003, 281 with note by Krll; BGH 21.09.2005, SchiedsVZ 2005, 306.
BayObLG 05.07.2004, BayObLGR 2004, 381 (enforcement of a settlement under the Bilateral Treaty
with Austria).
BGH 23.02.2006, SchiedsVZ 2006, 161 (164) = IHR 2006, 125 = (2006) Int.A.L.R. N-59; (GermanSoviet Treaty of 25.04.1958 Art. 8 (3) = BGBl. 1959 II, 221 et seq. = Geimer/Schtze (2005), Internationaler Rechtsverkehr, Vol. IV, No. 745, pp.3 seq.
48
153 Pursuant to 1064 (3) ZPO, the facilitated form requirements for the exequatur of domestic
awards also apply to foreign awards.244 Thus, it is not necessary to submit a copy of the arbitration agreement and certification of copies may be made by counsel.
154 The courts decision declaring the award enforceable is provisionally enforceable. Thus, a
possible recourse in the form of an appeal on a point of law to the Federal Court of Justice
does not ipso jure prevent enforcement. Any declaration of enforceability may be revoked
when the award has been set aside in its country of origin (1061 (3) ZPO).
3.
Grounds to Refuse Enforcement
155 The reasons for denying enforcement are nearly identical to the grounds for the setting aside
of domestic awards as discussed above and are largely interpreted in the same way. Some
specific issues, however, in applying Article V NYC are worth mentioning.
156 It is controversial to what extent a party, which has not made use of existing remedies at the
place of arbitration, is precluded from relying on such defects in exequatur proceedings in
Germany. Several Higher Regional Courts have held, however, that reliance on defects may
be precluded if a party could have obtained effective protection at the place of arbitration had
it made use of the remedies there.245 The German Supreme Court made clear that this cannot
apply in those cases where the party contested ever having submitted to the jurisdiction of
the arbitral tribunal.246 The existence of such remedies will at least make it harder for a party
to argue that enforcement of the award would be contrary to public policy.
157 With regard to the absence of a valid arbitration agreement (Article V (1) (a) NYC), the
prevailing view in Germany is that the applicant bears the burden of proof for showing that
an arbitration agreement was entered into247 while the defendant must prove the alleged invalidity of the agreement. Another particularity applies with regard to the form requirements
for an arbitration agreement. The Federal Court of Justice has adopted a very enforcement
friendly attitude. It is no longer required that the underlying arbitration agreement meets the
comparably strict form requirement of Article II NYC. Rather, in light of Article VII NYC it
is also considered to be sufficient if the arbitration agreement either meets the form requirements of 1031 ZPO or that of the law determined according to the ordinary conflict of laws
rules for agreements,248 Article 11 EGBGB. The latter in turn provides that an agreement will
be formally valid if it meets either the form requirements of the law to which the parties have
submitted it or that of the place where the agreement was entered into.
158 The violation of rules of public policy is always a ground for refusing enforcement of the
award (1061 ZPO and Article V (2)(b) NYC). The applicable German case law of the
244
245
246
247
248
BGH 25.09.2003, SchiedsVZ 2003, 281; cf. OLG Hamm 27.09.2005, SchiedsVZ 2006, 106.
OLG Karlsruhe 27.03.2006, SchiedsVZ 2006, 281 (282) with note by Gruber and by Krll, IPRax 2007,
430; OLG Stuttgart 14.10.2003, (2005) Int.A.L.R. N-48; for details see Part II, Krll, 1061 paras49 seq.
BGH 16.12.2010, NJW 2011, 1290 = SchiedsVZ 2011, 105.
OLG Brandenburg 13.06.2002, IPRax 2003, 349; OLG Schleswig 30.03.2000, RIW 2000, 706 (707);
OLG Rostock 22.11.2001, IPRax 2002, 401 (403); BayObLG 12.12.2002, NJW-RR 2003, 719; OLG
Celle, 04.09.2003; Stein/Jonas-Schlosser (2002), Anhang 1061 para.74; critical Krll/Wenzel, Art. VII
New York Convention and the Need to Produce an Arbitration Agreement, (2004) 19(4) Mealeys IAR
27.
BGH 21.09.2005, SchiedsVZ 2005, 306 (307); for different views see OLG Schleswig 30.03.2000, RIW
2000, 706 (form requirement of Art. II NYC); OLG Dresden 13.01.1999 (form requirement of 1031
ZPO).
49
Federal Court of Justice generally applies a very narrow interpretation of public policy and,
in relation to foreign awards, the even more restrictive standard of international public policy
is used.249 As a result, courts have enforced foreign awards which would have been considered
to violate national public policy in relation, for example, to their reasoning.250 Violation of
procedural public policy is excluded if remedies at the place of arbitration provide reasonable protection.251 However, a violation of international public policy exists where the award
was obtained by fraud252 or where a party was never informed about the arbitral proceedings
because service was based on a fiction.253 Under the old law parties could instead of enforcing an award directly enforce a judgment declaring the award enforceable in its country of
origin. Such double exequatur is no longer possible.254
XIII. Multi-Party Arbitrations

The German arbitration law does not contain specific provisions dealing with multi-party 159
situations, though multi-party arbitrations are a standard occurrence in German arbitration
practice.255 They are either dealt with in the applicable arbitration rules, which sometimes
contain specific rules as is the case with the DIS-Supplementary Rules for Corporate Law
Disputes 09 (SRCoLD), or are dealt with under the application of the general rules of the
German arbitration law.256
The problem of multi-party arbitrations must be considered when drafting ad hoc arbitra- 160
tion agreements and particularly regarding the issue of the choice of arbitrators,257 since the
equality of the parties is an element of international public policy.258 A breach of this principle
would be a ground for setting aside the award259 or a ground for not recognizing a foreign
award.260 Under the DIS Rules, all parties on one side must agree to the choice of arbitrator.
Otherwise, the arbitrator for both sides will be chosen by the DIS. Although this has yet to be
the subject of a judgment of the highest courts, it is generally held that such a solution would
be upheld by the Federal Court of Justice.
The organization of such multi-party proceedings is left to the arbitral tribunal and the dis- 161
cretion granted by the German arbitration law usually allows the tribunal to find appropriate
249
250
251
252
253
254
255
256
257
258
259
260
BGH 15.05.1986, NJW 1986, 3027 (3028); id. 16.09.1993, BGHZ 123, 268 (270) = NJW 1993,
3269; id. 23.02.2006; OLG Hamburg 04.11.1998, RPS 1/1999, 16; OLG Brandenburg 02.09.1999, RPS
1/2001, 21; id., 11.05.2000; against such a distinction Schwab/Walter (2005), Chap.30 para.21 according to whom the definition of the domestic ordre public is already much wider than in other countries so
that there is no need to distinguish between the ordre public national and the ordre public international.
OLG Bremen 30.09.1999, RPS 2/2000, 18 (20); for an English summary see (2001) Int.A.L.R. N-26.
BGH 01.02.2001, RPS 1/2001, 14; cf. Krll, Party pursuing bias claim against arbitrator must do so at
place of arbitration German Federal Court of Justice rules, (2002) 17(8) Mealeys IAR 34.
BayObLG 06.11.2003, IDR 2004, 48.
BayObLG 16.03.2000, RPS 2/2000, 15; in the case the requirements for such service fiction were not
met.
BGH 02.07.2009, SchiedsVZ 2009, 285.
For details see Part II, Nacimiento/Abt/Stein, 1035 paras 36 et seq.
OLG Frankfurt 24.11.2005, SchiedsVZ 2006, 219 et seq.
Socits BKMI et Siemens c. Socit Dutco Construction, Rev.Arb. 1992, 470 = BB 1992, Beilage No.15,
p.27.
Cf.Berger, The German arbitration law of 1998 first experiences, in: Briner et al. (eds.), FS-Bckstiegel,
2001, p.31 (39).
1059 (2) No.2 (b) ZPO.
Art. V (2)(b) NYC.
50
solutions for the particular situation. The tribunal only has to ensure that all parties are
treated equally and are provided a fair chance to present their case.
XIV. Insolvency of a Party

162 The insolvency of a party does not in itself affect the arbitral proceedings. The arbitration
agreement remains binding and the insolvency of one party prevents neither the initiation
of arbitral proceedings nor the termination of existing proceedings.261 Rather, the insolvency
administrator is considered to be bound by the arbitration clause. He thus steps in on behalf of
the insolvent party and takes up the proceedings where they stand.262 For reasons of fairness,
the arbitral tribunal should allow the insolvency administrator sufficient time to adequately
prepare the further proceedings. Where the insolvent party, however, lacks even the necessary funds to participate in the arbitral proceedings, the arbitration agreement may pursuant to the controversial view held by the Federal Court of Justice become inoperable.263
163 By contrast, state court proceedings are interrupted pursuant to 240 ZPO until either the
insolvency administrator takes up the court proceedings or the insolvency proceedings are
terminated. This applies as well to the court proceedings in support of arbitral proceedings.264
164 Where insolvency occurred after the award has been issued, a court is not prevented from
declaring the award enforceable.265 Insolvency proceedings bar only execution, but not preceding acts such as the declaration of enforceability.266
261
262
263
264
265
266
Raeschke-Kessler/Berger (1999), paras689 et seq.; for details, see Part IV, Krll, Insolvency and Arbitration.
BGH 19.07.2004, SchiedsVZ 2004, 259 (260); Flther, Schiedsverfahren und Schiedsabrede unter den
Bedingungen der Insolvenz, DZWiR 2001, 89 (93).
BGH 14.09.2000, Yearbook XXVII (2002), 265 = CLOUT 404; Wagner, Impecunious Parties and Arbitration Agreements, SchiedsVZ 2003, 206; cf. DIS (ed.), Financial Capacity of the Parties A Condition
for the Validity of Arbitration Agreements?, Frankfurt am Main 2004; Krll, Arbitration and Insolvency
Proceedings Selected Problems, in: Mistelis/Lew (eds), Pervasive Problems in International Arbitration,
Alphen aan den Rijn 2006, pp.357 et seq.
BGH 21.11.1966, KTS 1966, p.246; Weigand-Wagner (2002), Germany, para.205; Raeschke-Kessler/
Berger (1999), para.695.
OLG Dresden 25.09.1998; OLG Brandenburg 02.09.1999, BB 2001, Beilage No. 6, p.21.
BGH 29.01.2009, SchiedsVZ 2009, 176: The Federal Court of Justice held that the Higher Regional
Court had erred in finding that the arbitral awards, which had been rendered after Respondent in the
arbitral proceedings was declared insolvent, and which ordered Respondent to pay to Claimant a specific
amount of money, violated the German ordre public interne.
PART II
COMMENTARY ON THE GERMAN ARBITRATION LAW
(10TH BOOK OF THE GERMAN CODE
OF CIVIL PROCEDURE)
Chapter I
General Provisions
(1) The provisions of this Book apply if the place of arbitration as referred to in
1043(1) is situated in Germany.
(2) The provisions of 1032, 1033 and 1050 also apply if the place of arbitration is
situated outside Germany or has not yet been determined.
(3) If the place of arbitration has not yet been determined, the German courts are competent to perform the court functions specified in 1034, 1035, 1037 and 1038
if the respondent or the claimant has his place of business or habitual residence in
Germany.
(4) Sections 1061 to 1065 apply to the recognition and enforcement of foreign arbitral
awards.
Short Bibliography: Fischer/Unberath, Das neue Mediationsgesetz, Mnchen 2013; Geimer, IZPR,
Kln 2005; Greger/Unberath, MediationsG, Mnchen 2012; Holtzmann/Neuhaus, A Guide to the
UNCITRAL Model Law on International Commercial Arbitration, Deventer 1989; Hutner, Das
internationale Privat- und Verfahrensrecht der Wirtschaftsmediation, Tbingen 2005; Lachmann,
Handbuch fr die Schiedsgerichtspraxis, Kln 2008; Oschtz, Sportschiedsgerichtsbarkeit, Berlin
2005; Raeschke-Kessler/Berger, Recht und Praxis des Schiedsverfahrens, Kln 1999; Rensmann, Anationale Schiedssprche, Berlin 1997; Risse, Wirtschaftsmediation, Mnchen 2003; Schtze, Schiedsgericht und Schiedsverfahren, Mnchen 1999; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen
2005; Wagner, Private Law Enforcement through ADR: Wonder Drug or Snake Oil?, 51 CMLRev
1, 9 seq. (2014); Wagner, Die Richtlinie ber Alternative Streitbeilegung Law Enforcement statt
mediative Konfliktlsung, ZKM 2013, 104; Wagner, Prozessvertrge: Privatautonomie im Verfahrensrecht, Tbingen 1998; Wagner, in: Weigand (ed.), Practitioners Handbook on International
Arbitration, Mnchen/Copenhagen 2002.
Para.
Purpose: A Uniform Law of Arbitration . . 1
The Law of Arbitration and the Directive
on Consumer ADR . . . . . . . . . . . . . . . . . . . . . . 6
III. Arbitration vs. Other Forms of
Alternative Dispute Resolution . . . . . . . . . . . 8
A. Prerequisites of Arbitration . . . . . . . . . . . 8
B. Dispute Resolution Boards
and Panels of Corporations or
Associations . . . . . . . . . . . . . . . . . . . . . . . . 10
C. Conciliation and Mediation . . . . . . . . . 12
1. Distinguishing Elements . . . . . . . . . 12
2. Choice of Law . . . . . . . . . . . . . . . . . . . 15
D. Expert Determination (Schiedsgutachten). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
I.
II.
Para.
1. Background. . . . . . . . . . . . . . . . . . . . . . 16
2. Premature Claims . . . . . . . . . . . . . . . . 17
3. Binding Nature of the Experts
Findings . . . . . . . . . . . . . . . . . . . . . . . . . 18
4. Procedural Safeguards. . . . . . . . . . . . 20
5. Expert Determination as a
Form of Arbitration? . . . . . . . . . . . . . 21
IV. The Territoriality Principle . . . . . . . . . . . . . . 23
V. Party Autonomy . . . . . . . . . . . . . . . . . . . . . . . . 25
A. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
B. Choice of the Place of Arbitration. . . . 27
C. Default Character of Arbitration
Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
VI. Application of German Arbitration Law . 29
54
Para.
A. Place of Arbitration within
Germany, 1025 (1) ZPO . . . . . . . . . . 29
B. Place of Arbitration Outside of
Germany, 1025 (2) ZPO . . . . . . . . . . 31
C. Place of Arbitration Has Not Yet
Been Fixed, 1025 (3) ZPO . . . . . . . . 35
I.
Para.
D. Between 1025 (2) and (3)
ZPO: How to Fix the Place of
Arbitration and Avoid Vacuums in
International Arbitration . . . . . . . . . . . . 37
VII. Recognition and Enforcement of
Foreign Arbitral Awards, 1025 (4)
ZPO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Purpose: A Uniform Law of Arbitration1
1 In essence, 1025 Code of Civil Procedure (Zivilprozessordnung ZPO) is a choice of law

provision. It defines the prerequisites that must be met for the German law of arbitration to
be applicable in a given case. The basic norm is 1025 (1) ZPO, which provides for application of the 1025 et seq. ZPO in their entirety. Sections 24 of 1025 ZPO are of supplementary nature, as they allow for the application of particular provisions within the 1025
et seq. ZPO only. Where the requirements of 1025 (1) ZPO are not met, some parts of the
statutory scheme are applicable nonetheless in order to facilitate the commencement and
conduct of arbitral proceedings, as well as the enforcement of the award.
2 1025 ZPO is the German version of Article 1 Model Law (ML), but deviates from it in
several respects. The framers of the Model Law defined the scope of application of their
statute rather narrowly in order to improve the chances of transformation into national law
and in an effort not to interfere with political choices, which necessarily have to be made at
the national level.2
3 The framers of the German law did not have to accommodate concerns about national
sovereignty and the prospects for unification of international arbitration law. The levers of
national sovereignty were in their hands, and it was for them to make the choices. These
choices were made in favour of uniformity and simplicity.3 The distinction between commercial and non-commercial disputes was abandoned, as was the distinction between domestic
and international cases. Courts and parties should be spared the fate of having to operate
with two or even a whole set of different arbitration laws, e.g. one for commercial, one for
non-commercial, one for domestic and one for international disputes. 1025 et seq. ZPO
apply regardless of whether the case concerned is of commercial nature or not and whether
the case involves a cross-border or a purely domestic transaction.
4 Whenever the place of arbitration is located inside Germany, the German law of arbitration
applies, regardless of the nature of the case in dispute (1025 (1) ZPO). Vice versa, if the place
of arbitration is outside of Germany, then the 1025 et seq. ZPO are inapplicable, if one
disregards for the moment the auxiliary powers of the courts under 1025 (2) and (3) ZPO.
Once an arbitral award has been made outside of Germany, recognition and enforcement are
governed by 1061 ZPO, which provides the interface to the New York Convention.
5 As will be explained below, 1025 ZPO is based on the principle of territoriality (infra, paras
23 et seq.). As such, the provision abandons the alternative principle of party autonomy,
1
2
3
Holtzmann/Neuhaus (1989), pp. 26 seq.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 25.
1025 Wagner
55
which allowed the parties to designate the applicable arbitration law.4 Therefore, the case law
which was developed under the old code is moot under the new statutory scheme.
II.
The Law of Arbitration and the Directive on Consumer ADR
While all arbitration proceedings located in Germany fall under 1025 et seq. ZPO, Directive 6
2013/11/EU5 on consumer ADR provides an entirely new framework for ADR in consumer
disputes. The Directive aims to contribute to the proper functioning of the internal market by
ensuring that consumers can settle complaints by use of independent, impartial, transparent,
effective, fast and fair alternative dispute resolution procedures. The scope of the Directive
includes all forms of ADR, and notably arbitral proceedings.6 While the Directive does not
itself provide fresh rules of arbitration or create new institutions,7 it imposes a variety of duties upon the Member States. Pursuant to Art. 5 (1) ADR-Directive, Member States shall
take measures to facilitate access of consumers to ADR procedures. Entities offering ADR
shall inform the parties online and offline about their services (Art. 5 (2)). They must offer
ADR procedures to consumers free of charge or in exchange for a nominal fee only (Art.
8 (c)). In its chapter Chapter III, the ADR-Directive goes beyond the definition of basic
principles of ADR and regulates far-reaching duties of ADR entities to inform consumers
and to cooperate with one another.8
The scope of the Directive is confined to claims that are brought by consumers against busi- 7
nesses and are based on sales contracts or service contracts between these two parties, (Art.
2 (1)). Additionally, the scope of application is also limited by the following considerations:
Art. 2 (1) states that the Directive only applies to disputes involving an ADR-entity. Art. 4
(1) (h) defines ADR entity as any entity, however named or referred to, which is established on a durable basis and offers the resolution of a dispute through an ADR procedure
and that is listed in accordance with Article 20(2). Therefore, arbitral institutions do not
automatically qualify for the status of an ADR entity, but only if they successfully applied to
the competent national authority to be included on the list of ADR entities. Arbitral institutions thus have the choice to opt in into the framework of the Directive or to stay outside
of it. ADR procedures before other, non-listed institutions do not fall under the Directive.9
Given the numerous discrepancies between the Leitbild of the ADR-Directive, which is law
enforcement, and the more amicable view of commercial arbitration, it is doubtful that opting in is a good choice.10 It must also be considered that the Directive places a considerable
administrative burden on ADR entities that arbitral institutions must be willing to shoulder
if they apply for registration.
4
5
7
8
9
10
BGH 03.10.1956, BGHZ 21, 365 (368).

Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative
dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive
2009/22/EC (Directive on consumer ADR), O.J. 2013 L 165/63.
Id. Recital (19): This Directive is intended to apply horizontally to all types of ADR procedures, including to ADR procedures covered by Directive 2008/52/EC.
Wagner, ZKM 2013, 104 (104).
For a full review of the Directive cf. Wagner, 51 CMLRev 1, 9 seq. (2014); Rhl, Die Richtlinie ber
alternative Streitbeilegung und die Verordnung ber Online-Streitbeilegung, RIW 2013, 737.
Hayungs, ADR-Richtlinie und ODR-Verordnung, ZKM 2013, 86, 88; Wagner, ZKM 2013, 104 (106).
Wagner, ZKM 2013, 104, 105 seq.; Wagner, 51 CMLRev 1, 13 seq. (2014).
56
III. Arbitration vs. Other Forms of Alternative Dispute Resolution

A.
Prerequisites of Arbitration
8 The application of German arbitration law pursuant to 1025 ZPO presupposes that the
proceedings under consideration are in fact arbitral proceedings and not of another variety
of alternative dispute resolution (ADR). German law places very little weight on the use of
the correct terminology but follows instead the traditional principle of falsa demonstratio
non nocet. As a consequence, it is not determinative of the issue whether the parties actually
labelled the dispute resolution mechanism they chose as arbitration.11 More importantly,
even where the parties expressly refer their case to arbitration, legal analysis may well lead to
the conclusion that the dispute resolution mechanism really employed is not arbitration, but
in fact conciliation, mediation, expert determination or another mode of ADR.
9 In order to define the scope of 1025 et seq. ZPO, it is therefore necessary to identify a
minimum set of elements which must be present in order for a dispute resolution mechanism
to qualify as arbitration. The two crucial elements are as follows:12
Derogation of judicial dispute resolution: Arbitration is close to dispute resolution in public

court in the sense that legal controversies are decided by a third party who acts in lieu of
a judge sitting in a public court. In essence, arbitrators replace judges as decision-makers
so that resort to a court of law is precluded. Where the task of the third party is merely
to help the parties settle their dispute, i.e. where the third party lacks the authority to
make a final determination of the rights and obligations of the parties, this third party
does not act as arbitrator but as a mediator, conciliator or expert.13 On the other hand,
arbitration is compatible with the option of a party to have the dispute decided by a
court subsequent to arbitral proceedings (supra, 1026 paras 6 seq.). If one of the parties
is not content with the outcome of the proceedings, it may have a second bite.
Dispute resolution by an independent third party: The party or parties authorized to decide
the dispute must be separate from the parties to the controversy. This requirement does
not mean, of course, that partial arbitrators cease to be arbitrators at all or even strip
the whole proceedings of their character as arbitral proceedings. However, where the
tribunal itself is not an independent body but rather part of the organizational structure
of one of the parties, it ceases to be an arbitral tribunal. It may be acceptable for a party
to reserve the right to determine contested issues unilaterally, but such a procedure does
not qualify as arbitration.
B.
Dispute Resolution Boards and Panels of Corporations or Associations
10 The requirement that the tribunal, as such, be independent from both parties is important in
connection with dispute resolution mechanisms created and offered by one of the parties to
the dispute, often a corporation, association, stock exchange, private club or other institution.
Where the charter or by-laws of such institution explicitly reserve the right of recourse to
the courts against the decision of the corporate dispute resolution board or other panel,
11
12
13
OLG Mnchen 07.08.2006, SchiedsVZ 2006, 286 (288); OLG Frankfurt 14.06.2011, ZNER, 2012, 188
(191); OLG Kln 16.11.2012, BeckRS 2013, 03938; Zller-Geimer (2014), 1031 para. 12.
Cf. Stein/Jonas-Schlosser (2002), 1029 paras 10 seq.; cf. also MnchKommZPO-Mnch (2013), vor
1025 paras 20 seq.
BGH 23.05.1960, NJW 1960, 1462 (1463); id. 08.11.2007, SchiedsVZ 2008, 40 (41); OLG Kln
16.11.2012, BeckRS 2013, 03938, II.A.1.
1025 Wagner
57
arbitration is not an option. However, even if the right of recourse to the courts has been
excluded explicitly or implicitly, this does not automatically entail that the dispute resolution mechanism employed by the corporate entity is arbitration and not of another variety.
The distinguishing factor identifying arbitration is the independence and neutrality of the
tribunal.14 Arbitration requires that a dispute is processed and decided by an independent
body that is not within the exclusive control of one of the parties. If potential claimants lack
any influence on the choice of would-be arbitrators and are instead confronted with a dispute
resolution panel staffed and equipped by the corporate entity whose acts are the subject matter of the dispute to be resolved, the case is not one of arbitration. As a consequence, the
decision rendered by such a panel does not qualify as an award and is not binding upon either
the parties or the court subsequently called upon.
On the other hand, the mere fact that the tribunal is associated with a larger organization 11
to which one of the parties belongs, as it is the case with the Court of Arbitration for Sport
(CAS/TAS), is in itself no reason to deny the character of arbitration.15 In the case that only
a single arbitrator is lacking the requisite personal neutrality and independence, the situation
is to be resolved under 1036et seq.ZPO.
C.
Conciliation and Mediation
1.
Distinguishing Elements
Arbitration must also be distinguished from conciliation and mediation, which may be 12
particularly difficult where the parties employed a single person to help them resolve their
dispute with whatever means he or she sees fit. The criterion identifying the neutral person
as an arbitrator rather than a conciliator or mediator is his or her authority to make a decision
that is binding on the parties. In contrast, a neutral person is a mediator or conciliator if he or
she is employed merely to help the parties settle their dispute by negotiating an agreement.
Art. 3 (a) of Directive 2008/52/EC defines mediation as a structured process, however
named or referred to, whereby two or more parties to a dispute attempt by themselves, on a
voluntary basis, to reach an agreement on the settlement of their dispute with the assistance
of a mediator.16 The German Mediation Act provides an equivalent definition.17
In particular cases, it might be difficult to distinguish the two classes of agreements. A factor 13
weighing heavily in favour of mediation or conciliation rather than arbitration is that the parties included a forum selection clause into their agreement.18 This suggests that they did not
have the intention to exclude recourse to a court of law, which is a hallmark of arbitration.
MedArb is an attempt to reconcile mediation and arbitration in order to apply both tech- 14
niques to a particular dispute in tandem. Such combination creates problems because the
roles and functions of the neutral person or persons the would-be mediators or arbitrators
14
15
16
17
18
BGH 28.11.1994, BGHZ 128, 93 (108 seq.); id. 27.05.2004, BGHZ 159, 207 (210 seq.); OLG
Braunschweig 12.05.2005, SchiedsVZ 2005, 262 (263); OLG Kln 16.11.2012, BeckRS 2013, 03938; for
details see Wagner (1998), pp.482 seq.; Stein/Jonas-Schlosser (2002), vor 1025 para. 5; Schwab/Walter
(2005), Chap. 32 para. 17.
See also Oschtz, Sportschiedsgerichtsbarkeit, Berlin 2005, pp. 28seq.
Directive 2008/52/EC of 21.5.2008 on certain aspects of mediation in civil and commercial matters, O.J.
L 136/3.
1 Mediation Act (Mediationsgesetz MedG) of 21.7.2012, BGBl. I, 1577.
OLG Naumburg 20.05.2005, SchiedsVZ 2006, 103 (104 seq.) note Deutsch.
58
are utterly different in each case.19 Precisely because the mediator lacks the authority to
decide the case, the parties may be prepared to admit to certain facts or conclusions which
are detrimental to their own position, either openly or in ex parte conversations with the
mediator. This is fine if a settlement agreement is reached, such that the stage of arbitration
need not be entered. However, if mediation fails, such admissions must not be exploited in
proceedings against the party who made them. In order to preserve the confidentiality of
mediation, 4 Mediation Act grants privileges to mediators who must not be compelled to
testify in subsequent civil proceedings before a court of law or an arbitral tribunal.20 Unfortunately, the right of the parties and their counsel to disclose information gathered during the
mediation remains unimpaired. Furthermore, it is generally thought that the roles of judge
and mediator are incompatible.21 Transferred to the world of arbitration, this means that a
person who served as mediator must not act as arbitrator, i.e. decision-maker. However, the
parties retain the authority to reconcile both roles by agreement and to allow their mediator
to continue and step into the shoes of an arbitrator.22 The motive behind such agreements is
to avoid costs.
2.
Choice of Law
15 1025 ZPO does not in itself apply to mediation procedures that form the preliminary stage
of arbitral proceedings or that are integrated into arbitral proceedings. While major parts of
the law of mediation have been codified into the 2012 Mediation Act (Mediationsgesetz
MedG),23 the choice of law issues of mediation remain unresolved by statute and have not
as of yet reached the courts. In accordance with general principles of conflicts law (Art. 3 (1)
Rome I-Regulation), the parties enjoy autonomy to designate the applicable law themselves,
at least with regard to substantive matters such as the mediation agreement, confidentiality
and the like.24 Insofar as the mediation agreement includes procedural element, e.g. the exclusion of the right to go to court, the lex loci principle should apply, as it is codified in 1025
(1) ZPO.25 In the special case of MedArb, it must be ensured that both stages of dispute
resolution, i.e. mediation and arbitration, are governed by the same law.26 The link between
the law of arbitration and the law of mediation does not restrict the freedom of the parties
as they may still opt in favour of a particular legal system by way of designating the place of
arbitration wherever they see fit.27
19
20
21
22
23
24
25
26
27
Eidenmller, Hybride ADR-Verfahren bei internationalen Wirtschaftskonflikten, RIW 2002, 1 (10);

Risse, Wirtschaftsmediation, Mnchen 2003, 15 paras 7 seq.
For an interpretation and a critique of 4 cf. Wagner, Vertraulichkeit der Mediation, in: Fischer/Unberath, Das neue Mediationsgesetz (2013), pp.89seq.; idem ZKM 2011, 164.
von Olenhusen, Gerichtsmediation: Richterliche Konfliktvermittlung im Wandel, ZKM 2004, 104; Ler,
Einbindung von Mediation in den Zivilprozess Teil I, ZKM 2005, 182 (183seq.); Ortloff, Der Richter
als Mediator?, ZKM 2002, 199 seq.
Commission of the European Communities, Green Paper on Alternative Dispute Resolution in Civil
and Commercial Law, 19.04.2002, COM (2002) 196 final, para. 82; Berger, Integration or Mediation
Elements into Arbitration, Arb.Int. 2003, 387 (394 seq.).
For an overview of the new legislation see Wagner, Das Mediationsgesetz Ende gut, alles gut?, ZKM
2012, 110; Unberath, in: Greger/Unberath, MediationsG (2012).
Hutner (2005), pp.30seq.; Unberath, in: Greger/Unberath, MediationsG (2012), Part 5 para. 11.
Cf. Unberath, in: Greger/Unberath, MediationsG (2012), Part 5 para. 19.
The problem is not dealt with in Hutner (2005) pp. 174 seq.
See infra, Sachs/Lrcher, 1043 para. 2.
1025 Wagner
D.
Expert Determination (Schiedsgutachten)
1.
Background
59
In many areas, factual and technical (rather than legal) issues are the lifeblood of disputes. 16
Pertinent examples are the determination of defectiveness of performance in connection
with contracts for the construction of buildings and facilities, for the sale of machinery, vessels, aircraft and the like. In case the parties argue whether performance rendered conforms
to the requirements set up in the contract, it makes sense to let a neutral expert work out the
contested issues of fact before initiating a fully developed and thus costly mode of dispute
resolution. Under an agreement calling for expert determination, the party raising a claim
against the other side must not call upon a court of law or commence arbitral proceedings
immediately, but first has to present its case to an expert charged with determining contested
issues of fact. It is probable that the dispute will be easy to settle once the divisive issues of
fact have been clarified.
2.
Premature Claims
If one of the parties reneges on its commitment under the clause calling for expert determi- 17
nation and directly files its claim with a court or commences arbitral proceedings, the claim
must be thrown out.28 Courts have interpreted clauses mandating an expert determination
as barring any action brought prematurely. The claim will only be heard by the court after
the expert determination has been made. At this stage, however, most of the cases are settled
according to the conclusions arrived at in the expert report. If settlement cannot be reached,
the party whose position was supported by the expert may take legal action in public court.
The court or tribunal and the parties are bound by the conclusions reached by the expert,
and the dispute will usually be decided along the lines of the expert report. In this case, the
fees charged by the expert are not part of the fee-shifting system of German civil practice.29
3.
Binding Nature of the Experts Findings
However, there is an important exception to the binding effect of the experts findings. The 18
public court or arbitral tribunal must disregard the expert report and set his or her conclusions aside if the results reached by the expert are clearly erroneous (offenbar unrichtig).30
The exception is based on a per-analogiam application of 319 (1) (Brgerliches Gesetzbuch
BGB). This provision is directly applicable where the third party is called upon to adjust
contractual terms or even to complete a contractual agreement, for instance by determining the price owed in exchange for performance. These cases are not pursued in the present
context since their connection to dispute resolution by way of arbitration is remote.31 The
unanimous view is that the supplementation of contracts by third parties is solely a matter
for the substantive law.
The parties retain the authority to derogate from the legal standard of review provided by 19
319 (1) BGB: as 319 (2) BGB indicates, the parties may commit themselves to accept
28
29
30
31
BGH 08.06.1988, NJW-RR 1988, 1405; id. 24.11.2005, SchiedsVZ 2006, 217 (218) para. 13 (note
Greger); Zller-Geimer (2014), 1029 para. 5; Wagner (1998), pp. 655 seq.; id., NJW 2001, 182 (183).
BGH 24.11.2005, SchiedsVZ 2006, 217 (218) paras 15 seq. (note Greger).
BGH 22.04.1965, BGHZ 43, 374 (376); id. 09.07.1981, BGHZ 81, 229 (237); id. 14.07.1987, BGHZ
101, 307 (318seq.); Wagner (1998), pp. 658 (668 seq.); Zller-Geimer (2014), 1029 para. 5.
Stein/Jonas-Schlosser (2002), vor 1025 para. 29.
60
the expert determination as binding, even if it is apparent or arguable that his or her findings
are clearly erroneous.32 Conversely, they may also relax the standard of review or even eschew
any binding effect of the expert determination altogether.33 In the latter case, popular in practice, the expert report is relegated to the status of a statement of contested facts, prepared by
a competent and neutral third party. Even if these findings are not made binding, they will
ordinarily induce the parties to settle their dispute, provided the expert report is coherent
and well-prepared.
4.
Procedural Safeguards
20 Given that the experts findings are often determinative for the resolution of the case, the
question arises whether the expert is bound to observe basic principles of procedural equity in working towards his report. The central points are whether the expert must abide by
the commands of impartiality and independence (cf. 1036 ZPO) and whether he must
structure his own proceedings in a way that conforms to the principle of a fair trial (1041
(1)ZPO). The modern cases tend to answer the first of the above-mentioned questions in
the affirmative, at least where the clause referring disputes to determination by an expert was
not negotiated individually but hidden in boilerplate language. Where the clause calling for
expert determination is part of the standard business terms of one of the contracting parties,
it is subject to judicial review under 307 BGB. Where the clause puts the other side at an unfair disadvantage, it must not be enforced by courts or tribunals. In application of this general
standard, clauses have been set aside that subjected one party to determination of disputes
by an expert who lacked the requisite independence and impartiality and was associated with
the party who drafted the contract terms.34 With regard to the right to a fair trial, courts have
been more cautious, relying mostly on the result-oriented test of whether the conclusions
(rather than the procedure) of the expert were clearly erroneous.35 The better view is to hold
on to fundamental safeguards, e.g. the right to a fair trial, because rational parties would not
accept a procedure not conforming to such standards. Looked at in this way, it is obvious
that the right to a fair trial is of default nature only, such that the parties may negotiate a more
expedited and streamlined procedure if they wish.36
5.
Expert Determination as a Form of Arbitration?
21 The question of which procedural safeguards the expert has to observe in the course of
elaborating his or her opinion would be moot if the law of arbitration, i.e. 1025 et seq. ZPO,
were to be applied by way of analogy as suggested by some commentators.37 However, the
majority opinion refuses to follow suit and insists on the fundamental difference between
arbitration and expert determination.38 Thus, for example, it was held that a party cannot
32
33
34
35
36
37
38
BGH 28.02.1972, NJW 1972, 827; MnchKommBGB-Wrdinger (2012), 319 para. 3.

MnchKommBGB-Wrdinger (2012), 319 para. 3.
BGH 17.09.1976, BGHZ 81, 229 (236); id. 18.05.1983, NJW 1983, 1854 (1855); Wagner (1998),
pp.671seq.
BGH 25.06.1952, BGHZ 6, 335 (341); OLG Celle 26.01.1995, NJW-RR 1995, 1046.
Wagner (1998), pp.677 seq.
Stein/Jonas-Schlosser (2002), vor 1025 para.31; Zller-Geimer (2014), 1029 para. 5; cf. also Wagner
(1998), pp. 659 seq.
BGH 25.06.1952, BGHZ 6, 335 (340seq.); id. 17.05.1967, BGHZ 48, 26 (27 seq.); id. 14.06.1955, BGHZ
17, 366; OLG Mnchen 07.08.2006, SchiedsVZ 2006, 286 (288); Wagner (1998), p. 663; MnchKomm
ZPO-Mnch (2013), vor 1025 paras 58 seq.
1025 Wagner
61
challenge an allegedly partial expert before the court of appeals (Oberlandesgericht OLG)
under 1037 (3), 1062 (1) No. 1 ZPO.39 Furthermore, the court of appeals competent to
hear petitions to set aside an arbitral award (1062 (1) No. 4 ZPO) is not competent to hear
challenges directed against expert determinations alleged to be clearly erroneous.
The hesitation to equate expert determination with arbitration and to apply the full-blown 22
scheme of 1025et seq. ZPO is well founded. In particular, it is obvious that a number of
provisions within the law of arbitration do not fit the mould of expert determination. To
begin with, 1031 ZPO (on form requirements) does not and should not apply to contractual clauses calling for expert determination. Likewise, 1059 ZPO, which lists the reasons
for setting aside an award and sets out the pertinent procedural rules, should not be applied
to reports on factual issues supplied by an expert. These limitations are acknowledged even
by the adherents of the minority opinion, who counsel in favour of an equation of expert
determination with arbitration.40 On the other hand, commentators following the lines
of the traditional theory (which treats expert determination as different from arbitration)
recommend the per-analogiam application of 1037 (3) ZPO in cases of challenges brought
against partial experts.41 The early removal of a disqualified expert is the best way to help the
parties settle their dispute, and to avoid needless expenditure and to spare the public courts
deciding the dispute, both of which would certainly ensue if the allegedly partial expert were
allowed to proceed and deliver a report. Nevertheless, application of 1062 ZPO should
also be avoided, as it would be an exaggeration to concern a court of appeals with challenges
launched against experts in petty disputes, e.g. about car repairs. The proper solution would
be to refer applications to remove an expert to the court of first instance, even though it is
unclear which court that would be.42 These difficulties again make it clear that it is preferable
to hold on to the traditional theory that distinguishes expert determination and arbitration.
It would go much too far to classify any activity that helps the parties settle their dispute by
removing certain contested issues from controversy as arbitration and to apply the elaborated scheme of 1025 et seq. ZPO, which is costly to implement. To eschew the application
of 1025 seq. ZPO does not entail that procedural safeguards are missing or superfluous.
Quite the contrary, it is for the law of such other mechanisms of dispute resolution to develop
the necessary standards.
IV. The Territoriality Principle

The basic principle enshrined both in Article 1 (2) ML and in 1025 (1) ZPO is the princi- 23
ple of territoriality.43 The framers of both statutes identified the closest connection of arbitral
proceedings to exist to the law of the state on whose territory the proceedings take place.44
Thus, it is irrelevant which law governs the commercial contract that is in dispute between
the parties, and it is equally irrelevant which law governs the arbitration agreement, even if
the parties, as they are free to do, expressly and specifically opted in favour of that law.45
39
40
41
42
43
44
45
OLG Mnchen 07.08.2006, SchiedsVZ 2006, 286 (288).

Stein/Jonas-Schlosser (2002), 1025 paras 323 seq.
Wagner (1998), pp. 676seq.
Cf. with regard to a related case, Wagner, Schluwort, JZ 2001, 598 (599seq.).
Zller-Geimer (2014), 1025 para. 1; Raeschke-Kessler/Berger (1999), paras 131 seq.
Holtzmann/Neuhaus (1989), pp.35 seq.
Cf. infra, Trittmann/Hanefeld, 1029 para. 11; 1059 (2) No. 1 (a); Geimer (2005), IZPR paras 3721 seq.
62
24 The policy behind the territoriality principle is to make arbitral proceedings and awards as
safe as possible.46 Assuming that the proceedings were governed by another law, that legal
system would not have the power to prevent the competent authorities within the jurisdiction where the proceedings take place from interfering with the process. Likewise, choice of
a foreign law to govern arbitral proceedings would open up many ways to challenge the award
in the courts of the country where it was made. In order to fend off those dangers, the scope
of application of the arbitration law in general and the competence for challenge proceedings
is being tied to one and the same element, i.e. the place of arbitration, as it is defined in 1043
(1) ZPO.
V.
Party Autonomy
A.
Overview
25 Application of the territoriality principle seems to bear harsh upon parties who want to have
their dispute arbitrated in a custom-made process, independent of the confines of municipal
law. The framers of the Model Law acknowledged the concern of party autonomy but still
withheld the freedom to pick and choose a particular statute from the menu of national
arbitration laws.47 Under the Model Law and its progenies, the proper places for party autonomy are, firstly, the choice of the place of arbitration and, secondly, the leeway granted
by arbitration law itself, which to a large extent is of default nature only. Where the parties
designated both a place of arbitration and a law of arbitration, and it turns out that the two
choices do not match up, the law at the place of arbitration takes priority and the stipulation
in favour of a different arbitration law is to be re-interpreted to the effect that the rules of such
law derogate from the applicable system wherever it allows the parties to agree otherwise
(infra, para. 29).48
26 1025 (1) ZPO is a unilateral conflicts rule. As such, it does not apply if the parties select a
place of arbitration outside of Germany. In this case, it is for the foreign law to decide whether
the parties retain the authority to designate a law of arbitration which is different from the
law in force at the (foreign) place of arbitration. German law does not stand in the way of
parties who want to have the 1025 seq. ZPO applied even though they located the place of
arbitration outside Germany. Thus, the 1025seq. ZPO may be applied extraterritorially
where the parties reached such an opt-in agreement.49
B.
Choice of the Place of Arbitration
27 The definition of the place of arbitration supplied by 1043 (1) ZPO (Article 20 ML) is
remarkable for its abstraction. As 1043 (2) ZPO makes clear, the tribunal is free to meet
and hold hearings wherever it sees fit. Therefore, the concept of place of arbitration must
not be understood in a naturalistic, empirical fashion; it is not necessarily the place where
the proceedings actually occur. Rather, place of arbitration is a term of art which serves a
46
47
48
49

Holtzmann/Neuhaus (1989), p.36.
Zller-Geimer (2014), 1025 paras 4 seq.; Musielak-Voit (2013), 1042 para. 32.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 31; Lachmann (2002), para. 155; ZllerGeimer (2014), 1025 para. 8; MnchKommZPO-Mnch (2013), 1025 para. 15; Schtze (1999), para.
145.
1025 Wagner
63
particular function within the normative framework of the Model Law and the ZPO.50 Its
function is to marry legal certainty with party autonomy. Legal certainty requires that arbitral
proceedings be anchored in the jurisdiction, in which they take place, while party autonomy
favours the intent of the parties. By allowing the parties to designate the place of arbitration
(1043 (1) ZPO) and at the same time authorizing the tribunal to conduct the proceedings virtually anywhere (1043 (2) ZPO), the place of arbitration may in fact be chosen
with an eye towards the applicable law of arbitration only. The question of where it is most
convenient to meet and hold hearings should really be of no concern in this context. One is
ill-advised who proceeds the other way around, i.e. picks the place of arbitration first and then
waits to see what law of arbitration applies. In short, the parties are very well able to choose
the law applicable to the arbitral proceedings, but they must do so by designating the place
of arbitration (1043 (1) ZPO). After they have done this, they may set up the proceedings
anywhere they wish (1043 (2) ZPO).
C.
Default Character of Arbitration Law
As to the leeway of the parties to derogate from the framework of 1025 seq.ZPO, once it 28
is applicable, infra, para. 29.
VI. Application of German Arbitration Law

A.
Place of Arbitration Within Germany, 1025 (1) ZPO
Provided that the place of arbitration is inside Germany, 1025 seq. ZPO are applicable 29
in full. This does not mean, however, that party autonomy is discarded. Time and again,
the several provisions of the law contain the proviso that they apply only unless the parties
have agreed otherwise. There is very little true ius cogens within the German arbitration law,
as most of the rules are of a default nature only. For practical purposes, it is important that
the choice in favour of a tailor-made solution must not only be made specifically, i.e. within
the arbitration agreement or in a separate contract, but also by way of reference to arbitration rules of an arbitral institution or to arbitration rules prepared for the purpose of ad hoc
procedures, such as the UNCITRAL Rules (cf. Article 2 (d) ML).51 Thus, whenever the law
refers to an agreement of the parties that may specify otherwise, the relevant provisions of
the applicable arbitration rules must be read into the proviso. As a result, arbitration rules in
general, and those of institutions in particular, take priority over the statutory scheme.
There is a controversial discussion in German legal doctrine concerning whether it is pos- 30
sible to go one step further and recognize the existence of anational awards and arbitral
proceedings that are completely independent from any national legal system and its arbitration law. The majority of commentators reject such a view and hold on to the theory that
any arbitration must be grounded in one jurisdiction or the other.52 The minority position
wants to reserve the power of the parties to emancipate the arbitral tribunal from the strings
which any national arbitration law necessarily attaches.53 According to this view, the latter is
50
51
52
53
Raeschke-Kessler/Berger (1999), para. 136: vergeistigter Sitzbegriff; Stein/Jonas-Schlosser (2002), 1025

para. 2.
Weigand-Wagner (2002), Germany, para. 6; cf. BGH 26.09.1985, BGHZ 96, 40 (44 seq.).
Geimer (2005), IZPR para. 3718; Stein/Jonas-Schlosser (2002), Anhang 1061 para. 8; Rensmann, Anationale Schiedssprche, Berlin 1997, pp.78 seq.
Cf. Vorwerk/Wolf, Beckscher Online-Kommentar ZPO 1025 paras 21 seq., discussing this view without
subscribing to it.
64
only relevant where a party challenges the award in court or applies for its recognition and
enforcement, i.e. it is accepted that 1059 seq. ZPO are binding upon the German courts.
Given this concession, the difference between the two views is marginal: as long as the parties
act in concert and keep their dispute away from courts, they can act exactly as they choose.
B.
Place of Arbitration Outside of Germany, 1025 (2) ZPO
31 If the parties locate the place of arbitration outside of Germany, the domestic law of arbitration does not apply, save for the exceptions listed in 1025 (2) ZPO. The ZPO does not
attempt to designate the law that governs in this case, as that would amount to overreaching
into the affairs of a foreign state.54 It is, however, possible to opt into the German arbitration
law where the otherwise applicable foreign law does not stand in the way (supra para. 26).55
32 The three exceptions of 1025 (2) ZPO all concern the competences of German courts with
respect to a dispute that is subject to arbitral proceedings conducted elsewhere and subject
to foreign law. The first exception mentioned is 1032 ZPO, according to which a German
court of law must dismiss a claim brought in violation of a valid arbitration agreement. In
other words, the courts are held to respect the ouster of their jurisdiction regardless of where
the place of arbitration is located. The second exception is 1033 ZPO, which preserves the
jurisdiction of the German courts for preliminary measures in the face of a valid arbitration
agreement. Although the arbitral tribunal itself is authorized to issue interim measures of
protection pursuant to 1041 ZPO, Article 17 ML clarifies that this authority does not take
away the respective competence of the public courts.
33 For this reason, it was wrong for the OLG Nrnberg to reject an application for interim relief
brought in a case which the parties had referred to arbitration in Geneva to be settled under
Swiss law.56 The court held that the arbitration agreement, in conjunction with the choice
of law provision, excluded the jurisdiction of the German courts and thus stripped them of
their competence to issue an injunction or other means of interim protection. As is obvious
from the text of 1025 (2) ZPO, the reverse is true, i.e. the mere fact that the parties referred
the case to arbitration at a place outside Germany excludes the jurisdiction of the German
courts with respect to the final disposition of the case, but preserves their competence to
issue orders of interim protection.57
34 Finally, 1025 (2) ZPO preserves the competence of the courts to assist an arbitral tribunal
in the taking of evidence and similar measures pursuant to 1050 ZPO, Article 27 ML. Unlike the two exceptions just explained, this one is not provided for in Article 1 (2) ML.
C.
Place of Arbitration Has Not Yet Been Fixed, 1025 (3) ZPO
35 The territoriality principle runs into difficulties where the place of arbitration is still uncertain, such that it is impossible to tell whether the proceedings will be domestic (1025 (2)
ZPO) or foreign (1025 (3) ZPO). In this situation, 1025 (3) ZPO declares a number of
provisions to be applicable, all of which have in common that they authorize the German
courts to assist the parties in establishing the arbitral tribunal. The idea behind this provi54
55
56
57
Stein/Jonas-Schlosser (2002), 1025 para. 2.

OLG Nrnberg 30.11.2005, IPRax 2006, 468 note Schtze, IPRax 2006, 442 seq.
Schtze, Die verkannte Funktion der Schiedsvereinbarung im internationalen Zivilprozessrecht, IPRax
2006, 442 (443 seq.).
1025 Wagner
65
sion, which has no precursor in the Model Law, is that the German courts should help any
of the parties to enforce the arbitration agreement and to put the proceedings on track. This
requires the setting up of the arbitral tribunal. Once this has been done successfully, it is for
the tribunal to choose the place of arbitration, thereby anchoring the proceedings within a
particular legal system. Relevant authorizations in favour of the courts, which 1025 (3)
ZPO refers to, are to be found in 1034 (2), 1035 (3), (4), 1037 (3), 1039 ZPO.
1025 (3) ZPO requires that either the claimant or the respondent have their seat or ha- 36
bitual residence in Germany. If neither of the parties have a strong connection to Germany,
the courts of this country must refrain from assistance.
D.
Between 1025 (2) and (3) ZPO: How to Fix the Place of Arbitration and Avoid
Vacuums in International Arbitration
1025 (2) and (3) ZPO rest on the principle of non-interference into arbitral proceedings 37
that lack any connection to Germany. This is sound policy in general but the principle may
generate adverse consequences in particular cases, e.g. where the law of the country in which
the place of arbitration is located defines the jurisdiction of its own courts differently from
1025 ZPO. 1025 ZPO is a unilateral conflicts rule (supra para. 26) which does not, as
it may not, confer jurisdiction on foreign courts with regard to assistance within arbitral
proceedings classified as foreign.
The problems inherent in the unilateral definition of the scope of application of arbitration 38
law became apparent in a decision of the Bavarian Highest Regional Court (Bayerisches
Oberstes Landesgericht BayObLG).58 The facts of the case are as follows: the parties had
agreed on arbitration in Japan, without stipulating a particular city as the place of arbitration.
The respondent party, a German firm resident in Bavaria, had failed to nominate an arbitrator
in due time. The claimant Japanese firm applied to the BayObLG, invoking 1025 (3) ZPO
and seeking the appointment of an arbitrator for the respondent by the court under 1035
(3) ZPO. The BayObLG asserted jurisdiction on the theory that the place of arbitration had
not been fixed yet because the parties failed to name a particular city in Japan. This reasoning
is not convincing as the parties had made it clear beyond doubt that they wanted to arbitrate
in Japan and not in any other jurisdiction. However, the court was still correct in taking jurisdiction and thus helping the Japanese party in getting the arbitral proceedings under way.
The Japanese arbitration law lacks a mirror image of 1025 (3) ZPO and instead confers
jurisdiction for the appointment of arbitrators on the court that, absent the arbitration clause,
would have been competent to hear the underlying claim. Under general principles of international jurisdiction (actor sequitur forum rei) the competent forum was in Germany. Had
the BayObLG denied jurisdiction, no court on earth would have been competent to assist the
claimant in establishing the arbitral tribunal.
The teachings of this decision are twofold:59 firstly, in order to connect their dispute with the 39
arbitration law of a particular jurisdiction, it is enough for the parties to name the respective country as the place of arbitration. If a country other than Germany is nominated as the
place of arbitration, the proceedings are foreign (1052 (2) ZPO).60 Secondly, whenever the
58
59
60
BayObLG 05.10.2004, SchiedsVZ 2004, 316 (note Wagner); see also OLG Mnchen 9.5.2013, BeckRS
2013, 18009.
Cf. Wagner, SchiedsVZ 2004, 317 (318 seq.).
OLG Mnchen 9.5.2013, BeckRS 2013, 18009.
66
foreign state designated as the place of arbitration defines the scope of application of its own
arbitration law and the jurisdiction of its own courts differently from 1025 ZPO, the parties
must not be left without any possible assistance. Rather, the German courts should invoke
their jurisdiction in a per-analogiam application of 1025 (3) ZPO, provided that the place
of arbitration is in a foreign country (1025 (2) ZPO) and the foreign court denies them
the assistance that 1025 (3) ZPO grants. Of course, one of the parties must have its seat or
residence in Germany.
VII. Recognition and Enforcement of Foreign Arbitral Awards, 1025 (4) ZPO
40 1025 (4) ZPO is to be read in parallel with 1025 (2) ZPO. Both provisions apply in the
situation where the place of arbitration is located outside of Germany. Whereas the latter defines the powers of the German courts in the stages before the award has been made, 1025
(4) ZPO governs the situation once the award has been handed down at a foreign place.
As 1025 (4) ZPO makes it clear, recognition is governed by 1061 ZPO while domestic
awards are enforced subject to 1060, 1059 ZPO.
41 In order to pick the correct subset of provisions, it is crucial to know whether the award is a
domestic or a foreign one. The criterion upon which the distinction is to be drawn is again
the place of arbitration. In order to facilitate the making of the distinction and in the interest
of legal certainty, 1054 (3) sentence 1 ZPO requires that the arbitrators stipulate the place
of arbitration in the award (cf. Article 31 (3) sentence 1 ML). Precisely because the concept
of place of arbitration is a complex one (supra, para. 27 seq.), it may very well remain doubtful whether the arbitrators made the choice correctly in their award, i.e. whether they named
the true locus as the place of arbitration. In order to avoid these doubts and the risk of satellite
litigation around this issue, 1054 (3) sentence 2 ZPO (Article 31 (3) sentence 2 ML) adds
the clarification that the award shall be deemed to have been made at that place. Thus, the
determination whether a given award is domestic or foreign must be made exclusively on
the basis of the place of arbitration stipulated in the award itself. If the tribunal designated a
place inside Germany, the award is domestic and may be enforced or set aside pursuant to
1059, 1060 ZPO. If the tribunal designated a place outside Germany, the award is foreign
and subject to recognition and enforcement under the rules set out in the New York Convention, to which 1062 ZPO refers.
1026 Extent of Court Intervention1

In matters governed by 1025 to 1061, no court shall intervene except where so provided in this Book.
Short Bibliography: Holtzmann/Neuhaus, A Guide to the UNCITRAL Model Law on International
Commercial Arbitration, Deventer 1989; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005;
Schtze, Schiedsgericht und Schiedsverfahren, Mnchen 1999; Wagner, Prozessvertrge: Privatautonomie im Verfahrensrecht, Tbingen 1998; Wagner, in: Weigand (ed.), Practitioners Handbook
on International Arbitration, Mnchen/Copenhagen 2002; Wagner, Dispositionen ber die Verbindlichkeit von Schiedssprchen, Festschrift Schilken, Mnchen 2015 (in print).
I.
II.
I.
Para.
Purpose and Background . . . . . . . . . . . . . . . . 1
Powers of Courts under German
Arbitration Law. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Para.
III. Party Agreements. . . . . . . . . . . . . . . . . . . . . . . . 5
Purpose and Background1
1026 Code of Civil Procedure (Zivilprozessordnung ZPO) was included into the Ger- 1
man arbitration law for the sole reason that it has a precursor in Article 5 Model Law (ML).2
The framers of the Model Law wanted to make it clear that public courts were barred from
intervening into arbitral proceedings at will.3 Arbitral tribunals are acting in their own right
and there is no supreme judicial power ranging over the heads of the arbitrators.4 To be sure,
all of this was well understood in German law anyway. It follows from general principles that
courts may intervene into private affairs only where the law specifically authorizes them to
do so. This is what 1026 ZPO makes explicit in the interest of legal certainty and in order to
comply fully with the Model Law.
II.
Powers of Courts under German Arbitration Law
A catalogue of subject matters in which German courts are authorized to intervene is sup- 2
plied by 1062 (1) ZPO. In full congruence with the scheme of the Model Law, the German
courts are authorized or even obliged:
to provide assistance in establishing the arbitral tribunal, i.e. appointment, removal and
replacement of arbitrators: 1035 et seq. ZPO;
to refer to arbitration those claims which are brought in violation of an arbitration agreement: 1032 ZPO;
to order interim measures of protection: 1041 ZPO; and
to set aside awards which are successfully challenged and grant enforcement of awards
which are upheld: 1059et seq. ZPO.
1
2
3
4
Holtzmann/Neuhaus (1989), p. 216.
Weigand-Wagner (2002), Germany, para. 309.
68
3 As a result of several provisions within the 1025et seq. ZPO, the catalogue of competences
vested in the public courts is wider than in the Model Law. The purpose of all of these extensions is to facilitate arbitral proceedings rather than allowing for a larger measure of court
control over such proceedings. The additional competences are:
the authority to cure imbalances in the composition of the arbitral tribunal by the replacement of arbitrators or by disregarding the mechanism of appointment set out in the
arbitration agreement: 1034 (2) ZPO;
the authority to issue declaratory judgments prior to the establishment of the arbitral
tribunal, settling disputes over whether the arbitration agreement is valid and binding or
not: 1032 (2)ZPO;
the authority to grant leave for the enforcement of a preliminary order made by an
arbitral tribunal: 1041 (2)-(4) ZPO; and
the authority to provide assistance to arbitral tribunals not only in the taking of evidence
(cf. Article 27 ML), but also in other matters in which tribunals lack the necessary authority: 1050 ZPO.
4 In addition to the statutory authorizations listed above, German courts have not shied away
from intervening in arbitral proceedings where it appears that such intervention would
facilitate matters or otherwise further the legitimate interest of one of the parties. Thus,
for example, 1035 (4) ZPO has been applied per-analogiam to cases where one party
sought a declaration that the terms of the governing arbitration agreement concerning the
appointment of the chairperson were not complied with.5 Another example concerns the
enforcement of arbitral awards. The procedure set out in 1060 ZPO does not require that
the award is subject to enforcement and execution in the ordinary sense of the terms. Even
where the award is of declaratory nature only, the party concerned has a legitimate interest
in seeking enforcement, as such a decision cuts off grounds for challenge to which the award
may otherwise be subjected (1060 (2) ZPO).6
III. Party Agreements

5 Some commentators entertain the view that 1026 ZPO is strictly binding upon the parties,
i.e. that they can neither narrow the competences of the public courts nor expand them by
providing for a broader involvement of courts into arbitral proceedings.7 However, 1026
ZPO as well as its precursor in Article 5 ML aim at fending off state intervention into arbitral
proceedings, not at restricting the parties in matters on which they are in agreement. The
question whether expansions of court competences agreed by the parties are binding upon
the courts has nothing to do with 1026 ZPO, but poses a problem within its own category:8
generally, parties are not able to expand the competences of public courts in their own interest because the public has to fund the judicial system, court dockets are crowded and other
parties wait in line to have their own disputes resolved.9
5
6
7
8
9
OLG Hamm 07.03.2002, SchiedsVZ 2003, 79 (80) note Krll.

BGH 30.11.1961, JZ 1962, 287; Schwab/Walter (2005), Kap. 27 para. 7; Krll, (Schiedsrechtliche Rechtsprechung 2003), SchiedsVZ 2004, 113 (120); dissenting Zller-Geimer (2014), 1059 para. 27 who
opts in favour of declaratory judgments.
MnchKommZPO-Mnch (2013), 1026 para. 3.
Wagner (1998), pp.598 et seq.
1026 Wagner
69
However, where the parties have agreed to take their dispute off the dockets of the judges and 6
to pay arbitrators out of their own pockets, there is no reason to deny them something like
a partial re-entry into the judicial system. This explains why the parties may even discard
the arbitral award altogether and come back to the courts to have their dispute adjudicated
there.10 Consequently, the Federal Court of Justice (Bundesgerichtshof BGH) saw no difficulty in enforcing an arbitration clause that allowed any party to re-litigate the dispute in a
public court within one month of the day when the arbitral award was made.11 As the court
correctly observed, arbitration is a creature of contract, so that the parties are free to define
its scope and limits. Furthermore, it seems difficult to explain why the parties should have
the option to opt out of the judicial system altogether through an arbitration agreement, but
should not be allowed to opt for an intermediate mechanism that provided for arbitration as
a first stage and elective judicial dispute resolution as a second option.
In the U.S., the courts of appeals were divided on the question of whether parties are allowed 7
to expand judicial review of arbitral awards beyond the narrow categories of 10 Federal
Arbitration Act (9 U.S.C.). While some appellate courts have been willing to enforce such
agreements and to allow for a more searching standard of review,12 others have refused to
dilute the finality of arbitral awards out of a fear of undermining the effectiveness of arbitration as a mode of dispute resolution chosen by the parties.13 The U.S. Supreme Court has
finally settled the issue and committed to the strict view that parties must not derogate from
the FAA through an agreement expanding the scope of judicial review beyond the statutory
limits.14
If the parties are authorized to waive the arbitral award altogether and to have the case tried 8
a second time in a court of law, they must also have the authority to go not quite so far, i.e.
to expand the scope of judicial review of arbitral awards, e.g. by adding reasons for setting
aside an award to the list of 1059 (2) ZPO. Preceding the BGH decision,15 the Higher
Regional Court (Oberlandesgericht OLG) Naumburg had remarked, in passing, that
such agreements were void without explaining why this should be the case.16 However, as
has been indicated above (supra, para. 6), such agreements deserve to be honoroed and an
expansion of judicial review be allowed. The law of arbitration is built on the principle of
party autonomy, and arbitral awards owe their enforcement to the fact that the parties agreed
to have their dispute resolved in arbitration. There is no compelling reason why the parties
10
11
12
13
14
15
16
Cf. Wagner (1998), pp.715seq.; see also BGH 1.3.2007, BGHZ 171, 245 para. 19 = SchiedsVZ 2007, 160
(162); RG 21.12.1934, RGZ 146, 262 (267 seq.); BayObLG 24.02.1984, MDR 1984, 496; OLG Bremen
14.12.1956, NJW 1957, 1035 (1036).
BGH 1.3.2007, BGHZ 171, 245 para. 18ff. = SchiedsVZ 2007, 160 (162); Wagner, FS Schilken (2015, in
print); dissenting OLG Naumburg 20.05.2005, SchiedsVZ 2006, 103 note Deutsch; MnchKommZPOMnch 1029 para.90.
Gateway Technologies, Inc. v. MCI Telecommunications Corp., 64 F.3d 993, 996 seq. (5th Cir. 1995); Roadway Package System, Inc. v. Scott Kayser, 257 F.3d 287, 292 seq. (3rd Cir. 2001); Lapine Technology Corp. v.
Kyocera Corp., 130 F.3d 884, 888 seq. (9th Cir. 1997).
Bowen v. Amoco Pipeline Co., 254 F.3d 925, 931 seq. (10th Cir. 2001); Mactec, Inc. v. Gorelick, 427 F.3d 821,
827 seq. (10th Cir. 2005).
Hall Street Associates, L.L.C. v. Mattel, Inc., 128 S.Ct. 1396, 1403ff. (2008); cf. also Becker, Supreme Court
erklrt Vereinbarungen zur Erweiterung des gerichtlichen berprfungsmastabs von Schiedssprchen
fr unwirksam Hall Street Associates, L.L.C. v. Mattel, Inc., SchiedsVZ 2009, 205.
Supra, note 11.
OLG Naumburg 20.05.2005, SchiedsVZ 2006, 103 note Deutsch; MnchKommZPO-Mnch 1029
para.90.
70
should be confronted with a binary, either/or choice of either opting in favour of litigation
or of arbitration without being able to modify either mode of dispute resolution. In the area
of litigation, it is undisputed that the parties may derogate from a variety of procedural rules,
such as those on jurisdiction (38 ZPO); as such, it would be a contradiction to hold otherwise in the area of arbitration.
9 Therefore, the better view is to allow the parties to expand the competences of the courts
beyond the limits set out in the ZPO.17 The parties retain the authority to broaden the scope
of judicial review of arbitral awards. Furthermore, it should also be possible for them to refer
a particular legal question to a court of law in order to wait for its decision while the arbitral
proceedings are still pending.
17
Wagner, FS Schilken (2015, in print).
1027 Loss of Right to Object

A party who knows that any provision of this Book from which the parties may derogate
or any agreed requirement under the arbitral procedure has not been complied with and
yet proceeds with the arbitration without stating his objection to such non-compliance
without undue delay or, if a time limit is provided therefore, within such period of time,
may not raise that objection later.
I.
II.
I.
Para.
Background and Purpose . . . . . . . . . . . . . . . . 1
Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
A. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
B. Procedural Error . . . . . . . . . . . . . . . . . . . . . 4
C. Failure to Object in Time . . . . . . . . . . . . . 8
Para.
D. Knowledge of the Aggrieved Party . . . 10
E. Consumer Disputes . . . . . . . . . . . . . . . . . 11
III. Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . 12
IV. Party Agreements. . . . . . . . . . . . . . . . . . . . . . . 13
Background and Purpose1
1027 Code of Civil Procedure (Zivilprozessordnung ZPO) is the German version of 1

Article 4 Model Law (ML), concerning implied waiver of the right to object. The function
of the waiver principle is to speed up proceedings and to isolate them from protracted challenges. If 1027 ZPO did not exist, a party witnessing a violation of a procedural rule could
remain idle and wait for the resolution of the dispute, i.e. the arbitral award: if it turned out
that the award was in its favour, the party could accept it, and if the award was in favour of the
opponent, the aggrieved party could dig out the procedural error in order to challenge the
award and have it set aside. The same analysis may be applied to earlier stages of the arbitral
proceedings, e.g. where the tribunal had made a mistake in summoning a witness. Here, the
aggrieved party could wait for the testimony of the witness in order to invoke the procedural
error if the testimony was detrimental to its interests. To prevent such opportunistic behaviour, provisions about implied waivers of the right to object are a staple of modern codes of
civil procedure. With regard to proceedings in a court of law, the ZPO supplies an estoppel
rule in 295 ZPO which goes further than 1027 ZPO in as much as actual knowledge on
the part of the aggrieved party is not necessary.
Unlike Article 4 ML, 1027 ZPO does not employ the concept of implied waiver. Where the 2
prerequisites of 1027 ZPO are met, the party loses its right to object, regardless of whether
the behaviour in question, i.e. silence in the face of procedural error, may really be interpreted
as an implied declaration of waiver or not.2 This difference in construction has no bearing on
the resolution of particular cases.
II.
Requirements
A.
Overview
The pre-requisites for estoppel of the right to object are as follows:
Procedural error, i.e. non-compliance with

(a) a statutory rule from which the parties may derogate or
1
2
72
(b) a procedural requirement specified in the arbitration agreement.
Failure to object without undue delay or within the time limit provided by statute or
agreement.
Knowledge of the error on the part of the aggrieved party.
B.
Procedural Error
4 The first prerequisite of implied loss of the right to object is that the tribunal made a procedural mistake. The yardsticks needed to identify a mistake are the applicable arbitration law
and the arbitration agreement of the parties. If a statutory rule has not been complied with,
there is an error; however, not all of such errors are subject to the loss of the right to object.
A further requirement is that the rule which was violated was of the character of a default
rule such that the parties were free to derogate from it. Where this is the case, the loss of the
right to object comes close to an implied waiver in the true sense of the term (supra, paras 1 et
seq.). Where statutory rules of mandatory nature were violated, the right to object cannot be
lost by silence because the purpose behind such a rule must not be frustrated by the parties.
5 In other words, mandatory rules are waiver-proof and thus the right to object cannot be lost.
This exception is of little weight, however, because German arbitration law contains few
provisions that are strictly binding upon the parties and the tribunal. The most important
examples are 1030, 1042 (1), (2), 1048 (4) sentence 1 ZPO, and anything that is part of
the ordre public (1059 (2) No. 2 (a) ZPO).3 Delayed objections pointing to formal defects
within the arbitration agreement are not subject to 1027 ZPO because the special regime
of cure found in 1031 (6) ZPO applies: if the party who wants to rely on the non-existence
of a valid agreement fails to object and instead participates in the proceedings on the merits,
the defect of the arbitration agreement is cured and the right to object is lost.4 In a similar
vein, the right to have a claim thrown out of court that was brought in violation of an arbitration agreement is lost pursuant to 1032 (1) ZPO if the aggrieved party fails to lodge an
objection prior to the hearing on the merits.5 An application challenging the composition of
the arbitral tribunal and motioning the court to appoint the arbitrators itself under 1034
(2) ZPO must be brought no later than two weeks after the aggrieved party learned of the
composition of the arbitral tribunal.6 Thus, there is very little in the statutory framework of
German arbitration law that is really resistant to the failure of the interested party to object
in time.
6 The second category of mistakes is violation of procedural rules which stem from the arbitration agreement drawn up by the parties. In practice, it is extremely rare that the parties
really negotiate such terms, either at the time of contract formation or subsequently, after the
dispute has arisen. In order to avoid the transaction costs associated with the negotiation of
arbitration rules, they usually refer to the rules of an arbitration institution, like the German
Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) or ICC Rules
of Arbitration. In this way, institutional arbitration rules are incorporated into party agreements and thus take priority over the statutory framework of 1025 et seq. ZPO, if only
3
4
5
6
For details see infra, Krll/Kraft, 1059 paras 90et seq.

Cf. infra, Trittmann/Hanefeld, 1031 para. 30.
Cf. infra, Huber/Bach, 1032 paras 12 et seq.
Cf. infra, Nacimiento/Abt/Stein, 1034 paras 31 et seq.
1027 Wagner
73
to the extent that the latter is of default nature.7 However, the parties always retain the right
to come back to the statutory framework, i.e. they may derogate from the institutional rules
agreed upon as they see fit. This is the reason why 1027 ZPO draws a distinction between
statutory and party-made provisions and exposes rules grounded in party-agreement to the
risk of estoppel without exception.
1027 ZPO fails to mention non-compliance with a procedural rule imposed by the tribunal 7
itself under 1042 (4) sentence 1 ZPO. This case merits the per-analogiam application of
1027 ZPO.8 After all, the rule-making authority of the tribunal is grounded in the agreement of the parties. Furthermore, the procedural rules imposed by the tribunal are of no
greater seniority than those on which the parties agreed directly.
C.
Failure to Object in Time
Once an error has been made, the aggrieved party must object without undue delay or within 8
the time limit which has been specified for such objection. Like the Model Law, the ZPO fails
to stipulate such time limits for objections, and reasonable parties will abstain from drafting
their own. If they exist at all, time limits are the domain of arbitration rules developed by
institutions. The tribunal itself may also have set time limits under its rule-making power
granted by 1042 (4) sentence 1 ZPO.
Where a specific time limit is missing, the objection must be lodged without undue delay. 9
This is a term of art in German law which stands between immediately and not too late, and
roughly equals as soon as possible (121 (1) sentence 1 Civil Code (Brgerliches Gesetzbuch
BGB)). The aggrieved party must take the first reasonable opportunity to bring the error
to the attention of the arbitral tribunal. It is doubtful whether the legislative materials are
justified in their willingness to allow the party to wait until the beginning of the next oral
hearing to raise its objection.9 In light of the goal of 1027 ZPO to speed up proceedings
(supra, para. 1), the party should be required to object earlier, either in the same hearing in
which the mistake occurred or in a written statement filed subsequently. If a number of weeks
lapse before the next oral hearing is scheduled, there is no reason to allow the party to wait for
such a long time. On the other hand, it goes too far to require the party to write immediately
for the sole reason of bringing the objection to the attention of the tribunal.10 For the purpose
of 1027 ZPO, it is sufficient to require the aggrieved to raise its objection together with the
next procedural steps it takes, be it an oral presentation in the course of the ongoing hearing,
a written objection together with a statement that is filed after the hearing or orally at the
beginning of the next hearing.11
D.
Knowledge of the Aggrieved Party
Under Article 4 ML, the third element (knowledge of the aggrieved party) is a true pre- 10
requisite of implied waiver because the tribunal must have been reasonably certain that the
party had the relevant knowledge. Matters are different under 1027 ZPO. In this context,
knowledge of the mistake is not a prerequisite but rather a defence against estoppel the
7
8
9
10
11
See supra, Wagner, 1025 paras 25 et seq.

MnchKommZPO-Mnch (2013), 1027 para. 9; Stein/Jonas-Schlosser (2002), 1027 para. 8.
Cf. Musielak-Voit (2013), 1027 para. 3; MnchKommZPO-Mnch (2013), 1027 para. 10.
74
party who failed to lodge a timely objection must show and prove that it did not have the
relevant knowledge.12
E.
Consumer Disputes
11 In a famous decision, the European Court of Justice (ECJ) declined to apply the principle
of estoppel in cases where the legal rule that was violated served the purpose of protecting
the consumer.13 In the case at hand, the consumer had signed an arbitration clause together
with a contract for cell-phone services. The competent Spanish court held the arbitration
clause to violate Article 3, Annex q of the Directive 93/13 on Unfair Terms in Consumer
Contracts. However, the arbitral tribunal had informed the consumer of her right to object,
but to no avail; the consumer chose to participate in the arbitral proceedings instead of raising an objection.14 After she had lost on the merits, the consumer challenged the award on
the ground that the arbitration clause had been invalid. The ECJ allowed the challenge and
called for setting aside the award on the ground that the principle of effectiveness required
the national court to assess on its own motion whether the arbitration agreement involved
was valid or not.15 This judgment flies in the face of 1040 (2), (3) ZPO and amounts to a
kiss of death for arbitration of B2C disputes.16
III. Consequences
12 If the requirements of 1027 ZPO are satisfied and the defence of ignorance is not raised successfully, then the right to object is lost for good. The right to complain about the error in the
course of the arbitral proceedings themselves is not all that is lost to the party who remains
idle; rather, the loss of the right to object extends to subsequent procedures before a court of
law for the setting aside or the enforcement of the award.17 In particular, the aggrieved party
can no longer challenge the award on the ground that the proceedings before the tribunal
were not in accordance with the law or with the agreement of the parties, the latter including
institutional arbitration rules to which the parties had referred to in their agreement, as it
otherwise could pursuant to 1059 (2) No. 1 (d) ZPO. On the other hand, a decision of the
arbitral tribunal declaring estoppel is not binding upon a court of law hearing a challenge that
is based upon the respective procedural error.18
IV. Party Agreements

13 Under 1027 ZPO, the loss of the right to object is confined to the area of non-mandatory
rules of procedure. As a consequence, 1027 ZPO itself is of non-mandatory nature as well.19
12
13
14
15
16
17
18
19
MnchKommZPO-Mnch (2013), 1027 para. 13; Stein/Jonas-Schlosser (2002), 1027 para. 7; Musielak-Voit (2013), 1027 para. 4.
ECJ 26.10.2006, Case C-168/05 (Mostaza Claro v. Centro Mvil Milenium SL), SchiedsVZ 2007, 46 note
Wagner.
ECJ 26.10.2006, Case C-168/05, (Mostaza Claro v. Centro Mvil Milenium SL), para. 17.
ECJ 26.10.2006, Case C-168/05, (Mostaza Claro v. Centro Mvil Milenium SL), paras 27 seq., 38.
The decision in Mostaza Claro also contradicts other case law of the ECJ, cf. Stein/Jonas-Wagner (2011),
Art. 24 EuGVVO paras 41 seq.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 33; OLG Stuttgart 16.07.2002, SchiedsVZ
2003, 84 (86) note Nacimiento/Geimer; OLG Naumburg 21.02.2002, NJW-RR 2003, 71, 72; MusielakVoit (2013), 1027 para. 1.
Stein/Jonas-Schlosser (2002), 1027 para. 6; MnchKommZPO-Mnch (2013), 1027 para. 14.
Dissenting MnchKommZPO-Mnch (2013), 1027 para. 6.
1027 Wagner
75
The parties may derogate from the rule, e.g. by specifying additional prerequisites for estoppel
of the right to object. Section41 DIS Rules reiterates the contents of 1027 ZPO without
changing the substance.20
20
See Part III, Bredow/Mulder, Section 41 para. 1.
1028 Receipt of Written Communications in Case of Unknown Whereabouts1

(1) Unless otherwise agreed by the parties, if the whereabouts of a party or of a person
entitled to receive communications on his behalf are not known, any written communication shall be deemed to have been received on the day on which it could
have been received at the addressees last-known mailing address, place of business
or habitual residence after proper transmission by registered mail/return receipt
requested or any other means which provides a record of the attempt to deliver it
there.
(2) Subsection 1 does not apply to communications in court proceedings.
I.
II.
I.
Para.
Purpose and Scope of Application . . . . . . . . 1
Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Para.
III. Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
IV. Party Agreements. . . . . . . . . . . . . . . . . . . . . . . . 8
Purpose and Scope of Application1
1 1028 Code of Civil Procedure (Zivilprozessordnung ZPO) is the German version of

Article 3 Model Law (ML). Unlike the drafters of the Model Law, the German lawmakers
declined to say anything regarding receipt of written communications in cases where the address of a party or its counsel is known. Where this is the case, it is understood that delivery
must be made to the respective addresses and is effective upon receipt (130 Civil Code
(Brgerliches Gesetzbuch BGB).2 Cf. also Article 3 (2) ICC-Rules.
2 The purpose of 1028 ZPO is to speed up proceedings and to deter strategic behaviour. If it
did not exist, a party could be tempted to deny having received certain documents that were
sent to it in the course of arbitral proceedings.3 As a practical matter, however, the concern
of 1028 ZPO is not so much with communications sent in the course of arbitral proceedings already under way because, in this case, the whereabouts of parties and counsel will be
known to the other side and the tribunal. It is at the commencement stage, i.e. where a claimant wants to initiate arbitral proceedings but does not know the address, seat or residence
of the respondent or its counsel, that 1028 ZPO is important.4 In such a situation, 1028
(1) ZPO allows the claimant to satisfy the prerequisite for the commencement of arbitral
proceedings, i.e. that the request for arbitration is received by the respondent, even if the
address is unknown (1044 ZPO).
3 Situations of the type just described also haunt court proceedings. The ZPO tries to cure the
problem by allowing for a stripped-down procedure of document delivery (181 ZPO) and
by providing for the retroactive effect of service of process for the purpose of interruption of
prescription periods and other time limits (167 ZPO). As 1028 (2) ZPO makes it clear,
169, 181 ZPO and the other provisions on service of documents in court proceedings
remain applicable even where they concern the matters relating to arbitral proceedings listed
in 1062 ZPO. The goal of 1028 (1) ZPO is to make arbitral proceedings as efficient as
1
2
3
4
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 33; cf. also Article 3 (2) ICC Rules.
Ibid.
1028 Wagner
77
proceedings in public court, but not to supply additional rules for service of process in public
court.
II.
Requirements
1028 (1) ZPO only applies where the residence of a party or its counsel is unknown to the 4
person intending to deliver a written communication. Unlike Article 3 (1) ML, the ZPO says
nothing about a duty to make inquiries. However, 1028 (1) ZPO is neither a procedural
nicety nor formality, but firmly based upon the principle of due process, which requires that
the would-be respondent is informed in due time of the proceedings initiated against it
such that it is possible to enter an appearance. The German lawmakers did not intend to
deviate from this principle and to compromise the principle of due process. Quite the opposite, they thought it to be self-evident that the sender was under an obligation to make
reasonable inquiries.5 On the other hand, the party which is moving its place of business after
consummation of the arbitration agreement is obliged to inform the other side of its new
address.6 Where it fails to do so, neither the claimant nor the tribunal is bound to investigate
the whereabouts of the would-be respondent.
The second element, i.e. that the sender actually tried to deliver the document to the other 5
side, is also not explicitly mentioned in the text of 1028 (1) ZPO.7 Without such attempt
having been made, it is impossible to identify the day which is to be deemed the day of delivery.8 Therefore, the sender must have sent the document to any one of the three places
mentioned in 1028 (1) ZPO, i.e. the last known mailing address, place of business or habitual residence. The choice between those three is for the sender to make. The attempt to
deliver the written communication must have been made by registered mail (Einschreiben
gegen Rckschein) or any other means which provides a record of the attempt to deliver it.
Such other means are delivery by facsimile transmission, private mail or courier service.
1028 (1) ZPO applies regardless of whether the sender of the document is the claimant, 6
the respondent or the chairman of the arbitral tribunal.9
III. Consequences
If the sender of the document made an attempt to deliver the document which satisfies the 7
requirements outlined above, the document is deemed to have been received on the day it
would have been delivered had the address still been valid. This language mirrors the text of
Article 3 (2) (b) ML and makes it clear that the day on which the letter was mailed does not
count as the date on which it was delivered. Rather, a reasonable time for the transport of the
documents must be allowed.10 The hypothetical day on which the communication would
have been received is deemed to be the day of delivery.
6
7
8
9
10
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 33; Stein/Jonas-Schlosser (2002), 1028
para.5; Musielak-Voit (2013), 1028 para. 3.
OLG Dresden 15.03.2005, SchiedsVZ 2005, 166.
Ibid.
MnchKommZPO-Mnch (2013), 1028 para. 20; Musielak-Voit (2013), 1028 para. 4; dissenting
78
IV. Party Agreements

8 The drafters of 1028 (1) ZPO followed the example of Article 3 (1) ML in authorizing the
parties to agree on another mechanism to cure problems in the service of documents. The
law merely provides a default rule. The parties are also free to agree on particular methods
of communication, e.g. on service of documents having to be effected exclusively between
counsel. 3 (2), (3) ICC-Rules is in conformity with 1028 (1) ZPO. Section 5 DIS
Rules of Arbitration supplies a set of provisions which comply with the general outline of
1028ZPO.11
11
For details see Part III, Bredow/Mulder, Section 5.
Chapter II
1029 Definition
(1) Arbitration Agreement is an agreement by the parties to submit to arbitration all
or certain disputes which have arisen or which may arise between them in respect
of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of a separate agreement (separate
arbitration agreement) or in the form of a clause in a contract (arbitration clause).
Short Bibliography: Ahrens, Die subjektive Reichweite internationaler Schiedsvereinbarungen und
ihre Erstreckung auf die Unternehmensgruppe, Frankfurt am Main 2001; Deutsche Institution fr
Schiedsgerichtsbarkeit (ed.), Financial Capacity of the Parties, Frankfurt am Main 2004; Distler, Private Schiedsgerichtsbarkeit und Verfassung, Frankfurt am Main 2000 Ebbing, Schiedsvereinbarungen
in Gesellschaftsvertrgen, NZG 1998, 281; Hanefeld/Wittinghofer, Schiedsklauseln in Allgemeinen
Geschftsbedingungen, SchiedsVZ 2005, 217; Heuser, Schiedsgerichtsbarkeit und Mediation im
Insolvenzverfahren, Frankfurt a.M. 2011; Klich, DIS-Musterschiedsvereinbarung, in Nedden/
Herzberg (eds), Praxiskommentar ICC-SchO/DIS-SchO, Kln 2014, p. 991; Krll, Ergnzung und
Anpassung von Vertrgen durch Schiedsgerichte, Kln 1998; Lachmann/Lachmann, Schiedsvereinbarungen im Praxistest, BB2000, 1633; Lachmann, Handbuch fr die Schiedsgerichtspraxis, Kln
2008; Lew/Mistelis/Krll, Comparative International Commercial Arbitration, Hague/London/
New York 2003; Martens, Wirkungen der Schiedsvereinbarung und des Schiedsverfahrens auf Dritte,
Frankfurt am Main 2005; Niklas, Die subjektive Reichweite von Schiedsvereinbarungen, Tbingen
2008; Rosenberg/Schwab/Gottwald, Zivilprozessrecht, Mnchen 2010; Sandrock Schiedsklauseln
im Konzern, in: Bckstiegel/Bredow/Berger (eds), Die Beteiligung Dritter an Schiedsverfahren,
Kln 2005, p. 93; Schroeder, Zur Aufhebung von Scheinschiedssprchen und anderen formellen
Schiedssprchen durch staatliche Gerichte, SchiedsVZ 2005, 244; Schtze, Schiedsgericht und
Schiedsverfahren, Mnchen 2012; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005.
Para.
Purpose and Relevance . . . . . . . . . . . . . . . . . . 1
A. Relevance of the Norm in the
Context of German Arbitration Law . . 1
B. Relevance of the Norm in Practice . . . . 2
II. Legislative History . . . . . . . . . . . . . . . . . . . . . . . 3
A. Comparison with the UNCITRAL
Model Law . . . . . . . . . . . . . . . . . . . . . . . . . . 3
B. Comparison with German Arbitration Law Prior to its Reform in 1998 . . 4
C. Applicability of Jurisprudence
and Legal Authority Relating to
German Arbitration Law Prior to
its Reform in 1998 . . . . . . . . . . . . . . . . . . . 5
III. Possible Scope of Derogation . . . . . . . . . . . . 6
I.
Para.
IV. Elements of the Norm . . . . . . . . . . . . . . . . . . . 7
A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 7
1. Legal Nature of the Arbitration
Agreement. . . . . . . . . . . . . . . . . . . . . . . . 7
2. Terminology . . . . . . . . . . . . . . . . . . . . . . 8
3. Separability of Main Contract
and Arbitration Agreement . . . . . . . . 9
B. Law Applicable to Various Aspects
of the Arbitration Agreement . . . . . . . . 10
1. Conclusion . . . . . . . . . . . . . . . . . . . . . . 11
2. Capacity . . . . . . . . . . . . . . . . . . . . . . . . . 12
3. Arbitrability . . . . . . . . . . . . . . . . . . . . . 13
4. Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
C. Conclusion of the Arbitration
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 15
80
Para.
1. Conclusion of an Individually
Negotiated Arbitration
Agreement . . . . . . . . . . . . . . . . . . . . . . 15
2. Conclusion of an Arbitration
Agreement Contained in
Standard Terms of Contract . . . . . . 16
D. Content of the Arbitration
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 17
1. Mandatory Content . . . . . . . . . . . . . . 17
2. Qualification of the Parties Intent 18
3. Optional Content . . . . . . . . . . . . . . . . 22
Para.
4. Interpretation . . . . . . . . . . . . . . . . . . . . 23
5. Pathological Arbitration
Agreements. . . . . . . . . . . . . . . . . . . . . . 29
6. Model Arbitration Clauses of
Arbitral Institutions . . . . . . . . . . . . . . 30
E. Scope of the Arbitration Agreement . 31
1. Objective Scope . . . . . . . . . . . . . . . . . . 31
2. Subjective Scope . . . . . . . . . . . . . . . . . . 36
F. Effect of the Arbitration Agreement. . 43
G. Termination of the Arbitration
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 44
I.
Purpose and Relevance1
A.
Relevance of the Norm in the Context of German Arbitration Law
1 As an arbitration agreement is constitutive for all forms of contractual arbitration, 1029

ZPO with its definition of the term arbitration agreement is one of the central provisions
in German arbitration law.2 It defines the different forms of a contractual arbitration agreement used in practice. By contrast, arbitral tribunals established lawfully by dispositions not
based on an agreement (e.g. by articles of association of unions, associations, foundations
or corporations) are subject to 1066 ZPO, which provides that German arbitration law
applies mutatis mutandis to arbitral tribunals established lawfully by disposition on death or
other dispositions not based on an agreement.3
B.
Relevance of the Norm in Practice
2 1029 ZPO contains all central requirements that have to be met in order to establish an
effective arbitration agreement.4 The relevance of 1029 ZPO is illustrated by a number
of court decisions rendered either under 1032 (2) ZPO (special court proceedings to
determine the admissibility or inadmissibility of arbitral proceedings), 1040 (3) ZPO
(appeal against the arbitral tribunals affirmation of jurisdiction), 1059 ZPO (application
for setting aside an award), 1060 ZPO (recognition and enforcement of domestic awards)
and 1061 ZPO (recognition and enforcement of foreign awards). Several material questions arise in connection with the arbitration agreement in the sense of 1029 ZPO. These
include whether an agreement to arbitrate as opposed to other dispute resolution clauses
exists, what in turn constitutes a pathological arbitration agreement and who is bound
by the arbitration agreement and to what extent.
II.
Legislative History
A.
Comparison with the UNCITRAL Model Law
3 The definition of the term arbitration agreement in 1029 ZPO is literally the same as
the definition of the term arbitration agreement in Article 7 (1) UNCITRAL Model Law
1
2
3
Niklas (2008), p. 29.
Baumbach/Lauterbach (2014), 1066 para.3; Thomas/Putzo-Reichold (2013), 1066 para.1; for details
see infra, Haas, 1066 ZPO.
Prtting/Gehrlein-Prtting (2013), 1029 para. 1.
1029 Trittmann/Hanefeld
81
(ML). Like the Model Law, 1029 ZPO recognizes the validity and effect of a commitment
by the parties to submit to arbitration an existing dispute or a future dispute. Moreover, both
laws do not, in general, require a separate arbitration agreement but recognize an arbitration
clause within a contract as a valid agreement to arbitrate.
B.
Comparison with German Arbitration Law Prior to its Reform in 1998
German arbitration law prior to its reform in 1998 did not include a definition of the term 4
arbitration agreement. However, jurisprudence and legal authority relating to German
arbitration law prior to its reform in 1998 defined arbitration agreements in similar terms.5
C.
Applicability of Jurisprudence and Legal Authority Relating to German Arbitration

Law Prior to its Reform in 1998
The jurisprudence and legal authority relating to German arbitration law prior to its reform in 5
1998 should nevertheless be applied to 1029 ZPO with care. The reform has brought about
significant changes concerning the arbitrability of disputes (1030 ZPO) and the necessary
form of arbitration agreements (1031ZPO), which are two of the core factors determining
the arbitration agreements validity. The legislative changes relating to arbitrability and form
will be dealt with in the context of 1030 ZPO and 1031 ZPO.
III. Possible Scope of Derogation

Given the parties constitutional right of access to the courts (Article103 GG), arbitral tribu- 6
nals must be established by consent (1029 ZPO) or by dispositions specifically provided
for in the law (1066 ZPO).6 For all forms of contractual arbitration (1029 ZPO), a valid
arbitration agreement is constitutive and cannot be substituted by general principles, such as
good faith considerations (242 German Civil Code BGB).7
IV. Elements of the Norm

A.
Introduction
1.
Legal Nature of the Arbitration Agreement
Some legal authors qualify the arbitration agreement as a substantive agreement to a proce- 7
dural relationship.8 Other legal authors suggest that an arbitration agreement qualifies as a
procedural agreement.9 However, the practical implications of the controversy are limited.
There is concurrence that an arbitration agreement has, in any event, substantive side effects
such as actionable cooperation and advancement duties. The parties have to do all that is
5
6
7
8
9
See Sareika, Zu den Begriffen in der Schiedsgerichtsbarkeit, ZZP 1977, 285 seq.
For a detailed discussion of the constitutional issues involved see Distler, Private Schiedsgerichtsbarkeit
und Verfassung, Frankfurt am Main 2000 and Steiner, Das Verhltnis von Schiedsgerichtsbarkeit und
staatlicher Gerichtsbarkeit, SchiedsVZ 2013, 15.
Lachmann (2008), para.342.
Baumbach/Lauterbach (2014), 1029 para.10; Lachmann (2008), para.266; Schtze (2012), para. 180.
Stein/Jonas-Schlosser (2002), 1029 para.1; MnchKommZPO-Mnch (2013), 1029 para.13; Schwab/
Walter (2005), Chap.4 para.16; Zller-Geimer (2014), 1029 para.15; see also BGH 03.12.1986, BGHZ
99, 143 (147).
82
necessary to advance the arbitral proceedings; they need to be fair and loyal and they may
not obstruct the proceedings.10
2.
Terminology
8 The arbitration agreement may be in the form of a separate arbitration agreement or in the
form of an arbitration clause contained in a contract (1029 (2) ZPO). The arbitration
agreement may incorporate institutional arbitration rules or simply contain the parties
agreement to arbitrate their dispute without the provision of institutional administration (ad
hoc arbitration). The arbitration agreement will constitute standard terms and conditions
(Allgemeine Geschftsbedingungen AGB) in the sense of 305 (1) BGB if the arbitration
agreement is pre-established for a multitude of contracts which one party to the contract
the user presents to the other party upon the conclusion of the contract without individual
negotiation. Arbitration agreements and arbitration clauses constituting standard terms and
conditions are subject to specific validity control under 305 et seq. BGB.11
3.
Separability of Main Contract and Arbitration Agreement
9 An arbitration agreement is legally distinct and autonomous from the main contract. This
so-called notion of separability applies regardless of whether the arbitration agreement is
contained in a separate agreement or the arbitration clause is included as a contract within
the contract in the main contract (1040 (1) ZPO). The invalidity or termination of the
main contract usually does not affect the arbitration agreements validity.12
B.
Law Applicable to Various Aspects of the Arbitration Agreement
10 There are several laws that apply to various aspects of the arbitration agreement.
1.
Conclusion
11 As follows from the notion of separability, the law that applies to the conclusion, interpretation and termination of the arbitration agreement (Schiedsvereinbarungsstatut) is not
necessarily identical with the law chosen for the main contract. The parties may specifically
choose the law applying to the arbitration agreement; however, this is not very common.13
The choice of law for the main contract will often be interpreted as an implied choice of law
for the arbitration agreement.14 Failing an express or implicit choice of law, the law of the
place of arbitration will apply.15
10
11
12
13
14
15
BGH 22.02.1971, BGHZ 55, 344 (349); MnchKommZPO-Mnch (2013), 1029 paras13, 117; Lachmann (2008), para.266.
See infra, para.16.
BGH 22.09.1977, BGHZ 69, 260 (261); OLG Hamburg, 21.12.2012, SchiedsVZ 2013, 180 (182);
Lachmann (2008), para. 532. However, the doctrine of separability does not determine whether an
arbitral clause also encompasses disputes arising out of a post-contractual relationship, cf. OLG Mnchen,
04.09.2006, OLGR Mnchen 2006, 869 et seq.
Lachmann (2008), para.268; Lew/Mistelis/Krll (2003), paras6-7 et seq.
BayObLG 16.01.2004, SchiedsVZ 2004, 163.
Lachmann (2008), para. 269; Zller-Geimer (2014), 1029 para. 17b; Stein/Jonas-Schlosser (2002),
1029 para.41.
2.
83
Capacity
The law that applies to the parties capacity to enter into the arbitration agreement (subjektive 12
Schiedsfhigkeit) is determined by the law applying to the acting individual or juridical person
(Personalstatut).16
3.
Arbitrability
The law that determines the objective arbitrability of the dispute (objektive Schiedsfhigkeit) 13
is the applicable procedural law (lex arbitri) (1025 (1) ZPO). Hence, if the place of arbitration is situated in Germany, German arbitration law with its definition of arbitrable disputes
in 1030 ZPO applies. If the place of arbitration is situated outside Germany but the German courts are called to rule on the admissibility of arbitral proceedings (1032 (2) ZPO),
1030 ZPO as lex fori will be considered as well.17
4.
Form
The law that determines the necessary form of the arbitration agreement likewise depends 14
on the applicable procedural law (lex arbitri) (1025 (1) ZPO). If the place of arbitration is
situated in Germany, German arbitration law with its form requirements contained in 1031
ZPO applies. The same is true for German court proceedings under 1032 (2) ZPO, in
which the German courts will also consider 1031 ZPO as lex fori.18
C.
Conclusion of the Arbitration Agreement
1.
Conclusion of an Individually Negotiated Arbitration Agreement
Provided that German law applies to the conclusion of the arbitration agreement (see supra, 15
para.11), the general German rules on the conclusion of contracts contained in the German
Civil Code (104 et seq. BGB) govern the conclusion of the arbitration agreement.19 These
provisions require the parties valid consent on the essentialia negotii of the contract.
2.
Conclusion of an Arbitration Agreement Contained in Standard Terms of Contract
Additional considerations apply if the arbitration agreement is contained in standard terms 16

and conditions within the sense of 305 et seq. BGB (AGB). Standard terms, according to
305 et seq. BGB, are terms that one party imposes on its contractual partners in more than
one instance without individual negotiation. German law subjects such standard terms to a
stricter validity control than individually negotiated contract terms. As a general rule, arbitration agreements contained in standard terms and conditions are not regarded per se as surprising and therefore invalid (305c BGB), particularly if they are used between merchants
16
17
18
19
Those who qualify the arbitration agreement as a substantive agreement determine the law according
to the applicable conflict of law rules, e.g. Lachmann (2008), para.287; Schtze (2012) para. 180; BGH
25.01.2011, Yearbook XXXVII (2012), 223. Others, for example, HK-ZPO-Saenger (2013), 1029
para.8; Rosenberg/Schwab/Gottwald (2010), 175 para. 7, who qualify the arbitration agreement as a
procedural agreement, apply the rules concerning procedural capacity (Prozessfhigkeit) by analogy; for a
detailed discussion see at 1051 ZPO.
See infra, Huber/Bach, 1032 paras 44 et seq.
See infra, Huber/Bach, 1032 paras 45 et seq.
MnchKommZPO-Mnch (2013), 1029 para.16; Thomas/Putzo-Reichold (2013), 1029 para.10.
84
as defined in 1 et seq. of the German Commercial Code (Handelsgesetzbuch HGB).20

The Federal Court of Justice (Bundesgerichtshof BGH) in two decisions in 2004 and 2005
has confirmed that an arbitration clause does not constitute per se an undue burden for the
party concerned.21 However, their character as standard terms unilaterally imposed on one
party can pose specific questions as to the clauses validity if the clause constitutes an undue
burden for one of the parties (307 BGB).22 Arbitration clauses may fail the validity test
under 307 et seq. BGB. For example, if the user of the standard terms retains a unilateral
right to select between arbitration and litigation, the arbitration clause must provide the user
with an obligation to exercise this right upon request of the other party in order to enable the
other party to sue the user of the standard terms in the right forum.23 The validity of standard
term arbitration clauses also requires particular attention when the application of mandatory
rules of law is involved.24 Objectionable are clauses that provide for a seat of the arbitration
in Germany although no justifiable grounds for this choice exist if the German venue unduly
exacerbates the exercise and enforcement of the other sides rights.25 Even stricter validity
control standards (308, 309 BGB) may apply if the standard term arbitration clause is
imposed on a consumer.
D.
Content of the Arbitration Agreement
1.
Mandatory Content
17 A valid arbitration agreement requires as a minimum that certain or all disputes between the
parties arising out of a defined legal relationship must be finally solved by an arbitral tribunal
to the exclusion of the courts.26 A clause which simply excludes access to the courts without
providing for arbitration does not constitute an arbitration agreement but converts the claim
into a non-actionable claim (Naturalobligation).27 A valid arbitration agreement, hence,
requires not only the intention of the parties to derogate from the jurisdiction of the state
courts, but it must also clearly establish arbitral jurisdiction. On the other hand, it is not necessary to agree in the arbitration agreement on specific procedural aspects as these issues, if
not regulated, will be governed by 1025 et seq. ZPO. It is also not necessary that the parties
refer to a specific set of institutional arbitration rules, as the arbitration can be conducted as an
ad hoc arbitration without institutional administration. Therefore, even very short arbitration
agreements like Arbitration: Hamburg have been considered as sufficient by German courts
20
21
22
23
24
25
26
27
BGH 26.06.1986, at <www.juris.de>; OLG Celle 04.11.1999, EWiR 2000, 411; OLG Kln 16.12.1992
RIW 1993, 499 (501); OLG Hamburg 24.01.2003, SchiedsVZ 2003, 284 (288); OLG Mnchen
15.09.2010, BeckRS 2010, 23060; Schwab/Walter (2005), Chap.5 para.13; Prtting/Gehrlein-Prtting,
1029 para. 15.
BGH 27.05.2004, NJW 2004, 2226 (2227), with note by Schroeder, SchiedsVZ 2005, 244; id. 31.01.2005,
BGHZ 162, 9.
BGH 24.09.1998, BB 1998, 2335.
OLG Hamm 29.06.1998, TranspR 1999, 201; OLG Kln 02.08.2005, TranspR 2005, 472.
For a detailed analysis of standard term arbitration clauses and their validity under German law with a
categorization into uncritical (green light), critical (yellow light) and objectionable (red light) clauses,
see Hanefeld/Wittinghofer, SchiedsVZ 2005, 217 et seq.; see also Lachmann/Lachmann, BB 2000, 1633 et
seq.
OLGBrandenburg 12.04.2001, NZBau 2002, 448; OLG Naumburg 17.04.2000.
85
to establish the jurisdiction of an arbitral tribunal.28 If the arbitration agreement concerns

future disputes, these disputes must relate to a specific legal basis defined or definable at the
time of the contracts conclusion, such as a specific contract or a specific event.29
2.
Qualification of the Parties Intent
The qualification of a dispute resolution clause as an arbitration agreement is essential, as 18

German arbitration law only applies if the parties have indeed consented to arbitration as
opposed to expert determination (Schiedsgutachten), conciliation (Schlichtung), mediation
(Mediation) or any other form of alternative dispute resolution.30
a. Limited Relevance of the Terminology Chosen: The starting point for the dispute resolution 19
clauses qualification will be the wording of the dispute resolution clause. However, ultimately
decisive will be the parties intent concerning the desired effect of the dispute resolution
clause.31 For example, the Higher Regional Court (Oberlandesgericht OLG) Stuttgart has
disregarded the parties chosen wording to obtain an expert opinion (Schiedsgutachten)
and treated the parties agreement as an arbitration agreement in a case in which the parties
intended to achieve a final and binding decision of a neutral third party which was not subject
to any court review.32 Similarly, the OLG Celle once disregarded the parties literal choice of
an arbitrator and applied the rules on expert determination (317 et seq. BGB) in a case
in which the arbitrator was asked to rule solely on factual questions, whereas legal questions
were to be determined by a special rural court (Landwirtschaftsgericht).33 Under German law,
the distinctive characteristic of an arbitration agreement, as opposed to expert determination, is that the parties seek a binding and final decision over the legal consequences of a
behaviour and not simply the determination of facts or applicable law without a decision
over the legal consequences.34
b. Distinction Between Arbitration and Expert Determination: In fact, most of the cases relating 20
to the classification of arbitration agreements concern the difference between arbitration and
expert determination. Whereas awards may be vacated or recognition and enforcement be
denied only in exceptional circumstances (1059 et seq. ZPO), expert opinions allow a
review by the courts for significant mistakes.35 In cases of doubt as to whether the parties
intended expert determination or arbitration, a German court will assume that the decision
merely constitutes a non-binding expert opinion rather than a final award.36
28
29
30
31
32
33
34
35
36
OLG Hamburg 24.01.2003, SchiedsVZ 2003, 284.

MnchKommZPO-Mnch (2013), 1029 para.75.
But see, for example, Zller-Geimer (2014), 1029 para.5; Rosenberg/Schwab/Gottwald (2010), 174
para. 19 and HK-ZPO-Saenger (2013), 1029 para.5, who suggest to apply 1025 et seq. ZPO on expert
opinions by analogy if the expert is asked to determine the scope of the parties performance; see also
Schroeder, SchiedsVZ 2005, 244 et seq., who advocates an analogue application of 1059 ZPO (vacation
of awards) on pseudo awards (Scheinschiedssprche).
BGH 13.01.2009, NJW-RR 2009, 790 (792); Thomas/Putzo-Reichold (2013), 1029 para.6; Schwab/
Walter (2005), Chap.3 para.20.
OLG Stuttgart 23.01.2002, Justiz 2002, 410; for a detailed analysis of contract adaptation through arbitral
tribunals see Krll (1998).
OLG Celle 30.07.2003.
OLG Celle 11.09.2003.
BGH 03.03.1982, WM 1982, 543; id. 24.11.1995, NJW 1996, 452.
OLG Mnchen 01.06.2005, MDR 2005, 1186.
86
21 c. Arbitration Agreements in Statutes of Associations: The differentiation between arbitration

agreements and other dispute resolution clauses is also crucial if the dispute resolution clause
is contained in a statute of association (Verbandssatzung).37 Often the wording of the statute
is not clear and it remains doubtful whether the statute only intends an internal, not-final
decision subject to review by the courts or a final and binding decision of an arbitral tribunal.
Some courts primarily consider the binding character of the decision and the intended exclusion of the courts to classify the dispute resolution clause as an arbitration agreement.38 The
BGH focuses on the structural independence and impartiality of the decision making body.39
The OLG Frankfurt and the OLG Braunschweig have specified the requirement of structural
independence as meaning that the statute needs to provide for an equal right of the parties
to appoint the arbitral tribunal. If only the exercise of these rights in a specific case violates
the notion of equality, the legal nature of the dispute resolution clause as an agreement to
arbitrate remains unaffected.40 In view of the important right of access to courts, in cases of
doubt only an internal not-final decision subject to court review can be assumed.41
3.
Optional Content
22 Beyond the necessary content of the arbitration agreement, the parties can agree in their arbitration agreement on a variety of rules concerning the arbitral proceedings. These optional
elements include, for example, the place of the arbitration, rules regarding the constitution
of the arbitral tribunal, the appointment of arbitrators, the conduct of the proceedings,
the place and language of the arbitration, the applicable law, multi-step dispute resolution
provisions, the admissibility of certain procedural elements such as the International Bar
Association (IBA) Rules on the Taking of Evidence in International Commercial Arbitration, or the incorporation of institutional arbitration rules. German arbitration law expressly
permits such individual agreements. Subject to very few mandatory provisions of German
arbitration law, the parties are free to determine the procedure themselves or by reference to
a set of arbitration rules (1042 (3) ZPO).42
4.
Interpretation
23 German courts take an arbitration friendly view when interpreting ambiguous arbitration
agreements.43 However, certain ambiguities may render the arbitration agreement invalid
and thus should carefully be avoided.
24 a. Definite Choice of the Arbitral Institution: If the parties decide in their arbitration agreement
to conduct the arbitration under the auspices of an arbitral institution, the arbitral institu-
37
38
39
40
41
42
43
For details see infra, Haas, 1066 paras 29 et seq.

BayObLG 13.05.2003, MDR 2003, 1132.
BGH 27.05.2004, SchiedsVZ 2004, 205 = BGHZ 159, 207 = ZIP 2005, 13.
OLG Frankfurt 21.12.2004, OLGR Frankfurt 2005, 548; OLG Braunschweig 12.05.2005, SchiedsVZ
2005, 262; BGH 27.05.2004, ZIP 2005, 13 (with note by Krll).
BayObLG 13.05.2003, MDR 2003, 1132; Zller-Geimer (2014), 1029 para.7; for a detailed discussion
of consent and form requirements concerning arbitration agreements in statutes, see infra, Haas, 1066
paras 31 et seq.
Concerning the form requirements for the optional elements of arbitration agreements, see at 1031
ZPO.
Zller-Geimer (2014), 1029 para.78; Stein/Jonas-Schlosser (2002), 1029 para.14.
87
tion must be unambiguously defined or identifiable.44 If several existing institutions could

have been meant by the parties, this can invalidate the arbitration clause.45 In contrast, the
Kammergericht Berlin has held an arbitration clause to be valid which provided that disputes
shall be resolved through arbitration according to the arbitration rules of the German Central
Chamber of Commerce.46 As no German Central Chamber of Commerce exists, the claimant had commenced arbitration under the Rules of the German Institution of Arbitration e.V.
(Deutsche Institution fr Schiedsgerichtsbarkeit DIS). The Kammergericht Berlin confirmed
the competence of the arbitral tribunal constituted under the DIS Rules and interpreted the
arbitration agreement in favorem validitates reasoning that no other potentially competent
German arbitration institution existed.
b. Contradictory Arbitration and Forum Selection Clauses: In cases in which the contract in- 25
cluded an arbitration clause as well as a forum selection clause, the courts have reconciled
the conflicting provisions as meaning that the forum selection clause deals with the courts
competence for accompanying measures (1033ZPO). As there is no general presumption
in favour of court proceedings, the parties intent to exclude arbitral proceedings would need
to be indicated expressly.47 In general, the arbitration agreement can provide for a right to
elect between arbitration and litigation.48 Likewise, clauses that provide for the courts jurisdiction only in the case that the arbitration agreement turns out to be invalid are permissible.
In contrast, arbitration clauses that provide for an appeal to the courts are extremely critical.
Such clauses may only in exceptional circumstances be interpreted as multi-step dispute
resolution clauses providing in fact for conciliation or mediation rather than arbitration.49
In a recent decision, the BGH confirmed the validity of an arbitral clause providing for the
parties right to disregard any arbitral decision and within a fixed period of time to resort
to litigation. Because the binding character of any arbitral award is based on the parties common intent, the parties are free to agree that the binding character of the award be subject to
certain requirements.50 Yet, the courts decision appears to be restricted to clauses limiting
the parties right to resort to litigation to a fixed period of time. Additionally, there is authority that if the arbitration agreement simply stipulates that access to the courts is not excluded,
such clauses may be held invalid.51
44
45
46
47
48
49
50
51
BGH 02.12.1982, NJW 1983, 1267 (1268); OLG Kln 05.07.2005; BGH 14.07.2011, SchiedsVZ 2011,
284 seq.; Zller-Geimer (2014), 1029 para.53; Stein/Jonas-Schlosser (2002), 1029 para.14.
BGH 02.12.1982, RIW 1983, 209; BayObLG 28.02.2000, BayObLGZ 2000, 57; Schwab/Walter (2005),
Chap.3 para.1a; LG Hamburg 27.07.1990, RIW 1991, 419; OLG Hamm 15.11.1994, IPRspr 1994, 416.
KG Berlin 15.10.1999, BB 2000, Beilage No. 8, pp.13 et seq.
BGH 25.01.2007, WM 2007, 698 et seq.; OLG Celle 25.08.2005, SchiedsVZ 2006, 52 (54); BGH
12.01.2006, SchiedsVZ 2006, 101.
BGH 18.12.1975, NJW 1976, 852; Thomas/Putzo-Reichold (2013), 1029 para.3.
OLG Naumburg 20.05.2005, BauR 2005, 1524; HK-ZPO-Saenger (2013), 1029 para.12; Musielak-Voit
(2013), 1029 para.20; Prtting/Gehrlein-Prtting (2013) 1029 para. 10.
BGH 01.03.2007, NZBau 2007, 299et seq. (overruling OLG Frankfurt 20.12.2005, BauR 2006, 738); see
also Stein/Jonas-Schlosser (2002), 1029 para.15 who advocates that only the appeal provision but not
the arbitration agreement as a whole is invalid and who interprets the reservation court proceedings are
not excluded as giving the parties an election right between arbitration and court proceedings.
OLG Koblenz, NJW-RR 2000, 1365; Baumbach/Lauterbach (2014), 1029 para.14; but see Stein/JonasSchlosser (2002), 1029 para.15.
88
26 c. Arbitration Clauses with Different Arbitration Options: The parties can agree to select between various institutional and/or ad hoc arbitral tribunals, provided that these options are
clearly defined in the contract.52
27 d. Provision for a Separate Arbitration Agreement: In cases in which parties agreed to submit
their disputes to arbitration but provided at the same time for the conclusion of a separate
arbitration agreement, which they later failed to sign, the courts have decided that in the absence of a separate arbitration agreement, no valid agreement to arbitrate exists.53 Some legal
authors support this view, arguing that the parties document is not bound by the arbitration
clause if they fail to sign this separate agreement.54 However, one could also argue that the
reference to a separate agreement was only made for reasons of consumer protection (1031
(5) ZPO), and thus obsolete if the contracting parties are merchants (1 et seq. HGB). If
the main contract includes a conciliation clause and a side agreement provides for the jurisdiction of an arbitral tribunal, then a valid arbitration agreement is also rather questionable.55
However, the real intention of the parties to the arbitration agreement has to prevail under
German general contract law (133, 157BGB).56 Under these provisions, the wording
of the agreement will not be decisive if one of the parties can prove that the parties really
intended to give the clause a meaning different from the actual wording. Consequently, the
existence of a valid agreement to submit disputes to arbitration is subject to interpretation in
each individual case.
28 e. Multi-tier Arbitration Clauses: Multi-tier arbitration clauses occur in practice with increasing
frequency and are per se not critical if carefully drafted. The multi-tier clause may provide, for
example, in the first step for negotiation, in the second step for mediation and in the final step
for arbitration. It should contain precise instructions on time limits and other conditions
under which the parties shall be entitled to move from one tier to the other or, alternatively,
may directly resort to arbitration. If the contract contains an expert determination clause as
well as an arbitration agreement, this may lead to irresolvable conflicts if the scope of the
experts authority is not precisely confined. The arbitration agreement must, under these
circumstances, clearly delimit the respective competences of the expert and of the arbitral
tribunal. It should also be clearly defined whether a state court or the arbitral tribunal is competent to exert the rights under 319 BGB to review the expert opinion for manifest errors.
5.
Pathological Arbitration Agreements
29 Typical defects of poorly drafted arbitration agreements which may render the arbitration
agreement invalid include lack of clarity as to whether the parties actually agreed on arbitration or on some other form of dispute resolution, conflicting dispute resolution provisions,
and incorrectly referencing the institution under whose rules the arbitration should take
place. The challenge of an invalid or defective arbitration agreement may violate the notion
of good faith (242 BGB) if the party challenging the defect has, prior to the commence52
53
54
55
56
BGH 30.01.2003, IHR 2003, 90; Zller-Geimer (2014), 1029 para.37; Schwab/Walter (2005), Chap.3
para.1a; Rosenberg/Schwab/Gottwald (2010), 179 paras 9 et seq.
OLG Kln 05.07.2005, MDR 2006, 201; OLG Hamm 23.06.1992, BauR 1993, 86; but see also KG Berlin
28.04.2011, NJW 2011, 2978.
Stein/Jonas-Schlosser (2002), 1029 para.10; OLG Nrnberg 23.11.1970, BB 1971, 495.
OLG Naumburg 20.05.2005, OLGR Naumburg 2006, 31.
See BGH 28.02.1957, BGHZ 24, 15 (19); BGH 14.07.2011, SchiedsVZ 2011, 284 (285); KG Berlin
28.04.2011, NJW 2011, 2978.
89
ment of the proceedings, expressly invoked the arbitration agreement and thereby triggered
the commencement of arbitration.57 If only optional parts of the arbitration agreement are
invalid, these parts may be replaced by the statutory provisions of German arbitration law
and the arbitration agreement as such remains in force.58
6.
Model Arbitration Clauses of Arbitral Institutions
Parties wishing to arbitrate their dispute under the rules of an arbitral institution and who 30
want to avoid any risk concerning the arbitration agreements validity should use in their
contract a well tested, pre-formulated model clause recommended by one of the recognized
arbitral institutions. The DIS advises all parties wishing to make reference to DIS arbitration
in their contract to use its model arbitration clause.59
E.
Scope of the Arbitration Agreement
1.
Objective Scope
a. Interpretation: The scope of any arbitral clause must be interpreted in accordance with the 31
parties real intent and in consideration of the particular circumstances of the case.60 In doing
so, German courts tend to interpret arbitration agreements broadly, arguing that in cases of
doubt it is in the parties interest to submit all questions to arbitration in order to avoid a
split into different proceedings.61 Normally, the arbitration agreement will extend to statutory claims, such as tort claims arising out of the contracts violation and claims for unjust
enrichment,62 including the question of whether the contract was void ab initio or has validly been terminated.63 Amendments to the contract and extensions of the contract are also
regularly covered.64 The same applies to ancillary claims, such as claims for interest.65 Unless
the parties agree otherwise, under German law the arbitration agreement will be construed
to mean that the arbitral tribunal shall also allocate the costs of the arbitration between the
parties in the award (1057 ZPO).
b. Multiple Contracts: Contract interpretation, however, will usually reach its limits if the dis- 32
pute relates to questions arising under a different contract that does not include an arbitration
clause. Only in specific circumstances where two contracts are closely interconnected may
the arbitration clause included in one of the contracts extend to the other contract. This has
been confirmed by the OLG Mnchen in a case in which an arbitration clause was included in
a contract concerning the financing of court proceedings, whereas the dispute arose under a
loan agreement over the future proceeds of the claim.66
57
58
59
60
61
62
63
64
65
66
BGH 02.04.1987, WM 1987, 1084.

Baumbach/Lauterbach (2014), 1029 para.17; but see Lachmann (2008), para.343.
For a detailed analysis, see Klich, in: Nedden/Herzberg (eds) (2014) pp.991 et seq.
OLG Karlsruhe 05.06.2007, available at <www.juris.de> (providing for an excellent example of interpretation of arbitration clauses by the German courts).
Stein/Jonas-Schlosser (2002), 1029 para.18; Schwab/Walter (2005), Chap.3 para.19.
Schwab/Walter (2005), Chap.3 para.19; Thomas/Putzo-Reichold (2013), 1029 para.7; Zller-Geimer
(2014), 1029 para.80.
OLG Mnchen 25.09.2006, available at <www.juris.de>.
HK-ZPO-Saenger (2013), 1029 para.15.
OLG Naumburg 24.02.2005.
OLG Mnchen 13.10.2004, NJW 2005, 832.
90
33 c. Bills of Exchange and Documentary Evidence Proceedings: Claims under bills of exchange
(Wechsel) can be subject to arbitration if the arbitration agreement expressly includes such
claims or the arbitration agreement is so broadly defined that it can be interpreted as such.67
However, the claimant will usually retain the right to pursue his claims alternatively in special
fast track bills of exchange court proceedings (Wechselprozess) (602 et seq. ZPO) in which
an enforceable interim court decision can be obtained on the basis of the instrument alone.68
In contrast, as confirmed by the BGH in 2006, an arbitration agreement excludes that one
party unilaterally commences documentary evidence court proceedings (Urkundsprozess)
(595 et seq. ZPO).69 These summary proceedings would allow for an interim decision of
the court if the claimant can prove his claim with documentary evidence and the defendant cannot defend his position by the same means, his defences being likewise limited to
documentary evidence.
34 d. Contractual Defences: An arbitration agreement extends to defences arising under the
contract, such as a right of retention.70 These defences and the corresponding claim are two
interdependent aspects of the same dispute. As it is the common intention of the parties
to submit the dispute to arbitration as a whole, the defences are covered by the arbitration
agreement.
35 e. Set-off: It is subject to controversial debate whether an arbitration agreement governs a
set-off with a counterclaim that is not subject to the arbitration agreement if the other party
objects to include the counterclaim in the arbitral proceedings. Some legal authors advocate
that the arbitral tribunal is competent to decide on the counterclaim although, if raised in
separate proceedings, no arbitral jurisdiction would exist.71 Others deny the arbitral tribunals
competence to decide on the counterclaim, at least unless the counterclaim is not disputed
or finally confirmed by a court.72 In contrast, in court proceedings in which one side wishes
to declare a set-off with counterclaims governed by an arbitration agreement, there is agreement that the courts are not competent to decide on the counterclaim unless exceptional
circumstances exist.73
2.
Subjective Scope
36 According to the notion of privity of contract, arbitration agreements in principle bind only
the parties to the arbitration agreement and their legal successors.74
67
68
69
70
71
72
73
74
Zller-Geimer (2014), 1029 para.82; Lachmann (2008) para. 491.

Thomas/Putzo-Reichold (2013), 1029 para.8.
BGH 12.01.2006, SchiedsVZ 2006, 101; OLG Celle 25.08.2005, BauR 2005, 1821; OLG Kln 09.11.2000,
OLGR Kln 2001, 227; but see OLG Bamberg 19.05.2004, OLGR Bamberg 2005, 79.
Musielak-Voit (2013), 1029 para.23; Stein/Jonas-Schlosser (2002), 1031 para.23.
OLG Stuttgart 04.10.2000, OLGR Stuttgart 2001, 50 and OLG Mnchen 27.06.2005, OLGR Mnchen
2005, 592 for recognition and enforcement proceedings; in general: Schwab/Walter (2005), Chap. 3
para.12; Baumbach/Lauterbach (2013), 1029 para.22.
Zller-Geimer (2014), 1029 paras84 et seq.; Thomas/Putzo-Reichold (2013), 1029 para.9; HK-ZPOSaenger (2013), 1029 para.17; Stein/Jonas-Schlosser (2002), 1029 para.31.
BGH 30.09.2010, SchiedsVZ 2010, 330 (332); BGH 17.01.2008, NJW-RR 2008, 556; Baumbach/
Lauterbach (2013), 1029 para. 22; Zller-Geimer (2014), 1029 para. 89; Schwab/Walter (2005),
Chap.3 para.13; Rosenberg/Schwab/Gottwald (2010), 177 para. 5. For a set-off declared during exequatur cf. BGH 29.07.2010, SchiedsVZ 2010, 275.
For a detailed analysis, see Niklas (2008); exceptions falling under 1066 ZPO, see infra, Haas, 1066
ZPO.
91
a. Succession: A typical example of succession to an arbitration agreement is the assignment 37

of rights under a contract (398 BGB).75 Other examples of an automatic transfer of an
arbitration agreement by law are global succession into the rights of a party (e.g. by way of
inheritance ( 1922 BGB)), an assumption of debts ( 414 et seq. BGB) or a statutory
transfer of rights.76 For example, the courts have held that if the parties to a lease contract
have concluded an arbitration agreement in their lease and if the buyer of the leased property
succeeds to the rights and obligations of the lessor pursuant to 571 BGB, the arbitration
agreement remains valid between the buyer and the lessee.77 The assignment does not have
to be in the form required by 1031 ZPO.78
b. Exceptional Extension to Third Parties: An arbitration agreement is binding for third parties 38
only in exceptional circumstances.79 For example, if the arbitration agreement is framed as
a contract in favour of a third party (328ZPO), the third party can rely on the arbitration
agreement.80 Third parties typically bound by an arbitration agreement are the administrative receiver (Zwangsverwalter), the administrator of a will (Testamentsvollstrecker) and the
insolvency administrator (Insolvenzverwalter).81 However, the insolvency administrator is
not bound by an arbitration agreement in the exercise of his insolvency contestation rights.82
Hence, if the insolvency administrator wants to contest an illegitimate transaction between
the insolvent and a third party, he will be able to bring the claim in the state courts. In contrast,
arbitration agreements to a third partys disfavour are not permitted.83 As a consequence, an
arbitration agreement between two parties will not exclude a third partys right to seize state
courts with an action related to the subject matter of the arbitration agreement to which the
third party is not a party. A warrantor or guarantor is usually not bound by the arbitration
agreement as his debt exists independently from the principal claim.84 A third-party notice
cannot force a third party into arbitration, as the third party is not bound by the arbitration
agreement either.85
c. Extension to Former Parties: Whether the predecessor remains bound by the arbitration 39
agreement depends on the arbitration agreements interpretation. In a case where a former
shareholder of a limited partnership claimed to be absolved from the arbitration clause
75
76
77
78
79
80
81
82
83
84
85
BGH 02.10.1997, NJW 1998, 371; Musielak-Voit (2013), 1029 para. 8; MnchKommZPO-Mnch
(2013), 1029 para.45.
OLG Hamburg 14.06.2000; HK-ZPO-Saenger (2013), 1029 para.21.
BGH 03.05.2000, NJW 2000, 2346; OLG Mnchen 11.11.1997.
For a detailed analysis of third party participation in arbitral proceedings, see Bckstiegel/Bredow/Berger
(eds) (2005); Niklas (2008), pp. 242 et seq.; for a detailed analysis of the effects of the arbitration agreement and the arbitral proceedings on third parties, see Martens (2005).
BGH 03.05.2000, NJW 2000, 2346; id. 20.11.2003, ZInsO 2004, 88; Musielak-Voit (2013), 1029
para.8; for a detailed analysis of the effects of insolvency proceedings on the arbitration agreement, see
Flther DZWIR 2001, 89 or Heuser (2011).
BGH 20.11.2003, ZInsO 2004, 88; Zller-Geimer (2014), 1029 para.65; The BGH extended this exclusion to insolvency administrator rights arising from the InsO, cf. BGH 30.06.2011, SchiedsVZ 2011, 281
(283).
OLG Hamburg 08.11.2001, OLGR Hamburg 2002, 305; Schwab/Walter (2005), Chap. 7 para. 34;
Musielak-Voit (2013), 1029 para.8; Zller-Geimer (2014), 1029 para.63; Stein/Jonas-Schlosser (2002),
1029 para.33.
Baumbach/Lauterbach (2014), 1029 para.23; HK-ZPO-Saenger (2013), 1029 para.20.
92
included in the partnership contract, the BGH has held that the arbitration clauses transfer
to the legal successor does not automatically mean a release of the assignor, at least if the
claims are based on events prior to the assignment or related thereto.86 In cases of doubt, the
courts tend to interpret the arbitration agreement widely as comprising disputes with former
shareholders.87
40 d. Extension According to Substantive Corporate Law Principles: The extension of an arbitration
agreement to third parties by virtue of the rules on factual corporations or the group of
companies doctrine is subject to controversial discussion.88 There is no case law on the issue
yet.89 The majority view, however, is to deny such extension and to reject the notion of lifting
the corporate veil.90
41 At the same time, even opponents of the group of companies doctrine acknowledge the possibility of extending the arbitration agreement by recourse to different concepts of law, such
as apparent representation and ostensible representation if a non-signatory of the arbitration
agreement benefited from the contract.91
42 The extension of the arbitration agreement to non-signatories can also follow from general
substantive corporate law principles.92 For example, the BayObLG has held that if a commercial partnership (Kommanditgesellschaft) accedes to a contract concluded by its general
partner (Komplementr) with unlimited personal liability with another company, and if this
agreement refers to an arbitration agreement not signed by the general partner in his personal
capacity, such arbitration agreement is also binding on the general partner regardless of
whether he is a consumer or not at least from the time when the partnership accedes to the
contract.93
F.
Effect of the Arbitration Agreement
43 The principal effects of an arbitration agreement are twofold. First, a court before which an
action is brought in a matter which is the subject of an arbitration agreement shall, if the
respondent raises an objection prior to the beginning of the oral hearing on the substance
of the dispute, reject the action as inadmissible unless the court finds that the arbitration
agreement is null and void, inoperative or incapable of being performed (1032 (1) ZPO).
Second, the arbitration agreement forms the basis for the arbitral tribunals jurisdiction. In
addition, as noted above, the arbitration agreement establishes actionable cooperation and
advancement duties. The parties are obliged to pay their advances on costs94 and may not
obstruct the proceedings in bad faith.95 A violation of this so-called duty of loyalty arising out
86
87
88
89
90
91
92
93
94
95
BGH 01.08.2002, NJW-RR 2002, 1462.

BGH 01.08.2002, NJW-RR 2002, 1462.
For a detailed overview, see Ahrens (2001); see Gross, Zur Inanspruchnahme Dritter vor Schiedsgerichten in Fllen der Durchgriffshaftung, SchiedsVZ 2006, 194 for further references.
Sandrock, in: Bckstiegel/Berger/Bredow (eds) (2005), pp.93, 107.
Zller-Geimer (2014), 1029 para.72; Lachmann (2008), para. 509.
Sandrock, in: Bckstiegel/Berger/Bredow (eds) (2005), pp.93, 107.
For a detailed overview on arbitration agreements in articles of associations of corporations, see Ebbing,
NZG 1998, 281; Niklas (2008), pp. 183 et seq.
BayObLG 13.11.2003, DB 2004, 302; Zller-Geimer (2014), 1029 paras. 68, 71; see also infra, Haas,
1066ZPO.
OLG Dsseldorf 17.06.2003, SchiedsVZ 2003, 240.
93
of the arbitration agreement may trigger the right to terminate the arbitration agreement and
claims for damages.96
G.
Termination of the Arbitration Agreement
The arbitration agreement may end for a variety of reasons, for example expiration of a con- 44
tractually agreed time limit, occurrence of a resolving condition, or mutual agreement. The
arbitration agreement may be null and void ab initio or may become inoperative or incapable
of being performed in the course of time.
An example of an event that can render the arbitration agreement incapable of being per- 45
formed is a partys lack of funds necessary for the conduct of the arbitral proceedings.97
According to a critically discussed BGH decision, an arbitration agreement that has become
impossible to perform because one party is impecunious will even end automatically, without being terminated by the other party.98 On the other hand, a unilateral right to withdraw
from the arbitration agreement or to declare its termination requires an important reason.99
In case of a valid termination of the arbitration agreement, the parties right to bring a claim
in the national courts revives and the parties may challenge the jurisdiction of the arbitral
tribunal.
Another example for the impossibility to perform the arbitration agreement is that the parties 46
have agreed on a specific arbitral institution that has fallen apart and the parties had expressly
excluded a substitution.100 The arbitration agreement loses effect with the issuance of the
award, the judicial determination of its invalidity (1032 ZPO) or after a final judgment in
the same matter binding the same parties has been rendered.101 It regains its effect if a new
dispute arises under the contract or if the award is vacated (1059 (5) ZPO).
96
97
98
99
100
101

BGH 14.09.2000, BGHZ 145, 116; OLG Dsseldorf 14.11.2003, GmbHR 2004, 572; for a detailed
discussion see Deutsche Institution fr Schiedsgerichtsbarkeit (ed.) (2004); but see OLG Oldenburg
02.04.2004.
See BGH 14.09.2000, NJW 2000, 3720.
BGH 11.07.1985, NJW 1986, 2765 (2766); Schwab/Walter (2005), Chap.8 para.11.
OLG Hamm 14.01.2003, Rdl 2003, 251.
HK-ZPO-Saenger (2013), 1029 para.26; Zller-Geimer (2014), 1029 paras102 et seq.; Stein/JonasSchlosser (2002), 1029 para.39; Prtting/Gehrlein-Prtting (2013) 1029 para. 17.
1030 Arbitrability
(1) Any claim involving an economic interest (vermgensrechtlicher Anspruch) can
be the subject of an arbitration agreement. An arbitration agreement concerning
claims not involving an economic interest shall have legal effect to the extent that
the parties are entitled to conclude a settlement on the issue in dispute.
(2) An arbitration agreement relating to disputes on the existence of a lease of residential accommodation within Germany shall be null and void. This does not apply to
residential accommodation as specified in 549 subsection 2 numbers (1) to (3)
BGB.
(3) Statutory provisions outside this Book by virtue of which certain disputes may not
be submitted to arbitration, or may be submitted to arbitration only under certain
conditions, remain unaffected.
Short Bibliography: Borris, Abfassung von Schiedsklauseln und Ausgestaltung des Schiedsverfahrens in Streitigkeiten aus gesellschaftsrechtlichen Vertragsverhltnissen, in: Bckstiegel/
Berger/Bredow (eds), Die Beteiligung Dritter an Schiedsverfahren, Kln 2005, p.109; id., Borris,
Die Ergnzenden Regeln fr gesellschaftsrechtliche Streitigkeiten der DIS (DIS-ERGeS),
SchiedsVZ 2009, 299; Ebbing, Schiedsvereinbarungen in Gesellschaftsvertrgen, NZG 1998, 281;
id., Satzungsmige Schiedsklauseln, NZG 1999, 754; Flecke-Giammarco/Keller, Auswirkung der
Wahl des Schiedsorts aus Schiedsverfahren in der Insolvenz, NZI 2012, 529 (531); Heidbrink/
von der Groeben, Insolvenz und Schiedsverfahren, ZIP 2006, 265; Huber, Schiedsvereinbarungen
im Scheidungsrecht, SchiedsVZ 2004, 280; Huber, Das Verhltnis von Schiedsgericht und staatlichen Gerichten bei der Entscheidung ber die Zustndigkeit, SchiedsVZ 2003, 150; Lehmann,
Wertpapierhandel als schiedsfreie Zone? Zur Wirksamkeit von Schiedsvereinbarungen nach
37h WpHG, SchiedsVZ 2003, 219; Raeschke-Kessler, Gesellschaftsrechtliche Schiedsverfahren
und das Recht der EU, SchiedsVZ 2003, 145; Schmidt, Schiedsklauseln und Schiedsverfahren
im Gesellschaftsrecht als prozessuale Legitimationsprobleme Ein Beitrag zur Verzahnung von
Gesellschafts- und Prozessrecht, BB 2001, 1857; Schmidt, Kartellrecht im Schiedsverfahren
Neuorientierung durch VO 1/2003 und 7. GWB-Novelle, BB 2006, 1397; Schumacher, Das
neue 10. Buch der Zivilprozeordnung im Vergleich zum UNCITRAL-Modellgesetz ber die
internationale Handelsschiedsgerichtsbarkeit, BB 1998, 6; Trittmann, Art. 81 und 82 EGV in der
schiedsgerichtlichen Praxis, in: Bckstiegel/Berger/Bredow (eds), Schiedsgerichtsbarkeit und
Kartellrecht, Kln 2006, p.57; id., Die Auswirkungen des Schiedsverfahrens-Neuregelungsgesetzes
auf gesellschaftsrechtliche Streitigkeiten, ZGR 1999, 340.
I.
II.
Para.
Relevance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A. Relevance of the Norm in German
Arbitration Law . . . . . . . . . . . . . . . . . . . . . . 1
Legislative History . . . . . . . . . . . . . . . . . . . . . . . 3
A. Comparison with the UNCITRAL
Model Law . . . . . . . . . . . . . . . . . . . . . . . . . . 3
B. Intention of the Legislator and
Applicability of Jurisprudence and
Legal Authority under German
Arbitration Law Prior to its Reform
in 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Para.
IV. Elements of 1030 ZPO . . . . . . . . . . . . . . . . . 7
A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 7
1. Objective Arbitrability . . . . . . . . . . . . 7
2. Subjective Arbitrability . . . . . . . . . . . . 8
B. Arbitrability of Claims Involving
an Economic Interest (1030 (1)
sentence 1 ZPO) . . . . . . . . . . . . . . . . . . . . . 9
1. Claims Involving an Economic
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2. Conflict with Mandatory Rules
of Law? . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Para.
C. Arbitrability of Claims Not
Involving an Economic Interest
(1030 (1) sentence 2 ZPO). . . . . . . . 11
D. Discussion of Individual Subject
Matters and Statutory Exceptions
to Arbitrability . . . . . . . . . . . . . . . . . . . . . . 12
1. Commercial Subject Matters . . . . . 13
95
Para.
2. Other Matters . . . . . . . . . . . . . . . . . . . 20
E. Exceptions for Residential Lease
Agreements (1030 (2) ZPO) . . . . . . 26
1. Lease of Residential
Accommodation . . . . . . . . . . . . . . . . . 27
2. Dispute on the Existence of a
Lease Agreement . . . . . . . . . . . . . . . . 28
I.
Relevance
A.
Relevance of the Norm in German Arbitration Law1
In German arbitration law, the lack of arbitrability of the subject matter in dispute is one of 1
the limited grounds for challenging an arbitral award and refusing enforcement (1059 (2)
No. 1 (a) Code of Civil Procedure (Zivilprozessordnung ZPO)). Although 1030 ZPO
is directly applicable only if the place of the arbitration is in Germany,2 1030 ZPO will also
be considered as lex fori if the German courts are called to rule on the admissibility of arbitral
proceedings under 1032 (2) ZPO. Similarly, under 1061 ZPO and Article V (2)(a) New
York Convention 1958 (NYC), recognition and enforcement may be denied if the subject
matter is not arbitrable under the law of the country in which recognition and enforcement
is sought.3 The state courts in proceedings regarding the recognition and enforcement or in
proceedings regarding the challenge of an award will examine the arbitrability of the subject
matter ex officio. The national courts in proceedings for annulment will have to annul the
award or refuse recognition and enforcement even if the claimant has not explicitly raised
this issue during the proceedings.4 The time limit for an annulment request under 1059 (3)
ZPO does not preclude the court in enforcement proceedings to deny the award recognition
and enforcement on the grounds that the dispute was not arbitrable.5
B.
It is not surprising that the concept of arbitrability as laid out in 1030 ZPO also plays a 2
significant role in practice. In arbitral proceedings that have their seat in Germany, the arbitrability of the subject matter will be reviewed by the arbitral tribunal if it renders a decision
on its jurisdiction according to 1040 ZPO.6 As only a binding arbitration agreement will
enable the respondent in state court proceedings to raise the objection under 1032 (1)
ZPO, a German court will review the arbitrability when it decides on its jurisdiction over the
claim.7 The same applies in disputes regarding the admissibility of arbitral proceedings under
1032 (2) ZPO.8
1
2
3
4
5
6
7
8
Musielak-Voit (2013), 1030 para.10.
Stein/Jonas-Schlosser (2002), Anhang 1061 para. 133. See also Haas, Schiedsgerichte in Erbsachen
und das New Yorker bereinkommen ber die Anerkennung und Vollstreckung auslndischer Schiedssprche, SchiedsVZ 2011, 289.
See infra, Huber/Bach, 1040 para.6; see also OLG Oldenburg 15.11.2002, OLGR Oldenburg 2003, 340.
Baumbach/Lauterbach/Albers/Hartmann (2014), 1032 para.9.
See infra, Huber/Bach, 1032 para. 43.
96
II.
Legislative History
A.
3 As the UNCITRAL Model Law (ML) does not explicitly address the issue of arbitrability,
1030(1) ZPO does not have an exact counterpart in the Model Law.9 The concept used
in 1030 (1) ZPO has been taken from Article 177 Swiss Private International Law (Swiss
PIL).10
4 1030 (2) ZPO protects the scope of application of 29a ZPO.11 Under 29a ZPO,
disputes arising under lease agreements on residential accommodations must be brought
before the state court at the place where the property is located. This jurisdiction is exclusive
in order to protect the interests of the tenant against abusive derogation of jurisdiction. To
avoid circumvention by arbitration agreement, the legislator explicitly stated the inarbitrability of disputes arising under lease agreements on residential accommodations in 1030
(2) ZPO. The provision is not modeled on a counterpart in the UNCITRAL Model Law or
any foreign arbitration law.12 1030 (3) ZPO is phrased after Article 1 (5) ML. The Model
Law provision contains an exception to arbitrability by any other law of this State by which
certain disputes may not be submitted to arbitration, which has been adopted by the German
legislator synonymously.
B.
Intention of the Legislator and Applicability of Jurisprudence and Legal Authority

under German Arbitration Law Prior to its Reform in 1998
5 As documented by the German Arbitration Law Reform, it has been the legislators intention
to allow arbitration in all cases in which it can be considered as an equivalent mechanism of
dispute resolution.13 Arbitration should only be excluded if it is essential to the public interest that a state court decided the matter.14 As the legislator realized that the criterion of the
public interest would be too unspecific,15 it decided to make a distinction between monetary
claims involving an economic interest and claims not involving an economic interest. Under the current German arbitration law, monetary claims are generally arbitrable, whereas
non-monetary claims are arbitrable only if the parties have the legal authority to enter into
a settlement on the subject matter of the dispute. The change for the relevant criterion was
intended to increase the number of disputes that are arbitrable under German law.16 This is
in line with the overall objective of the 1998 Reform Act to promote Germany as a place of
venue for international arbitral proceedings.17 The jurisprudence established under the old
9
10
11
12
13
14
15
16
17

Art.177 Swiss PIL reads as follows: Gegenstand eines Schiedsverfahrens kann jeder vermgensrechtliche Anspruch sein. In English: Any claim involving an economic interest can be subject to arbitration.
On the relationship between Art. 177 Swiss PIL and 1030 ZPO see Stein/Jonas-Schlosser (2002),
1030 para.1 and MnchKommZPO-Mnch (2013), 1030 para.1.
Before the Arbitration Law Reform in 1998, the arbitrability depended on the parties ability to compromise on the subject matter by way of settlement.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.34; OLG Frankfurt 30.01.2004, SchiedsVZ
2004,97.
Trittmann, ZGR 1999, 340; Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.34.
97
1025a ZPO pre-1998 can be applied to 1030 (1) sentence2ZPO, as both provisions apply the criterion whether the parties have the authority to enter into a settlement agreement.
Moreover, in its last decisions on the old law, the BGH extended the arbitrability to all claims
except for those disputes that must be decided by a state court judge. It is to be expected that
this liberal view will be applied also to 1030 (1) sentence 2 ZPO, as the criterion in this
provision is identical to the law before the reform in 1998.

A derogation of 1030 ZPO is not possible. The provision protects public policy, and even 6
the recognition and enforcement of foreign awards will depend on the arbitrability of the
dispute under German law (see 1061 ZPO and Article V (2) (a) NYC).18
IV. Elements of 1030 ZPO

A.
Introduction
1.
Objective Arbitrability
1030 ZPO deals with the arbitrability of the subject matter, the so-called objective arbi- 7
trability under German doctrine (objektive Schiedsfhigkeit). A subject matter is arbitrable if
and as far as it may be the subject of arbitral proceedings in general.19 If the parties enter into
an arbitration agreement on a subject matter that is not arbitrable, the arbitration agreement
will be null and void.20 Consequently, a dispute cannot be brought before an arbitral tribunal
mentioned in a defective arbitration agreement. By regulating the arbitrability of the subject
matter of a dispute, the legislator reserves certain disputes for the exclusive jurisdiction of
the state courts in the public interest.21 Disputable may, however, be the treatment of cases
in which the subject matter per se is arbitrable (e.g. a contract between spouses on financial
issues in case of a divorce) but non-arbitrable questions (e.g. custody for children) form part
of the dispute as well. It could possibly be argued that only the non-arbitrable questions fall
outside the arbitral tribunals jurisdiction insofar as the arbitration agreement is incapable of
being performed, whereas the arbitration agreement as such remains valid and in force.
2.
Subjective Arbitrability
Arbitrability of the subject matter can be distinguished from the capacity of the parties to 8
enter into an arbitration agreement. This so-called subjective arbitrability (subjektive Schiedsfhigkeit) is not covered by 1030 ZPO. Rather, a party which is competent to enter into a
contract may also provide for an arbitration agreement. However, there are some exceptions.
Some provisions establish certain restrictions on the capacity to enter into an arbitration
agreement, i.e. 37h Securities Trading Act (Wertpapierhandelsgesetz WpHG).22 This
provision attributes to merchants under 1 et seq. Commercial Code (Handelsgesetzbuch
HGB) mainly corporations, individual entrepreneurs and other business entities the
exclusive capacity to enter in advance into an arbitration agreement on specific financial
18
19
20
21
22
Stein/Jonas-Schlosser (2002), Anhang 1061 para.133.

Cf. supra, Trittmann/Hanefeld, 1029 para. 13.
See also Niedermaier Schiedsgerichtsbarkeit und Finanztermingeschfte Anlegerschutz durch 37h
WpHG und andere Instrumente, SchiedsVZ 2012, 177.
98
service transactions such as services rendered with respect to negotiable instruments, financial futures derivatives, etc.23 Similar restrictions are contained in 1822 No. 12 Civil Code
(Brgerliches Gesetzbuch BGB) for arbitration agreements with minors and in 160 (2)
No. 3 German Insolvency Act (Insolvenzordnung InsO) for arbitration agreements with a
party subject to insolvency proceedings in Germany.24
B.
Arbitrability of Claims Involving an Economic Interest (1030 (1) sentence 1 ZPO)
1.
Claims Involving an Economic Interest
9 1030 (1) ZPO contains in its first sentence a comprehensive general clause. All claims
involving an economic interest are arbitrable, regardless of whether they are governed by
mandatory provisions of German law.25 In the interest of promoting arbitration as a dispute
settlement mechanism in Germany, the legislator intended a broad interpretation of the
term economic interest.26 Claims involving an economic interest are not only claims for the
payment of a sum of money, but also declaratory claims and actions for the change of a legal
relationship (Gestaltungsklagen).27 Prohibitory actions (Unterlassungsklagen) and actions
for revocations (Widerrufsklagen) also pertain to an economic interest if they are raised to
protect business interests.28
2.
Conflict with Mandatory Rules of Law?
10 This broad principle outlined above has been subject to criticism.29 If a claim involving an
economic interest is governed by mandatory provisions of law that do not give the parties
the authority to enter into a settlement on the substance, the parties may not settle the claim
outside of arbitral proceedings. In contrast, they may settle during arbitral proceedings as
1053 (1) ZPO allows the parties to agree upon the terms of the award.30 However, the
inclusion of the arbitrator as an objective third party who converts a settlement into an
award on agreed terms introduces a certain degree of control, as it can be presumed that
the arbitrator will not issue the award if the settlement contravenes mandatory provisions of
law. Further, as most of the mandatory provisions do not relate to monetary claims that are
arbitrable under 1030 (1) ZPO but to claims not involving an economic interest that are
arbitrable under 1030 (3) ZPO, the practical relevance of this conflict is limited. It may, for
example, cover claims on the original capital contribution in limited liability companies.31
Furthermore, the conflict of interest between the parties in arbitral proceedings will usually
prevent the parties from avoiding mandatory provisions of law. In these instances, each party
will invoke the provisions that are in favour of its respective position.32 For this reason, the
additional authority to settle under 1053 ZPO will, in practice and in all likelihood, not lead
to actual conflicts with the public interest.
23
24
25
26
27
28
29
30
31
32
Cf. BGH 09.03.2010, BGHZ 184, 365.

Zller-Geimer (2014), 1030 para.1a.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.34; Stein/Jonas-Schlosser (2002), 1030
para.1; Zller-Geimer (2014), 1030 para.1.
Stein/Jonas-Schlosser (2002), 1030 para.2; MnchKommZPO-Mnch (2013), 1030 para.13.
Cf. HK-ZPO-Saenger (2013), 1030 para.2.
Cf. Voit, Privatisierung der Gerichtsbarkeit, JZ 1997, 120 et seq.
See infra, Haas, 1066 para. 67.
C.
99
Arbitrability of Claims Not Involving an Economic Interest (1030 (1) sentence 2

ZPO)
Claims not involving an economic interest are arbitrable only if the parties are entitled to 11
enter into a settlement on the subject matter of the dispute. The provision takes up the criterion contained in the old 1025a ZPO pre-1998. The legislators decision has received some
criticism, as the BGH decided that, under the old 1025a ZPO pre-1998, all disputes should
be arbitrable except those disputes that necessarily have to be decided by a state court,33 such
as disputes on marital status or the status of a child. Although the wording of the provision
suggests that the arbitrability of claims not involving an economic interest should be the
exception rather than the rule,34 the case law established by the BGH under arbitration law
prior to 1998 suggests that, in practice, most disputes not involving an economic interest will
still be arbitrable under 1030 ZPO. This is also in line with the intention of the legislator
who accepted the BGHs dictum, according to which all disputes should be arbitrable except
when public interest requires a decision by a state court as a general principle.35
D.
Discussion of Individual Subject Matters and Statutory Exceptions to Arbitrability
1030 (3) ZPO states that provisions outside the ZPO may constitute an exception to the 12
arbitrability of specific subject matters. Such exceptions are made in the public interest, as the
legislator wants to ensure that these disputes are settled within the state court system and not
in private proceedings with limited supervision by the national authorities.
1.
Commercial Subject Matters
a. Intellectual Property Disputes: Disputes involving the use of intellectual property e.g. in 13
the context of license or know-how agreements are arbitrable as they involve an economic
interest. Arbitration agreements on these subject matters are valid under 1030 (1) ZPO.
In contrast, the issue of arbitrability is controversial, when it comes to the validity of examined 14
and granted IPR, e.g. annulment actions (Lschungsverfahren), actions for the withdrawal of
an intellectual property right (Klage auf Rcknahme) and actions for compulsive licences
(Zwangslizenzen). Under German arbitration law prior to the 1998 law reform, these kinds
of disputes were considered not to be arbitrable and the legislator did not intend to change
this situation.36 The traditional view is that disputes on intellectual property rights should
not be subject to arbitral proceedings as they are attributed to the exclusive jurisdiction of a
separate branch of the judiciary and involve a public interest.37
Thereafter, a strong opinion in favor of the arbitrability of disputes concerning the validity of 15
intellectual property rights has evolved among commentaries.38 This position is in line with
the general purpose of the 1998 reform to favor arbitration and to accept it as a method of
dispute resolution equivalent to the state courts. As a result of this, the provisions establishing exclusive jurisdiction of specialized courts39 do not restrict the arbitrability of intellectual
33
34
35
36
37
38
39
BGH 29.03.1996, BGHZ 132, 278; Stein/Jonas-Schlosser (2002), 1032 para.6.

Cf. MnchKommZPO-Mnch (2001), 1030 para.1.
Stein/Jonas-Schlosser (2002), 1030 para.6; see also Bill of the Arbitration Law Reform Act, BT-Drs.
13/5274, p.34.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, pp.34 et seq.
BGH 25.01.1983, BB 1984, 561.
Schwab/Walter (2005), Chap.4 para.11; Zller-Geimer (2014), 1030 para.14, 15.
81, 22 BPatG, 53 GeschmMG, 49, 51, 55 MarkenG.
100
property disputes. They are applicable only if the state courts have jurisdiction in the first
place.40 Although the execution of an award needs to be effected by the Patent and Trademark
Register, the decision on whether an intellectual property right needs to be avoided may be
delegated to an arbitral tribunal. There are not any predominant issues of public policy at
stake which could justify a limitation of the arbitrability.41
16 b. Corporate Disputes: As all disputes between shareholders of a company or between shareholders and the company will affect economic interests of some sort, they are arbitrable under 1030 (1) ZPO.42 For example, disputes regarding the nominal capital (Stammkapital)
of a limited liability company (Gesellschaft mit begrenzter Haftung GmbH) are arbitrable.43
In disputes involving corporations, especially the arbitrability of disputes regarding shareholder resolutions (Beschlussmngelstreitigkeiten), has been the object of debate. Whereas the
arbitrability of these disputes for partnerships such as the offene Handelsgesellschaft oHG,
Kommanditgesellschaft KG and Gesellschaft brgerlichen Rechts GbR has traditionally
been accepted,44 the situation is different for GmbH limited liability companies and for stock
companies (Aktiengesellschaft AG).45 Here, the dominant view has been that such disputes
regarding shareholder resolutions were not arbitrable under German arbitration law before
the reform 1998.46 In 1996, however, the BGH ruled in a decision under the law prior to the
1998 law reform that disputes regarding shareholder resolutions are arbitrable in principle.47
The court also stated, however, that an award on shareholder resolutions will always affect all
the shareholders even if they were not party to the arbitral proceedings. As the principle of
privity of contract does not allow an arbitral tribunal to extend legal consequences to third
parties, these disputes can only be subject to arbitration provided that all parties affected by
an award are also party to the arbitration agreement.48 The BGH has also stated that all parties
must be able to influence the nomination of the arbitrators.49 There is a debate whether this
decision implies that disputes on shareholder resolutions are arbitrable under 1030 (1)
ZPO.50 Some authors have interpreted the decision as not allowing for the arbitrability of disputes arising from shareholder resolutions, even after the reform in 1998.51 The predominant
position, however, appears to be that the BGH has merely stated that an arbitration clause
40
41
42
43
44
45
46
47
48
49
50
51
HK-ZPO-Snger (2013), 1030 para.3; Schwab/Walter (2005), Chap.4 para.11.

For further details, cf. Part IV, Schfer, Arbitration of Intellectual Property Disputes in Germany, paras 16
et seq.
See Part IV, Duve/Wimalasena, Arbitration of Corporate Law Disputes in Germany, paras 1 et seq.; Trittmann, ZGR 1999, 340 (349); Raeschke-Kessler, SchiedsVZ 2003, 145 (152).
OLG Frankfurt 30.01.2004, BB 2004, 908.
BGH 28.05.1979, NJW 1979, 2567; OLG Hamm 29.04.1992, DB 1992, 2180; Ebbing, NZG 1999, 754;
Ebenroth/Bohne, Die schiedsgerichtliche berprfung von Gesellschafterbeschlssen in der GmbH, BB
1996, 1393; Henze, Zur Schiedsfhigkeit von Gesellschafterbeschlssen im GmbH-Recht, ZGR 1988,
542; Schmidt, Schiedsfhigkeit von GmbH-Beschlssen, ZGR 1988, 523 (525); Schmidt, Schiedsklagen
gegen Hauptversammlungsbeschlsse?, AG 1995, 551 (552 et seq.).
See Trittmann, ZGR 1999, 340 (349 et seq.).
Overview Zller-Geimer (1993) (18th edn), 1025 para.38.
BGH 29.03.1996, NJW 1996, 1753.
Trittmann, ZGR 1999, 340 (352).
BGH 29.03.1996, NJW 96, 1753 (1754).
See e.g. OLG Celle 31.07.1998, NZG 1999, 167 and the note by Ebbing, NZG 1999, 754 seq.
101
must take into consideration that these shareholder disputes are multi-party disputes and
that the scope of the award must extend to all shareholders and to the company.52
Shareholder resolutions in commercial companies involve an economic interest. Conse- 17
quently, disputes arising from them are arbitrable.53 The actual, practical problem lies in the
drafting of the arbitration clause. The submission of this kind of corporate dispute to arbitration requires a specifically drafted arbitration clause that is adapted to the characteristics of the
situation at hand. A model clause has been developed by Borris54 and subsequently published
by the German Institution of Arbitration (Deutschen Institution fr Schiedsgerichtsbarkeit e.V.
DIS) as the DIS-Supplementary Rules for Corporate Law Disputes 09 implementing the
minimum requirements as set out by the BGH in Schiedsfhigkeit II.55
c. Financial Services Disputes: Financial services disputes pertain to, by the very nature of the 18
transaction, claims involving an economic interest. There are, however, some restrictions for
disputes involving securities (Wertpapierdienstleistungen and Wertpapiernebendienstleistungen) and futures trading on securities (Finanztermingeschfte). Under 37h WpHG, only
merchants and public law legal entities have the capacity to enter in advance into arbitration
agreements. As the restriction applies only to future disputes, an arbitral tribunal will have
jurisdiction despite 37h WpHG, even if one of the parties does not fulfill this requirement,
provided that the party validly consents to arbitration after the dispute has arisen.56
d. Antitrust Disputes and Merger Control: Claims involving antitrust issues are arbitrable, 19
as the former 91 Antitrust Act (Gesetz gegen Wettbewerbsbeschrnkungen GWB) that
prohibited arbitral proceedings in antitrust matters has been abolished and has not been
replaced.57 Even if a contract with an arbitration clause contravenes German or European
antitrust law, the arbitration agreement itself will not be invalid.58 This is a direct consequence
of the separability of the arbitration clause, 1040 (1) ZPO.59
2.
Other Matters
a. Employment Disputes: Employment disputes are arbitrable only under the 101 et seq. 20
ArbGG. The provisions 101 et seq. Act governing the Employment Courts (Arbeitsgerichtsgesetz ArbGG) establish a system of arbitral proceedings that expressly provide for
the representation of the parties to collective wage agreements, i.e. unions and management.
101 (3) ArbGG determines that the arbitral proceedings in employment disputes will
not be governed by the ZPO. Thus, the 1025 et seq. ZPO and, more specifically, 1030
ZPO will not be applicable in these cases.60 Other employment matters are not arbitrable.
However, disputes arising out of contracts between companies and its managing directors
52
53
54
55
56
57
58
59
60
Raeschke-Kessler, SchiedsVZ 2003, 145 (152); Trittmann, ZGR 1999, 340 (349 et seq.); Bayer, Schiedsfhigkeit von GmbH-Streitigkeiten, ZIP 2003, 881 (884).
Trittmann, ZGR 1999, 340 (349).
See Borris, in: Bckstiegel/Berger/Bredow (eds) (2005), pp.109, 127 et seq.
Available at <www.dis-arb.de>.
Musielak-Voit (2013), 1030 para.3; Ebbing (2003), pp.193 et seq.
See BGBl. 1997 I 3224 (3249); Schwab/Walter (2005), Chap.4 para.7; Musielak-Voit (2013), 1030
para.2.
See supra, Huber/Bach, 1040 para. 4.
Stein/Jonas-Schlosser (2002), vor 1025 para.18.
102
are arbitrable as managing directors are not employees under German employment law.61
Consequently, these disputes are not employment disputes.
21 b. Family Law Disputes and Succession: Family law disputes and disputes over succession
will be arbitrable if they concern an economic interest, such as maintenance payments or
the dividing up of inheritance.62 An arbitration clause may also be incorporated into a will,
1066 ZPO.63 However, matrimonial disputes will not be arbitrable if they affect the status of
a person, i.e. divorce (122 Family Matter Proceedings and Non-Contentious Proceedings
Act (Gesetz ber das Verfahren in Familiensachen und in den Angelegenheiten der freiwilligen
Gerichtsbarkeit FamFG), access to children, custody and other parent-child matters (Kindschaftssachen, 151 FamFG).64 Also, similar disputes arising from a registered partnership for
life (eingetragene Lebenspartnerschaft, 269 FamFG) are not arbitrable.65
22 c. Non-contentious Proceedings (Freiwillige Gerichtsbarkeit): Disputes involving non-contentious proceedings (Freiwillige Gerichtsbarkeit) are generally not arbitrable.66 These noncontentious proceedings are separated from the branch of the contentious civil proceedings
for historic reasons and include subject matters, such as (but not limited to) adoption, family
status, succession, land title registry and the company registry. Their common ground is that
the historic legislator assumed that these kinds of disputes affected the public interest.
23 Among these types of subject matters, only disputes involving adversarial proceedings as
opposed to disputes that are purely inquisitorial, such as family matters and status matters
are arbitrable. The following disputes have been considered as being adversarial: proceedings
according to 166 (3) HGB67 and for proceedings according to 51a Act on Limited Liability Companies (Gesetz betreffend die Gesellschaft mit beschrnkter Haftung GmbHG).68
Disputes under 166 (3) HGB concern the right of a limited partner (Kommanditist) in a
limited partnership under 161 et seq. HGB to request a balance sheet and the companys
books of account. Similarly, under 51a GmbHG, a shareholder in a limited liability company (GmbH Gesellschafter) may obtain information about the companys business and
receive access to the companys books of account.
24 d. Enforcement of Court Decisions: Disputes arising after a state court has reached a decision
are in principle arbitrable, with the exception of the actual recognition and enforcement
procedure.69 In contrast, actions to oppose execution under 767 ZPO and under 771
ZPO are arbitrable.70 Similarly, actions to modify the amount of a judgment for periodical
payments under 323 ZPO are also arbitrable.71
61
62
63
64
65
66
67
68
69
70
71
Cf. Wimmer, Der Anstellungsvertrag des GmbH-Geschftsfhrers, DStR 1997, 247 et seq. for this type of
contracts.
Huber, SchiedsVZ 2003, 150 (153); Wegmann, Die Schiedsgerichtsbarkeit in Nachlasssachen, ZEV
2003,20.
OLG Karlsruhe NJW 2010, 688. See also MnchKommBGB-Leipold (2004), 1937 paras32 et seq.
Huber, SchiedsVZ 2003, 150 (152).
Stein/Jonas-Schlosser (2002), vor 1025 para.19; Zller-Geimer (2014), 1030 para.6.
BayObLG 10.10.1978, MDR 1979, 317.
OLG Koblenz 21.12.1989, NJW-RR 1990, 1374.
Stein/Jonas-Schlosser (2002), 1029 para.15; BGH 24.09.1998, NJW 1999, 282; Zller-Geimer (2014),
1030 para.19.
BGH 03.12.1986, BGHZ 99, 143; id. 19.12.1995, NJW-RR 1996, 508; cf. also OLG Mnchen 15.03.2006,
OLGR Mnchen 2006, 404; OLG Saarbrcken 16.09.2005, available at <www.juris.de>.
MnchKommZPO-Mnch (2013), 1029 para.80; Musielak-Voit (2013), 1030 para.7.
103
e. Insolvency Proceedings: Disputes in insolvency proceedings are generally arbitrable. The 25

main issue in this context is whether the insolvency administrator is bound by an arbitration
agreement by the insolvent party. After the proceedings have commenced, the debtor does
not have the authority to conclude the arbitration agreement without the consent of the
insolvency administrator. If the arbitration agreement was concluded before the insolvency
proceedings were initiated, the insolvency administrator will have to resort to arbitration unless the assets of the insolvent party are insufficient to conduct the arbitration.72 Claims arising
after the avoidance of a transaction in the context of insolvency proceedings under 129 et
seq. Insolvency Act (Insolvenzordnung InsO) are arbitrable. These disputes concern claims
by the insolvency administrator with respect to transactions by the insolvent debtor for the
benefit of a third party. The insolvency administrator may, by avoiding the contract, recover
assets that the insolvent company has transferred to the said third party. Although the insolvency administrator is generally bound by arbitration agreements concluded by the debtor
before the proceedings were initiated, the administrator may bring claims after the avoidance
of such a contract in a state court. The arbitration agreement in the original transaction does
not cover the right to avoid the contract.73 Consequently, an arbitration will only take place
if the insolvency administrator enters into an arbitration agreement with the respective third
party. In continuation of this case law, the BGH decided that the insolvency administrators
rights, which are based on its capacity as an insolvency administrator and arise from the
InsO, are inarbitrable.74 Therefore, it held that the debtor not only lacks the legal authority to
dispose of the insolvency administrators avoidance rights, but also lacks the legal authority
to dispose of the insolvency administrators election right pursuant to 103 InsO.75
E.
Exceptions for Residential Lease Agreements (1030 (2) ZPO)
1030 (2) ZPO constitutes an exception of the arbitrability of residential lease agreements 26
located in Germany.76 Disputes concerning the existence of a contract on the lease of residential accommodation are not arbitrable. The provision also extends to sublease agreements.77
In contrast, disputes arising out of specific short term lease agreements and out of lease agreements on furnished accommodations are arbitrable (1030 (2) sentence 2 ZPO and 549
(2) Nos 1-3 BGB). Also, the arbitrability of commercial lease agreements is not limited by this
provision at all.
1.
Lease of Residential Accommodation
Residential accommodations located in Germany must be the object of the lease agree- 27
ment.78 If the function of the property is both commercial and residential, the main use will
be decisive for the qualification of the property.79 In order to prevent a circumvention of the
exclusive jurisdiction of the state court at the premises of the residential accommodation
established by 29a ZPO, 1030 (2)ZPO will be applicable even if German law is not the
72
73
74
75
76
77
78
79
Heidbrink/von der Groeben, ZIP 2006, 265 (266); Flecke-Giammarco/Keller, NZI 2012, 529 (531).
Heidbrink/von der Groeben, ZIP 2006, 265 (266).
BGH 30.06.2011, SchiedsVZ 2011, 281 (283).
Cf. Brinkmann Schiedsverfahren ber Lizenzen in der Insolvenz des Lizenzgebers eine Gleichung mit
drei Unbekannten, NZI 2012, 735; Flecke-Giammarco/Keller, NZI 2012, 529 (531).
MnchKommZPO-Mnch (2013), 1030 para.27; Stein/Jonas-Schlosser (2002), 1030 para.13.
104
lex arbitri and the arbitral tribunal will not have jurisdiction (even if none of the parties raise
an objection against the arbitrability of the dispute).80 The scope of application of 29a ZPO
is broader than 1030 (2) ZPO. Therefore, a dispute that is in principle arbitrable pursuant
to 1030 (2) ZPO could also well be covered by 29a ZPO without an arbitration clause.81
2.
Dispute on the Existence of a Lease Agreement
28 The dispute must address the existence of a lease agreement, but need not be limited to the
question of its existence. This provision will be applicable if the existence or non-existence of
a lease agreement is a prerequisite for the claim.82 Disputes about the eviction of the tenant
are consequently not arbitrable.83 In contrast, a claim for the payment of the lease or a claim
for the payment of damages will be arbitrable as long as the existence of a lease contract is
not in dispute.84
80
81
82
83
84

Baumbach/Lauterbach/Albers/Hartmann (2013), 1030 para. 9.
Zller-Geimer (2014), 1030 para.21; Musielak-Voit (2013), 1030 para.5.
Zller-Geimer (2014), 1030 para.21; MnchKommZPO-Mnch (2013), 1030 para.28.
1031 Form of Arbitration Agreement

(1) The arbitration agreement shall be contained either in a document signed by the
parties or in an exchange of letters, telefaxes, telegrams or other means of telecommunication which provide a record of the agreement.
(2) The form requirement of subsection 1 shall be deemed to have been complied
with if the arbitration agreement is contained in a document transmitted from one
party to the other party or by a third party to both parties and if no objection was
raised in good time the contents of such document are considered to be part of
the contract in accordance with common usage.
(3) The reference in a contract complying with the form requirements of subsection
1 or 2 to a document containing an arbitration clause constitutes an arbitration
agreement provided that the reference is such as to make that clause part of the
contract.
(4) [Repealed]
(5) Arbitration agreements to which a consumer is a party must be contained in a document which has been personally signed by the parties. The written form pursuant
to subsection 1 may be substituted by electronic form pursuant to 126a of the
Civil Code. No agreements other than those referring to the arbitral proceedings
may be contained in such a document or electronic document; this shall not apply
in the case of a notarial certification.
(6) Any non-compliance with the form requirements is cured by entering into argument on the substance of the dispute in the arbitral proceedings.
Short Bibliography: Hanefeld/Wittinghofer, Schiedsklauseln in Allgemeinen Geschftsbedingungen, SchiedsVZ 2005, 217; Lachmann, Handbuch fr die Schiedsgerichtspraxis, Kln 2008; Lachmann/Lachmann, Schiedsvereinbarungen im Praxistest, BB 2000, 1633; Ramming, Einhaltung der
Form des 1031 ZPO im Hinblick auf den Stckgutvertrag durch bergabe eines Konnossements
mit Schiedsklausel?, TranspR 2002, 392; Schmitz, Schiedsvereinbarungen in der notariellen Praxis,
RNotZ 2003, 591.
I.
II.
Para.
A. Relevance of the Norm in the
Legislative History . . . . . . . . . . . . . . . . . . . . . . 3
A. Comparison with the
UNCITRAL Model Law. . . . . . . . . . . . . 3
B. Comparison with German
Arbitration Law Prior to its
Reform in 1998. . . . . . . . . . . . . . . . . . . . . . 4
C. Applicability of Jurisprudence
and Legal Authority Relating to
German Arbitration Law Prior to
its Reform in 1998 . . . . . . . . . . . . . . . . . . . 5
Para.
IV. Elements of the Norm . . . . . . . . . . . . . . . . . . . 7
A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . 7
1. Scope of Application. . . . . . . . . . . . . . 7
2. Form Requirements of the
Main Contract. . . . . . . . . . . . . . . . . . . . 8
B. 1031 (1) ZPO . . . . . . . . . . . . . . . . . . . . . 9
1. Mutually Signed Agreement. . . . . .10
2. Written Record . . . . . . . . . . . . . . . . . .11
C. 1031 (2) ZPO . . . . . . . . . . . . . . . . . . . .12
1. Practical Relevance . . . . . . . . . . . . . .13
2. Letter of Confirmation . . . . . . . . . . .14
3. Silence as Consent . . . . . . . . . . . . . . .15
D. 1031 (3) ZPO . . . . . . . . . . . . . . . . . . . .16
106
Para.
1. Form Requirement of the
Referencing Document . . . . . . . . . .17
2. Document Containing the
Arbitration Clause . . . . . . . . . . . . . . .18
3. Incorporation of the
Arbitration Agreement. . . . . . . . . . .19
4. Validity Control of Arbitration
Clauses Included in Standard
Terms and Conditions . . . . . . . . . . .20
E. 1031 (4) ZPO . . . . . . . . . . . . . . . . . . . .21
F. 1031 (5) ZPO . . . . . . . . . . . . . . . . . . . .22
1. Consumer. . . . . . . . . . . . . . . . . . . . . . .23
Para.
2. Non-entrepreneurial Activity. . . . .24
3. Signing of a Separate Agreement .25
4. Validity Control of Standard
Term Arbitration Agreements . . . .26
5. Agreements in Electronic Form . .27
6. Notarized Agreements . . . . . . . . . . .28
G. 1031 (6) ZPO . . . . . . . . . . . . . . . . . . . .29
1. Cure of Form Defects . . . . . . . . . . . .29
2. Cure of Other Defects of the
Arbitration Agreement. . . . . . . . . . .30
3. Cure of Lack of Any Arbitration
Agreement . . . . . . . . . . . . . . . . . . . . . .31
I.
A.
Relevance of the Norm in the Context of German Arbitration Law
1 1031 ZPO constitutes one of the key provisions of German arbitration law, as the norm
deals with the required form of the arbitration agreement under German arbitration law
and thus with one of the key aspects determining the arbitration agreements validity.2
B.
2 A careful consideration of 1031 ZPO is of paramount importance be it in the contracting

stage, at the time of commencing arbitration, or in recognition and enforcement proceedings as form defects of the arbitration agreement often give rise to challenges of the arbitral
tribunals jurisdiction. As case law shows, frequently recurring issues are, in particular, a lack
of any written record of the arbitration agreement, arbitration agreements with consumers
and arbitration clauses contained in standard terms and conditions (Allgemeine Geschftsbedingungen AGB). 1031 ZPO is not only intended to facilitate proof of the arbitration
agreement, but it also intends to make the parties to the arbitration agreement aware of
the consequences of entering into such an agreement, namely the exclusion of recourse to
the state courts. The latter applies especially to 1031 (5) ZPO, which constitutes a qualified in-writing requirement for arbitration agreements to which a consumer shall become
a party.3 1031 (5)ZPO expressly allows for consumer arbitration but requires a separate,
mutually signed arbitration agreement.
II. Legislative History

A.
3 The rules on form contained in Article 7 (2) of the UNCITRAL Model Law (ML) have
been incorporated in full into the new German arbitration law. However, 1031 ZPO
contains two additional provisions covering specific aspects which do not appear in the
Model Law. These are 1031 (2) ZPO, dealing with acceptance by tacit consent according
1
2
3
Concerning arbitration agreements governed by foreign law, see infra, 1032, 1051 and 1061 ZPO.
Cf. MnchKommZPO-Mnch (2013), 1031 paras6 et seq.; Prtting/Gehrlein-Prtting (2013) 1031
para. 1.
107
to common usage and the repealed 1031 (4) ZPO, dealing with bills of lading. Just as with
the Model Law, 1031 ZPO does not recognize oral arbitration agreements. It in certain
respects narrows and in other respects widens the writing requirement of the Model Law.
B.
Comparison with German Arbitration Law Prior to its Reform in 1998
1031 ZPO was at the core of the reform of German arbitration law. On the one hand, 4
the new German arbitration law takes a rather liberal stand to the writing requirement as
far as commercial arbitration is concerned, in contrast to the strict writing requirement
of the previous German arbitration law, which required, in general, a written agreement
signed by both parties. On the other hand, the new German arbitration law tightens the
form requirements. A completely formless oral consent to arbitration is no longer possible
even between merchants. Furthermore, for arbitration agreements to which a consumer is
a party, the new German arbitration law requires a separate arbitration agreement signed by
both parties. Hence, as regards the form of the arbitration agreement, under the new German arbitration law the critical distinction has become whether the arbitration agreement
is with a consumer or not.
C.
Applicability of Jurisprudence and Legal Authority Relating to German Arbitration

Law Prior to its Reform in 1998
In light of these significant changes to the law, when dealing with the necessary form for 5
arbitration agreements, the jurisprudence and legal authority relating to German arbitration law prior to its reform should be applied to arbitration agreements concluded after 1
January 1998 only with care. However, the previous German arbitration law still applies to
arbitration agreements concluded prior to the reform of German arbitration law.4 Hence,
for arbitration agreements concluded prior to January 1998, the jurisprudence and legal
authority relating to German arbitration law prior to its reform in 1998 must still be taken
into consideration.

The form requirements for the arbitration agreement stipulated in 1031 ZPO are 6
mandatory and cannot be derogated from by general principles (for example, good faith
considerations).5
IV. Elements of the Norm

A.
Introduction
1.
Scope of Application
If the place of arbitration is situated in Germany, 1031 ZPO applies directly (1025 (1) 7
ZPO).6 Where the parties have additionally subjected the arbitration agreement to the law
of another country, the relevant provisions of that country and 1031 ZPO apply cumu-
4
5
6

Lachmann (2008), para. 342; Zller-Geimer (2014), 1031 para.1.
108
latively.7 By contrast, once the place of arbitration lies outside of Germany, 1031 ZPO
may only be applied indirectly since 1025 (2) ZPO does not refer to 1031 ZPO.8 Such
indirect application will take place in cases where 1031 ZPO can be applied by virtue of
the most favourable treatment principle contained in Article VII of the New York Convention on Recognition and Enforcement of Arbitral Awards of 1958 (NYC). The most favourable treatment principle contained in Article VII NYC not only applies in proceedings for
the recognition and enforcement of foreign awards,9 but also according to the prevailing
opinion in case law and literature applies in proceedings in which an arbitration clause is
raised as a defence against the admissibility of court proceedings (Einredeverfahren 1032
ZPO).10 Furthermore, it is subject to controversial debate whether only the necessary
content of the arbitration agreement (see 1029 ZPO) or also the parties optional agreements relating to the arbitral proceedings are subject to the form requirement contained in
1031 ZPO. The prevailing view is that only the arbitration agreement in its essential parts
is subject to the form requirement and that the arbitration agreement can be split into its essential and optional parts, the latter being free from the form requirement in 1031 ZPO.11
Accordingly, the Higher Regional Court (Oberlandesgericht OLG) Mnchen has held that
a clause generally reiterating the parties prior agreement to arbitrate and merely adapting
the selection process of the arbitral tribunal is not subject to the formal requirements of
1031 ZPO.12
2.
Form Requirements of the Main Contract
8 According to the notion of separability (see supra, Trittmann/Hanefeld, 1029 ZPO with
reference to 1040 (1) ZPO), the main contract and the arbitration agreement are subject
to individual form requirements. If the main contract is subject to stricter form requirements than 1031 ZPO, these stricter form requirements (e.g. notarized certification) do
not extend to the arbitration agreement.13
B.
1031 (1) ZPO
9 1031 (1) ZPO provides as a general rule that the arbitration agreement shall be contained
either in a document signed by the parties or in an exchange of letters, telefaxes, telegrams
or other means of telecommunication which provide a record of the agreement.
1.
Mutually Signed Agreement
10 As far as the first alternative of 1031 (1) ZPO is concerned, the provision envisions a
mutually signed contract, be it a separate arbitration agreement or a contract including an
7
8
9
10
11
12
13
HK-ZPO-Saenger (2013), 1031 para.18; Stein/Jonas-Schlosser (2002), 1031 para.1. The conflicting
opinion according to which even in that case formal requirements are solely set forth by 1031 ZPO
(Epping (1999), p.122), appears to be in conflict with the parties true intent.
OLG Dsseldorf, 09.02.2007, <www.juris.de>.
BGH 21.09.2005, NJW 2005, 3499 et seq.
OLG Dsseldorf, 09.02.2007, <www.juris.de>; Stein/Jonas/Schlosser, Anhang zu 1061 para. 40;
MnchKommZPO-Adolphsen (2013), 1061 Anh. 1 UN Art.V paras21 seq.
MnchKommZPO-Mnch (2013), 1031 para.13; Musielak-Voit (2013), 1031 para.2; Stein/JonasSchlosser (2002), 1029 para.6; but see Lachmann (2008), paras265, 343.
OLG Mnchen 25.04.2007, available at <www.juris.de>; cf. also Zller-Geimer (2014), 1029 para.11.
Baumbach/Lauterbach (2014), 1031 para.10; Stein/Jonas-Schlosser (2002), 1031 para.13; Lachmann
(2008), paras362 et seq.; for a detailed discussion see Schmitz, RNotZ 2003, 591 et seq.
109
arbitration clause.14 That the arbitration agreement must be in writing does not require
that the parties are named in the preamble of the contract; the parties need only to be identifiable by virtue of their signatures.15 Erroneous misspellings of a partys name are irrelevant
if the party is clearly identifiable, for example in the commercial register. Later changes or
amendments to the arbitration agreements text are valid, as long as they are made according
to general principles and are located above the parties signatures.16 The arbitration agreement or arbitration clause must not necessarily be named as such, but the parties intent to
subject themselves to arbitration must be clear.17
2.
Written Record
In the second alternative, 1031 (1) ZPO permits an exchange of letters, telefaxes, telegrams 11
or other means of telecommunication which provide a record of the arbitration agreement.
The statutory list of the means of telecommunication is not exhaustive.18 For example, the
parties can also conclude the arbitration agreement by email, provided that the information
is saved in a way to provide for the necessary record of the arbitration agreement.19 The
requirement of a written record is not met where two separate signatures are photocopied
onto the same blank document for subsequent completion by one party; rather, 1031 (1)
ZPO requires a mutual exchange of documents.20
C.
1031 (2) ZPO
According to 1031 (2) ZPO, the form requirement of 1031 (1) ZPO is also deemed to 12
be met if the arbitration agreement is contained in a document transmitted from one party
to the other party or by a third party to both parties and if no objection was raised in due
time the contents of such document is considered to be part of the contract in accordance
with common usage.
1.
Practical Relevance
Given that many contracts are concluded orally and followed by a unilateral confirmation of 13
the contract in writing, 1031 (2) ZPO is of high practical importance. The norm reflects
that, according to German substantive law, a failure to object to a commercial letter of confirmation (Kaufmnnisches Besttigungsschreiben) is, from a legal point of view, equivalent to
accepting the offer of a contract.21 Under German customary commercial law, oral contract
negotiations may be confirmed by one party unilaterally in writing. If the letter reflects the
result of the negotiations without significant changes, the other party will be deemed as
contractually bound to the content of this confirmation letter, unless it expressly contests
the content without undue delay. The intention behind the enactment of 1031 (2) ZPO
was to keep the law as it stood.
14
15
16
17
18
19
20
21
HK-ZPO-Saenger (2013), 1031 para.4; Prtting/Gehrlein-Prtting (2013) 1031 para. 4.

BGH 26.05.1994, NJW 1994, 2300; Zller-Geimer (2014), 1031 para.6; Stein/Jonas-Schlosser (2002),
1031 para.3; Schwab/Walter (2005), Chap. 5 para.3.
Thomas/Putzo-Reichold (2013), 1031 para.3; see also supra, Trittmann/Hanefeld, 1029 paras 18 et seq.
ZllerGeimer (2014), 1031 para.7.
Musielak-Voit (2013), 1031 para. 4; HK-ZPO-Saenger (2013), 1031 para. 5; Stein/Jonas-Schlosser
(2002), 1031 para.3; Prtting/Gehrlein-Prtting (2013) 1031 para. 5.
BayObLG 12.12.2002, IHR 2003, 143; Thomas/Putzo-Reichold (2013), 1031 para.4.
BGH 02.11.1995, WM 1996, 181; OLG Hamburg 25.01.2008, SchiedsVZ 2009, 71 et seq.
110
2.
Letter of Confirmation
14 It is not necessary for a letter of confirmation that both parties have put something in writing, as 1031 (2) ZPO prescribes the written transfer from only one party.22 However, the
Federal Court of Justice (Bundesgerichtshof BGH) has ruled that not every letter referring to the conclusion of a contract will suffice to meet the form requirement stipulated in
1031 (2) ZPO. If the letter is only an invoice for services rather than a confirmation of the
contract, no confirmation within the sense of 1031 (2) ZPO can be assumed.23 Likewise,
a letter does not qualify as a confirmation letter if one of the parties has previously declared
in writing that a contract with a different content has been concluded.24
3.
Silence as Consent
15 Whether common usage recognizes the silence of one party to a confirmation letter as
consent to its contents is a question of substantive law.25 According to German law, in commercial transactions the recipient of a commercial confirmation letter must object without
delay. Failing such prompt objection, a contract with the confirmation letters content is
deemed to have been concluded unless the confirming party has voluntarily misstated the
content of the parties contract negotiations or the content of the confirmation letter differs
so much from the contract negotiations that the party sending it cannot reasonably expect
the recipients consent.26 The party who invokes the arbitration agreement bears the burden
of proof for the fact that the other party has actually received the confirmation letter.27
D.
1031 (3) ZPO
16 1031 (3) ZPO permits, under certain conditions, a reference to other written documents
containing an arbitration agreement as due form.
1.
Form Requirement of the Referencing Document
17 The contract in which reference to the document containing the arbitration agreement is
made must comply with the form requirements of 1031 (1) ZPO or 1031 (2) ZPO,
i.e. must be a mutually signed contract, concluded by way of exchange of documents, or a
contract concluded by tacit consent to a letter of confirmation.
2.
Document Containing the Arbitration Clause
18 The document to which reference in the contract is made and that includes the arbitration
agreement can be a separate arbitration agreement, but will often be in the form of preformulated standard terms and conditions including an arbitration clause. It is common
understanding that by virtue of 1031 (3) ZPO, subject to the special provision in 1031
(5) ZPO for consumers, an arbitration clause forming part of standard terms and conditions can be validly incorporated into the parties agreement by reference. The document
22
23
24
25
26
27
Zller-Geimer (2014), 1031 para.8; Prtting/Gehrlein-Prtting (2013) 1031 para. 6.

BGH 21.09.2005, SchiedsVZ 2005, 306 = IHR 2006, 261; Stein/Jonas-Schlosser (2002), 1031 para.4.
OLG Hamburg 07.08.2003, OLGR Hamburg 2004, 66.
Thomas/Putzo-Reichold (2013), 1031 para.5; Prtting/Gehrlein-Prtting (2013) 1031 para. 6.
BGH 08.02.2001, NJW-RR 2001, 680; Palandt-Ellenberger (2013), 147 paras8 et seq.
OLG Rostock 22.11.2001, IPRax 2002, 401 (403).
111
must not necessarily be a separate document; the contract can also refer to standard terms
and conditions printed on the backside of the contract.28
3.
Incorporation of the Arbitration Agreement
The reference must be such as to make the arbitration agreement part of the contract. This 19
requires an unambiguous reference, such as an express reference to the arbitration clause.29
A general reference to the standard terms and conditions may also suffice if the other side
has a reasonable chance to take note of the arbitration agreement.30 This is assumed if the
other side is in the possession of the standard terms and conditions.31 However, neither
actual knowledge on part of the other side of the content of the referred document, nor an
exposed reference to the arbitral clause within the standard terms referred to, is required.32
4.
Validity Control of Arbitration Clauses Included in Standard Terms and Conditions
If the arbitration clause is included in standard terms and conditions, the arbitration clause 20
is subject to specific validity control of standard terms pursuant to 305 et seq. BGB,
provided that German law applies to the validity of the arbitration agreement. In particular,
the courts will examine whether the arbitration clause satisfies the requirement of a just
constitution of the arbitral tribunal and the notions of equality and fairness of the arbitral
proceedings.33 The mere fact that the party introducing the clause is entitled to choose between arbitral proceedings and court proceedings does not invalidate the clause, provided
that such right is limited to proceedings initiated by the aforementioned party. 34
E.
1031 (4) ZPO
1031 (4) ZPO has been repealed.
F.
21
1031 (5) ZPO
1031 (5) ZPO protects consumers from being bound by arbitration clauses hidden 22
somewhere in elaborate terms of contract. At the same time, the provision recognizes that
arbitration agreements with consumers are valid, provided that the form requirements are
met.35
28
29
30
31
32
33
34
35
BayObLG 17.09.1998, NJW-RR 1999, 644.

HK-ZPO-Saenger (2013), 1031 para.7; Prtting/Gehrlein-Prtting (2013) 1031 para. 7.
OLG Mnchen 15.09.2010, BeckRS 2010, 23060; Zller-Geimer (2014), 1031 para.10.
See Stein/Jonas-Schlosser (2002), 1031 para.5 who regards the handing over of the standard terms of
contract as a mandatory requirement for a valid incorporation; see also OLG Brandenburg 13.06.2002,
IHR 2002, 94 that requires for a valid incorporation a transmission of the standard terms to the other
party as well as a behaviour that indicates their acceptance.
DIS Interim Award 20.02.2007, SchiedsVZ 2007, 166 (168).
For a detailed description of the validity control of arbitration clauses under 305 et seq. BGB, see
Hanefeld/Wittinghofer, SchiedsVZ 2005, 217 and Lachmann/Lachmann, BB 2000, 1633; see also supra,
Trittmann/Hanefeld, 1029 para. 16.
DIS Interim Award 20.02.2007, SchiedsVZ 2007, 166 (168).
Arbitration Agreements contained in agreements of a foreign broker with a German consumer do have to
meet the requirements of 1030 para.5 ZPO as well, cf. BGH 08.06.2010, SchiedsVZ 2011, 46.
112
1.
Consumer
23 1031 (5) ZPO is applicable if at least one consumer is a party to the arbitration agreement.
According to 13 BGB, a consumer is any natural person who concludes a transaction for
a purpose which can be regarded as being outside his trade or self-employed profession.
This definition of the term consumer clarifies that those self-employed persons who, for
reasons of German legal tradition, are considered not engaged in a trade and are not merchants within the sense of 1 et seq. Commercial Code (Handelsgesetzbuch HGB) for
instance lawyers and medical doctors are among the parties who can enter into arbitration
agreements in simple form. To be eligible for consumer protection, the person must be a
natural person, as opposed to a corporate entity.36
2.
Non-entrepreneurial Activity
24 Whether consumer protection applies depends on the purpose of the contract. According
to the prevailing view though not uncontested an activity for the purpose of establishing
an independent trade or self-employed profession is an entrepreneurial activity and not a
consumer activity, therefore falling outside the scope of the special form requirement of
1031 (5) ZPO.37 The criterion for distinguishing between consumer and entrepreneurial
activity is not the degree of experience, but whether a specific activity is objectively connected to the persons private or professional sphere.38 For example, if a businessman purchases a
computer for his family, this is a consumer transaction; if he purchases the computer for his
professional practice, he is not protected by 1031 (5) ZPO.39 If it is questionable whether
or not an individual acts for private or professional purpose, this question can be left open if
the individual is bound by the arbitration agreement already by virtue of substantive corporate law principles. For example, if a partnership accedes to a contract concluded by its general partner with unlimited personal liability with another company, and if this agreement
refers to an arbitration agreement not signed by the general partner in his personal capacity,
such arbitration agreement is also binding on the general partner regardless of whether he
is a consumer or not at least from the time when the partnership accedes to the contract.40
In contrast, if a consumer accedes to a personally structured association (Partenreederei), a
simple reference in the declaration of accession to the arbitration agreement included in the
articles of association does not suffice.41
3.
Signing of a Separate Agreement
25 The requirement in 1031 (5) ZPO that an arbitration agreement with a consumer must
be included in a separate, mutually signed document is satisfied if the arbitration agreement
36
37
38
39
40
41
HK-ZPO-Saenger (2013), 1031 para. 10; Musielak-Voit (2013), 1031 para. 8; MnchKommZPOMnch (2013), 1031 para.47; Prtting/Gehrlein-Prtting (2013) 1031 para. 9. The BGH ruled that
if an arbitration agreement does not fulfill the prerequisites pursuant to 1031 para.5 ZPO the state
courts remain competent even if the consumer asserts the arbitration clause which was introduced by the
entrepeneur, cf. BGH 19.05.2011, SchiedsVZ 2011, 227 et seq.
BGH 24.02.2005, BGHZ 162, 253 = NJW 2005, 1273; OLG Dsseldorf 04.05.2004, MDR 2004, 1049 =
NJW 2004, 3192; but see Lachmann (2008), para.330.
BGH 24.02.2005, BGHZ 162, 253 = NJW 2005, 1273.
BayObLG 13.11.2003, DB 2004, 302.
OLG Oldenburg 23.05.2001, available at <www.juris.de>; id. 31.05.2001, available at <www.juris.de>; id.
21.06.2001, at <www.juris.de>; but see Stein/Jonas-Schlosser (2002), 1029 para.34.
113
is, indeed, contained in a separate document or if the arbitration agreement is at least sufficiently segregated and individually signed.42 The document does not need to contain provisions regarding the details of the arbitral proceedings but can refer to model arbitration
rules, standard terms or another arbitration agreement.43 The lack of a separate agreement
can be invoked by both parties, not only by the consumer.44
4.
Validity Control of Standard Term Arbitration Agreements
The validity of the arbitration agreement conforming to the form requirements for consum- 26
ers is not per se affected by reason of its being a standard form arbitration agreement, since
1031 (5) ZPO does not require an individually negotiated agreement with the consumer
but only a separate document.45 Moreover, according to the BGH, it is not necessary that
the user of the standard terms has a particular interest in the insertion of the arbitration
clause.46 In any event, specifically in consumer cases, the German courts will critically
examine whether the standard term arbitration agreement meets the validity control test
under 305 et seq. BGB in order to avoid the imposition of standard arbitration clauses
on consumers that are surprising or place the consumer at an unreasonable disadvantage.47
5.
Agreements in Electronic Form
The parties separate arbitration agreement can be in electronic form pursuant to 126a 27
BGB. 126a BGB requires that the author of the statement must add his name to the statement and append a qualified electronic signature pursuant to the German Signature Act
(Signaturgesetz SignG). Where there is a contract, the parties must each electronically
sign a document identical in wording in the same manner. According to 2 SignG, electronic signature means data in electronic form that is attached to or logically associated
with other electronic data and that serves as a method of authentication. Qualified electronic signature means an electronic signature that is based on a qualified certificate valid
at the time of the signatures creation and is created with a secure signature-creation device.
6.
Notarized Agreements
1031 (5) ZPO stipulates in its last sentence that a separate arbitration agreement with a 28
consumer is not required where there is notarized certification. This stipulation, inserted
at the suggestion of the Federal Chamber of Notaries, is particularly important and helpful
as it signifies that arbitration agreements in articles of association of limited liability companies and stock corporations are, in effect, not subject to the special form requirement for
arbitration agreements with consumers, even if the shareholder is a natural person acting in
private capacity. This exception appears justified since under German law, a notary is bound
to explain all important aspects of the contract to the parties, including the implications of
the arbitration clause. Whether notarization by a non-German notary can be regarded as
42
43
44
45
46
47
BGH 25.01.2011, SchiedsVZ 2011, 157 (159); id. 25.01.2011, Yearbook XXXVII (2012), 223; ZllerGeimer (2014), 1031 para.36; Baumbach/Lauterbach (2013), 1031 para.9; Schwab/Walter (2005),
Chap. 5 para.18; Prtting/Gehrlein-Prtting (2013) 1031 para. 9.
HK-ZPO-Saenger (2013), 1031 para.13; Zller-Geimer (2014), 1031 para.37.
OLG Hamm 28.03.2006, available at <www.juris.de>; Zller-Geimer (2014), 1031 para.39.
BGH 13.01.2005, SchiedsVZ 2005, 95 = BGHZ 162, 9.
BGH 13.01.2005, SchiedsVZ 2005, 95 = BGHZ 162, 9.
See supra, Trittmann/Hanefeld, 1029 para. 16.
114
sufficient appears questionable, as a foreign notary does not advise the parties on German
law.48
G.
1031 (6) ZPO
1.
Cure of Form Defects
29 In view of the prohibition of contradictory behaviour, according to 1031 (6)ZPO, any

non-compliance with the form requirements set out in 1031 (1)(5) ZPO is cured by
the partys appearance at the oral hearing.49 This holds true even if the parties are not aware
of this effect.50 In general, form defects are cured by entering into arbitral proceedings on
the substance of the dispute, for example by filing the first submission on the merits without raising jurisdictional objections.51 However, beyond the literal meaning of 1031 (6)
ZPO, initial form defects of the arbitration agreement can also be cured retroactively by
subsequent confirmation of the parties prior to the commencement of arbitral proceedings. This has been held by the OLG Hamburg in a case in which an arbitration agreement
was confirmed in correspondence concerning the constitution of the arbitral tribunal.52 A
party is not deprived of the right to object to the jurisdiction of the arbitral tribunal during
recognition and enforcement proceedings if it has not argued the merits of the case at all
before the arbitral tribunal.53 Similarly, form defects are not cured by mere cooperation in
constituting the arbitral tribunal, payment of the advance on costs or if one party challenges
the form defect and only enters into arguments on the merits by way of precaution.54 The
partys objection must specifically address the form defect. An objection to the arbitral
tribunals competence on other grounds does not prevent the form defect being cured pursuant to 1031 (6) ZPO.55 A party who invokes non-compliance with form requirements
as a ground for setting aside an award after having rejected an offer to conduct proceedings
before the courts acts in bad faith, 242 BGB.56 As a consequence, the respective party
cannot bring forward this defence in proceedings for setting aside or in proceedings for
recognition and enforcement.
2.
Cure of Other Defects of the Arbitration Agreement
30 Other defects of the arbitration agreement can be cured if the commencement of arbitral
proceedings, together with the opponents failure to object, constitutes an implied arbitration agreement. In this case, the parties need to have a respective awareness of their
48
49
50
51
52
53
54
55
56

BayObLG 10.02.2000; BayObLG 23.09.2004.
HK-ZPO-Saenger (2013), 1031 para.15; Thomas/Putzo-Reichold (2013), 1031 para.13; Lachmann
(2008), para. 369; Schwab/Walter (2005), Chap. 5 para. 5; Prtting/Gehrlein-Prtting (2013) 1031
para. 10; Baumbach/Lauterbach (2014), 1031 para.13.
OLG Schleswig, RIW 2000, 706 (707); Lachmann (2008), para. 368; Musielak-Voit (2013), 1031
para.13.
OLG Hamburg 30.07.1998, NJW-RR 1999, 1738.
BayObLG 12.12.2002, IHR 2003, 143.
HK-ZPO-Saenger (2013), 1031 para.15; Zller-Geimer (2014), 1031 para.41; Lachmann (2008),
para.369; Prtting/Gehrlein-Prtting (2013) 1031 para. 10.
BGH 29.06.2005, SchiedsVZ 2005, 259 = NJW-RR 2005, 1659; OLG Oldenburg 15.11.2002, OLGR
Oldenburg 2003, 340.
BayObLG 10.02.2000.
115
declarations (Erklrungsbewusstsein).57 Such awareness is given if the parties willingly and

consciously subject themselves to arbitration.58
3.
Cure of Lack of Any Arbitration Agreement
If no arbitration agreement was ever concluded, 1031 (6) ZPO is inapplicable. The com- 31
mencement of arbitral proceedings, together with the opponents failure to object, may constitute an implied arbitration agreement, provided that the parties are aware of this effect.59
57
58
59
Schwab/Walter (2005), Chap. 5 para.6; HK-ZPO-Saenger (2013), 1031 para.17; but see Zller-Geimer
(2014), 1031 para.44; Thomas/Putzo-Reichold (2013), 1031 para.14; Baumbach/Lauterbach (2014),
1031 para.15, who do not require such awareness; and see Prtting/Gehrlein-Prtting (2013) 1031
para. 10, according to who other defects may not be cured under 1031 (6) ZPO but only the lack of the
form.
1032 Arbitration Agreement and Substantive Claim Before Court1

(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if the respondent raises an objection prior to the beginning
of the oral hearing on the substance of the dispute, reject the action as inadmissible
unless the court finds that the arbitration agreement is null and void, inoperative or
incapable of being performed.
(2) Prior to the constitution of the arbitral tribunal, an application may be made to the
court to determine whether or not arbitration is admissible.
(3) Where an action or application referred to in subsection 1 or 2 has been brought,
arbitral proceedings may nevertheless be commenced or continued, and an arbitral
award may be made, while the issue is pending before the court.
Short Bibliography: Annen/Schmidt, Suum cuique Das Verhltnis zwischen staatlichem Urkundsprozess und Schiedsverfahren, SchiedsVZ 2007, 304; Haas, Die gerichtliche Kontrolle der
schiedsgerichtlichen Entscheidungszustndigkeit, in: Bittner/Klicka/Kodek/Oberhammer (eds),
FS-Rechberger, 2005, p.187; Hilger, Grenzen der Zustndigkeitsfeststellung nach 1032 II, 1062
I Nr. 2 ZPO, NZG 2003, 575; Huber, Das Verhltnis von Schiedsgericht und staatlichen Gerichten
bei der Entscheidung ber die Zustndigkeit, SchiedsVZ 2003, 73; Illmer, Die Arglisteinrede an der
Schnittstelle von staatlicher Gerichtsbarkeit und Schiedsgerichtsbarkeit, Tbingen 2007; Lachmann,
Handbuch fr die Schiedsgerichtspraxis, Kln 2008; Lew/Mistelis/Krll, Comparative International
Commercial Arbitration, Hague/London/New York 2003; Mann/Lumpp, Das Feststellungsverfahren nach 1032 Abs. 2 ZPO Zum Verhltnis von Feststellungsverfahren und gerichtlichem Hauptsacheverfahren, SchiedsVZ 2011, 323; Rosenberg/Schwab/Gottwald, Zivilprozessrecht, Mnchen
2010; Schroeter, Der Antrag auf Feststellung der Zulssigkeit eines schiedsrichterlichen Verfahrens
gem 1032 Abs. 2 ZPO, SchiedsVZ 2004, 288; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen
2005; Synatschke, Die Unzustndigkeitserklrung des Schiedsgerichts, Jena 2006.
I.
II.
Para.
Purpose and Relevance of the Provision . . 1
Arbitration Defence Before the State
Court (1032 (1) ZPO). . . . . . . . . . . . . . . . . 7
A. History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
B. Mandatory Character . . . . . . . . . . . . . . . . 8
C. Preconditions for the Application
of 1032 (1) ZPO . . . . . . . . . . . . . . . . . . . 9
1. Timely Objection . . . . . . . . . . . . . . . . 10
2. Objection Not Inadmissible . . . . . . 16
3. Arbitration Agreement Not
Null and Void, Inoperative or
Incapable of Being Performed . . . . 17
D. Decision of the Court . . . . . . . . . . . . . . . 25
1. Competent Court . . . . . . . . . . . . . . . . 25
2. Rejection of the Action as
Inadmissible . . . . . . . . . . . . . . . . . . . . . 26
Para.
3. Decision of the Court if the
Requirements of 1032 (1)
ZPO Are Not Met . . . . . . . . . . . . . . . 29
4. Possible Influence of Parallel
Arbitral Proceedings or an
Arbitral (Interim) Award on the
Courts Decision . . . . . . . . . . . . . . . . . 34
E. Scope of Application . . . . . . . . . . . . . . . . 40
III. Application to the Court to Determine
Whether Arbitration is Admissible
(1032 (2) ZPO) . . . . . . . . . . . . . . . . . . . . . . 43
A. Purpose and History . . . . . . . . . . . . . . . . 43
B. Mandatory Character . . . . . . . . . . . . . . . 44
C. Preconditions . . . . . . . . . . . . . . . . . . . . . . . 45
1. Application to the Court . . . . . . . . . 45
2. Time Limit . . . . . . . . . . . . . . . . . . . . . . 47
3. Legitimate Interest in Applying
for the Declaration . . . . . . . . . . . . . . . 50
The text of this second edition was written by Ivo Bach on the basis of the first edition text by Peter Huber.
1032 Huber/Bach
Para.
D. No Effect on Limitation Period . . . . . . 54
E. Decision of the Court . . . . . . . . . . . . . . . 55
1. Scope of the Decision . . . . . . . . . . . . 55
2. Effect of the Decision . . . . . . . . . . . . 57
I.
117
Para.
3. Possible Influence of Parallel
Arbitral Proceedings or an
Arbitral (Interim) Award on the
Courts Decision . . . . . . . . . . . . . . . . . 61
F. Scope of Application . . . . . . . . . . . . . . . . 65
IV. Parallel Arbitral Proceedings . . . . . . . . . . . . 66
Purpose and Relevance of the Provision2
1032 Code of Civil Procedure (Zivilprozessordnung ZPO) in conjunction with 1040 1

ZPO governs relations between the arbitral tribunal and state courts. Conflicts of jurisdiction between state courts and the arbitral tribunal can arise in different scenarios. In order
to get a structured picture of how German law deals with this issue, it is convenient to distinguish between the following three scenarios:
(1) Claimant has initiated the main proceedings before a state court and respondent raises 2
the arbitration agreement as a defence. This is the scenario envisaged by 1032 (1) ZPO: the
state court shall, if the respondent raises an objection prior to the beginning of the oral hearing on the substance of the dispute, reject the action as inadmissible unless the court finds
that the arbitration agreement is null and void, inoperative or incapable of being performed.
In the scenario envisaged by 1032 (1) ZPO, it is therefore the state court that will decide on
the validity and the binding character of the arbitration agreement (cf. infra, paras7 et seq.).
(2) Claimant has initiated arbitral proceedings and the respondent challenges the validity of 3
the arbitration agreement before the arbitral tribunal. This scenario is governed by 1040
ZPO. On the one hand, 1040 ZPO allows the tribunal to decide on its own competence.
On the other hand, the tribunals decision is subject to state court review; if the tribunal renders an interim award on jurisdiction ( 1040 (3) sentence 1 ZPO), any party may request
a state court to decide the matter ( 1040 (3) sentence 1 ZPO).3 If the tribunal renders a
final award on the merits, this award can be challenged under 1059 ZPO. It will be dealt
with in the commentary to that provision.
(3) One party has applied to a state court pursuant to 1032 (2) ZPO for a declaration 4
that arbitral proceedings are (or are not) admissible. 1032 (2) ZPO enables the parties to
obtain a separate decision of the state court on the admissibility of arbitral proceedings, albeit
only at a very early stage of the dispute.4 Prior to the constitution of the arbitral tribunal, an
application may be made to the court to determine whether or not arbitration is admissible
(cf. infra, paras43 et seq.).
In short: in every scenario it is the state court which has the last word on the admissibility of 5
arbitration.
In every scenario the question may arise whether the arbitral proceedings may go forward 6
while the state court is deciding on their admissibility. This issue is governed by 1032 (3)
ZPO and by 1040 (2) sentence 2 ZPO. It will be dealt with in connection with the different
scenarios (cf. infra, paras34 et seq., 58 et seq., 63 et seq. and infra, 1040 paras39 et seq.).
2
3
4
For further details see the commentary to 1040.
Cf. Stein/Jonas-Schlosser (2002), 1032 para.21; Musielak-Voit (2013), 1032 para.1; Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.38; MnchKommZPO-Mnch (2013), 1032 para.2.
118
II.
Arbitration Defence Before the State Court (1032 (1) ZPO)
A.
History
7 1032 (1) ZPO was inserted into the ZPO by the reform of 1998 and is largely based on
Article 8 (1) UNCITRAL Model Law (ML). There are, however, some slight differences in
the wording of the provision. The most striking difference is that 1032 (1) ZPO obliges the
court to reject the action as inadmissible, whereas Article 8 (1) ML provides that the court
shall refer the parties to arbitration (cf. infra, paras26 et seq.). One of the consequences of
this change is that already at this stage the court must engage in a comprehensive review of
the existence of a valid arbitration clause and cannot limit itself to a prima facie review, as
is done in other countries where the court proceedings are only stayed and not dismissed.
Furthermore, 1032 (1) ZPO gives a slightly more precise definition of the time bar for
raising the defence (objection prior to the beginning of the oral hearing on the substance of
the dispute, cf. infra, paras10 et seq.)
B.
Mandatory Character
8 The provision of 1032 (1) ZPO is mandatory; the parties cannot derogate from it.5 This
is in line with the fact that it is under the present law6 no longer possible for the parties
to confer on the arbitral tribunal the final (and binding for the state court) competencecompetence with regard to the decision on the validity of the arbitration agreement.7
C.
Preconditions for the Application of 1032 (1) ZPO
9 Three requirements must be met before the court may reject the action as inadmissible:
(1) the respondent must have raised an objection based on the arbitration agreement prior
to the beginning of the oral hearing on the substance of the dispute;
(2) the objection must not be inadmissible (for instance by virtue of the fraud exception);
and
(3) the arbitration agreement must not be null and void, inoperative or incapable of being
performed.
These requirements will be dealt with in turn.
1.
Timely Objection
10 1032 (1) ZPO requires the respondent who wants to rely on the arbitration agreement
in order to challenge the competence of the state court to raise an objection.8 Therefore,
the state court will not examine ex officio whether the dispute in question is covered by an
arbitration agreement. Instead, it is up to the respondent to bring forward the defence based
on the arbitration agreement.9
5
6
8
9

But see for the differing situation under the old law: BGH 26.05.1988, NJW-RR 1988, 1526 (1527) with
further references.
BGH 13.01.2005, SchiedsVZ 2005, 95 (96 seq.); Bill of the Arbitration Law Reform Act, BT-Drs.
13/5274, p.44; cf. infra, Huber/Bach, 1040 para. 3.
The wording is slightly different from Art. 8 (1) ML (if a party so requests).
Zller-Geimer (2014), 1032 para.4; Stein/Jonas-Schlosser (2002), 1032 para.1; see also (under the old
law) BGH 04.07.1996, NJW-RR 1996, 1150.
1032 Huber/Bach
119
There are no requirements as to the form in which the respondent must raise the arbitration 11
defence. As long as the respondent reasonably manifests an intent to have an arbitral tribunal
not a state court decide the merits of the dispute, it has objected effectively under 1032
(1) ZPO. If the parties have concluded more than one arbitration agreement, however, the
respondent must identify the particular agreement on which it bases its objection.10
The objection must be raised prior to the beginning of the oral hearing on the substance. It 12
is sufficient that the objection reaches the court within this time limit; the objection may be
served on the Claimant at a later time.11
The time limit was introduced by the reform of 1998. Under the old law, the time bar for 13
raising the arbitration defence had to be calculated using the general time provisions of
282 seq. ZPO. Under the present law, these provisions no longer govern the arbitration
defence because 1032 (1) ZPO is regarded as a lex specialis with regard to its filing deadline.12 The question may be of particular practical relevance if the court has set a deadline for
the respondent to submit its response to the statement of claim under 282 (3)ZPO. The
respondent does not have to raise the arbitration defence in its response, as would be required
by 282 (3) sentence 2 ZPO, but can wait until the beginning of the oral hearing on the
substance to do so (as provided for in 1032 (1) ZPO).13
According to the predominant opinion amongst scholars, the lex specialis character of the 14
1032 (1) ZPO time limit, bars an application of 296 (3) ZPO,14 as well.15 Therefore, a
failure to respect the time limit cannot be excused under this provision.
There is a discussion about whether (or when) the respondents failure to object to state 15
court proceedings, taken together with the claimants suit before the state court, can amount
to an implicit termination of the arbitration agreement.16 The matter can be relevant if the
state court (for other reasons) does not end up deciding on the substance of the dispute: will
the arbitration agreement still be in force for a future dispute on the matter? In the authors
opinion, such an implicit termination should if at all only be assumed in highly exceptional cases where such an intention of the parties becomes obvious from their conduct.
2.
Objection Not Inadmissible
The objection is inadmissible if the respondent acted in bad faith (the so called Arglistein- 16
wand).17 This may for instance be the case if the respondent has challenged the competence
of the arbitral tribunal (for instance by attacking the validity of the arbitration agreement)
10
11
12
13
14
15
16
17
BGH 08.02.2011, NJW-RR 2011, 1188 para. 28.

BGH 30.06.2011, SchiedsVZ 2011, 281 para. 10.
BGH 10.05.2001, NJW 2001, 2176 = CLOUT Case No. 435, with note by Krll, Mealeys I.A.R. 2002,25;
Zller-Geimer (2014), 1032 para.1; Lachmann (2002), para.640; Musielak-Voit (2013), 1032 para.7;
Stein/Jonas-Schlosser (2002), 1032 para. 2; Huber, SchiedsVZ 2003, 73; contra MnchKommZPOMnch (2013), 1032 para.16; Schwab/Walter (2005), Chap. 7 para.1.
BGH 10.05.2001, NJW 2001, 2176 = CLOUT Case No. 435.
296 (3) ZPO deals with certain objections to the admissibility of the action which are raised belatedly
and provides that those may only be admitted if the delay is reasonably excused.
Stein/Jonas-Schlosser (2002), 1032 para.2; Musielak-Voit (2013), 1032 para.7; MnchKommZPOMnch (2013), 1032 para.16.
See for instance (regarding this as possible under certain circumstances) Zller-Geimer (2014), 1032
para.5; Musielak-Voit (2013), 1032 para.7. But see for the opposing view Lachmann (2002), para.661.
For a deep analysis see Illmer (2007).
120
in earlier or parallel arbitral proceedings in the same matter.18 Further examples where the
objection may be inadmissible are:19 cases where the respondent refuses to pay his share of
the advance on costs and thus endangers the progress of the arbitral proceedings (which may
also lead to the conclusion that the arbitration agreement is incapable of being performed,
cf. infra, paras17 et seq.);20 cases where the claimant has brought suit before the state court
(despite the arbitration agreement), is faced there with a set-off defence or a counter-claim of
the respondent and now wants to object to the admissibility of the set-off/counter-claim by
relying on the arbitration agreement.21
3.
Arbitration Agreement Not Null and Void, Inoperative or Incapable of Being Performed
17 If the respondent has raised the objection in time, the state court will have to reject the action as inadmissible, unless the court finds that the arbitration agreement is null and void,
inoperative or incapable of being performed. This exception has been inserted in the course
of the 1998 reform; its trilogy goes back to both the New York Convention 1958 and to
the Model Law. Because it constitutes an exception (unless) to the arbitration defence, the
burden of proving facts that may lead to a finding that the arbitration agreement is null and
void, inoperative or incapable of being performed lies with the claimant.22
18 Usually, the term null and void is regarded to refer to an ex tunc invalidity of the arbitration
agreement. It would therefore, in particular, cover cases of lack of form ( 1031 ZPO) and
lack of legal capacity. According to the correct predominant opinion, it also encompasses
cases in which the matter in dispute is not arbitrable ( 1030 ZPO). This is justified by the
fundamental importance of the issue of arbitrability, which is further evidenced by the fact
that lack of arbitrability must be taken into account ex officio at the enforcement stage (1059
(2) No. 2 (a) ZPO).
19 The term inoperative refers to cases where the arbitration agreement has become ex nunc
invalid/ineffective, e.g. when a party has terminated the arbitration agreement.23
20 The term incapable of being performed refers to obstacles that may prevent the arbitral
proceedings from being effectively set in motion.24 Such an obstacle may consist in the lack
of funding. There are several German court decisions which hold that lack of funding may
render the arbitration agreement incapable of being performed.25 The major argument for this
position is that it would amount to a denial of justice to the party who cannot afford the costs
of arbitration if the arbitration agreement bars recourse to state courts in such cases. The BGH
even recently upheld this rule in a case where the plaintiff in a construction contract relied
18
19
20
21
22
23
24
25
BGH 20.05.1968, NJW 1968, 1928 (1928 seq.); MnchKommZPO-Mnch (2013), 1032 para.9. For
the reverse scenario see BGH 02.04.1987, NJW-RR 1987, 1194 (1195); OLG Frankfurt 01.10.1998,
RIW 1999, 461 (463).
MnchKommZPO-Mnch (2013), 1032 para.10; Stein/Jonas-Schlosser (2002), 1032 para.8; Illmer
(2007), pp. 17 et seq.
See BGH 12.11.1987, NJW 1988, 1215.
See Schwab/Walter (2005), Chap. 7 para.4; MnchKommZPO-Mnch (2013), 1032 para.10; Illmer
(2007), pp. 71 and 87.
The present law differs in that respect from the old law before the 1998 reform where it was the respondent who had to prove the validity of the arbitration agreement, cf. BGH 11.07.1985, NJW 1986, 2765.
OLG Mnchen, 29.02.2012, SchiedsVZ 2012, 96 paras 55 seq.
Lew/Mistelis/Krll (2003), paras14-47 seq.
See for instance recently BGH 14.09.2000, NJW-RR 2000, 3720; KG Berlin 13.08.2001, SchiedsVZ
2003,239.
1032 Huber/Bach
121
on its lack of funding to ignore the arbitration agreement and sue for damages before a state
court, even though he had relied on the arbitration agreement in previous disputes to avoid
proceeding before the state court.26 When it is the defendant who cannot afford the costs of an
arbitration, his objection may also be denied as inadmissible because it violates good faith.27
The Higher Regional Court (Kammergericht KG) Berlin28 has in one particular case 21
regarded an arbitration agreement as incapable of being performed because it provided that
the party-appointed arbitrators had to be professional judges. The parties agreed to this term
even though 40 of the German Judiciary Act (Deutsches Richtergesetz DRiG) provides
that professional judges will only be granted the necessary permission to act as arbitrators if
they are appointed jointly by the parties or by an independent authority. On the facts of the
case, the court neither saw a possibility to construe the arbitration agreement as providing for
a joint appointment, nor could it construe a possibility for appointing the arbitrators under
1035 (3), (4) ZPO. It therefore regarded the arbitration agreement as incapable of being
performed.
In contrast, an arbitration agreement is not per se incapable of being performed when it 22
refers to a non-existent institutional arbitral tribunal. Instead, courts usually try to find
another competent tribunal by way of a supplementary interpretation of the arbitration
agreement.29 Even if there is no comparable institutional tribunal, the BGH does not refrain
from a supplementary interpretation of the agreement: in one case it simply interpreted the
arbitration agreement as calling for an ad hoc arbitration.30
If the parties have agreed on a certain arbitrator in their arbitration agreement, the invalidity 23
of this particular arbitrator-selection term will not render the entire agreement incapable
of being performed.31 Instead, 1034 (2) calls for the state court to appoint an alternative
arbitrator. In cases where the parties agreement is valid, but the appointed person refuses to
act as arbitrator, 1039 gives the court the power to appoint a replacement arbitrator.
Obviously, an arbitration agreement is incapable of being performed when the arbitral tri- 24
bunal has declined jurisdiction.32 In this case, however, the arbitration objection is already
inadmissible; usually, the respondent will have objected to the tribunals jurisdiction and
therefore an objection to the state courts jurisdiction would violate good faith.33
D.
Decision of the Court
1.
Competent Court
The competent state court for deciding on the arbitration defence under 1032 (1) ZPO 25
is the court that is seized with the action. The provision of 1062 (1) No. 2 ZPO which
26
27
28
29
30
31
32
33
BGH 14.09.2000, NJW-RR 2000, 3720.

Cf. supra para. 16.
KG Berlin 06.05.2002, SchiedsVZ 2003, 185 with note by Mecklenbrauck, p.186.
BGH 14.07.2011, SchiedsVZ 2011, 284; OLG Frankfurt, 24.10.2006, SchiedsVZ 2007, 217, 218; KG Berlin, 15.10.1999, KGR 2001, 49; OLG Karlsruhe, 04.04.2007, OLGR 2007, 990, 992 cf. BGH 20.01.1994,
NJW 1994, 1008, 1011 seq.
BGH 14.07.2011, SchiedsVZ 2011, 284.
OLG Frankfurt 11.07.2013, SchiedsVZ 2013, 294.
For a similar scenario see OLG Dresden 11.12.2000; RG 25.06.1926, RGZ 114, 165 (170); cf. Schwab/
Walter (2005), Chap. 7 para.11; Haas, FS-Rechberger (2005), pp.187 (205 seq.).
See supra para. 16.
122
grants jurisdiction to the Higher Regional Court (Oberlandesgericht OLG) only covers
the independent declaratory procedure under 1032 (2) ZPO, but not the decision on the
arbitration defence within the framework of the main action on the claim.34
2.
Rejection of the Action as Inadmissible
26 If the requirements described in supra (C.) are met, the court will reject the action as
inadmissible. In other words, the court will dismiss the action for lack of jurisdiction. The
provision differs from Article 8 (1) ML, which provides that the court shall refer the parties
to arbitration. The German legislature decided to deviate from the Model Law in that respect
for reasons of legal certainty, arguing that a rejection of the action as inadmissible would lead
to a clear result relatively early. It further mentioned the problem that there may not yet be an
arbitral tribunal to which one could refer the dispute.35
27 It is disputed whether and to what extent a judgment rejecting the action as inadmissible also
decides with binding effect that the arbitration agreement is valid.36 In the authors opinion,
the correct approach would be to assume such a binding force of the judgment. If therefore,
at a later stage, a state court must decide on the validity of the arbitration agreement (for
instance according to 1040 (3) sentence 2 ZPO or 1059 ZPO), it will have to accept the
first courts decision that the arbitration agreement is valid.
28 In principle, the arbitral tribunal should also be regarded as being bound by the courts decision on the validity of the arbitration agreement.37 If the arbitral tribunal does not accept that
binding effect, regards the arbitration agreement as invalid and therefore rejects the arbitral
claim as inadmissible, the arbitration agreement will become incapable of being performed,
with the result that the state court may now decide on the matter without having to reject the
claim under 1032(1)ZPO.38 The binding effect of its earlier decision will not prevent the
court from doing so because the arbitral tribunals refusal to accept the earlier decision on the
validity of the arbitration agreement amounts to a new and material fact that could not have
been taken into account when the earlier decision was rendered.39
3.
Decision of the Court if the Requirements of 1032 (1) ZPO Are Not Met
29 If the requirements of 1032 (1) ZPO are not met (for instance because the court regards
the arbitration agreement as null and void, inoperative or incapable of being performed or
because the respondent has not raised the objection within the relevant time limit), the court
has two options available to it.40
34
35
36
37
38
39
40
See infra, Schroeder/Wortmann, 1062 para. 12.

See Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.38; Huber, SchiedsVZ 2003, 73 (74);
Haas, FS-Rechberger (2005), p.187 (191).
In favour of a binding effect in that respect: Huber, SchiedsVZ 2003, 73 (74); MnchKommZPO-Mnch
(2013), 1032 para.21; Zller-Geimer (2014), 1032 para.12; RG 08.12.1897, RGZ 40, 401 (403).
Contra Musielak-Voit (2013), 1032 para.9.
Huber, SchiedsVZ 2003, 73, 74; Zller-Geimer (2014), 1032 para. 7; Stein/Jonas-Schlosser (2002),
1032 para. 19; Lachmann (2008), para. 654.
See supra para. 24.
See Schwab/Walter (2005), Chap. 7 para.3; Stein/Jonas-Schlosser (2002), 1032 para.19; MnchKommZPO-Mnch (2013), 1032 para.21.
See Zller-Geimer (2014), 1032 paras12 et seq.; Huber, SchiedsVZ 2003, 73 (74); Lachmann (2002),
para.651.
1032 Huber/Bach
123
The first option is to simply continue the proceedings and to decide on the substance of 30
the dispute. The court will then give its reasons for disregarding the respondents arbitration
defence in its judgment on the substance.
Alternatively, the court may proceed and render a separate judgment on the jurisdiction issue 31
under 280 ZPO, holding that it regards itself as competent to decide on the substance.41
According to the predominant opinion, the arbitral tribunal is bound by the courts decision 32
in both cases.42 If the arbitral tribunal nonetheless ignores the decision and renders an award
on the merits, the respondent can successfully challenge the award under 1059 ZPO as
the 1032 (1) decision has the effect of res iudicata for 1059 challenge procedures (see
supra, para. 27).
There is, however, some dispute amongst German scholars as to whether such a challenge 33
procedure is in fact necessary. Some scholars argue that an award rendered after a state court
has denied the tribunals jurisdiction is void ipso jure, i.e. without the need for a procedure
challenging the award under 1059 ZPO.43 However, the BGH seems to oppose this doctrine of ipso iure-voidness. In a recent decision, it faced an award that was rendered before a
1040 (3) decision had become final. The BGH argued that the ZPO rules do not treat such
awards as ipso iure void. On the contrary, the BGH saw the existence of a challenge procedure
under 1059 ZPO as evidence that the ZPO did not intend to establish a rule of ipso iure
voidness.44 (see infra, 1040 para. 39).
4.
Possible Influence of Parallel Arbitral Proceedings or an Arbitral (Interim) Award on the

Courts Decision
Pursuant to 1032 (3) ZPO, the fact that court proceedings under 1032 (1) ZPO are 34
pending neither prevents the arbitral proceedings from being commenced or continued, nor
does it prevent an arbitral award from being made. This gives rise to the question of the extent
to which these ongoing arbitral proceedings (or an arbitral award on the jurisdiction issue)
can influence the decision of the state court.
First of all, the mere fact that arbitration is proceeding parallel to state court proceedings does 35
not force the state court to wait for the jurisdictional decision of the arbitral tribunal before
deciding on the arbitration defense under 1032 (1) ZPO.45
The effect of an arbitral award on state court proceedings is more complex. The general 36
principle as it appears from the new 1040, 1032 ZPO is that state courts have the last
word on the issue of jurisdiction, in particular on the validity of the arbitration agreement.
This is evidenced by the fact that the arbitral tribunals decisions on the matter will be subject
to review by a state court under 1040 (3) ZPO or under 1059 ZPO. In other words, the
41
42
43
44
45
See for instance BGH 23.05.1985, NJW-RR 1986, 61 (62).

Zller-Geimer (2014), 1032 paras 14, 16; Huber, SchiedsVZ 2003, 73 (74); Haas, FS-Rechberger
(2005), pp.187 (201 seq.); Lachmann (2008), para. 654.
Zller-Geimer (2014), 1032 paras 14, 16; Huber, SchiedsVZ 2003, 73 (74); Haas, FS-Rechberger
(2005), pp.187 (201 seq.); Musielak-Voit (2013), 1032 para.9 (arguing that it would not be adequate to
require the party that lost the arbitral proceedings to go through a challenge procedure in that situation).
Contra Synatschke (2006), p.108; Lachmann (2008), para. 654; Schroeter, SchiedsVZ 2004, 288 (295
seq.).
BGH 19.09.2013, SchiedsVZ 2013, 333, para. 9.
BGH 13.01.2005, SchiedsVZ 2005, 95 (96) (holding that it will make no difference if the parties have
(without success, see supra) tried to confer on the arbitral tribunal the competence-competence).
124
final competence-competence lies not with the arbitral tribunal, but with state courts. The
BGH has held that this principle is mandatory and cannot be derogated from by the parties
who (try to) agree on a competence-competence-clause in favour of the arbitral tribunal.46
The consequence of giving the state courts the final word on the jurisdiction issue would
normally be that they are not bound by the jurisdictional findings or decisions of the arbitral
tribunal.
37 However, the matter is somewhat more complex. This is due to the fact, that 1040 (3) and
1059 ZPO provide special proceedings for a court review. What is more: both provisions
contain preclusionary rules that bar a jurisdictional decision or challenge if such proceedings are not initiated within a certain time after the tribunal has issued its award. As a result,
after the time limit has lapsed, the arbitral award becomes binding. Therefore, if the arbitral
tribunal has assumed jurisdiction, a state court must accept the arbitration defence and must
dismiss any ongoing litigation before it as inadmissible (1032(1)ZPO).
38 If one of the parties has initiated court review under 1040 (3) or 1059 ZPO, the court
seized with the arbitration defence should stay any related proceedings (in an analogous application of 148 ZPO). 47
39 Problems occur when a state court ignores the tribunals award and renders its own decision
on the merits. In this case, the question of which decision prevails arises. Scholarly opinion
on that question is divided: the majority of scholars48 point to the ZPOs pattern of giving
state courts the final word on jurisdiction and validity to argue that the state courts judgment
prevails over the arbitral award rendering the latter void. Other scholars49 refer to the general principle of priority, i.e. that an earlier decision prevails over a later one. They conclude
that a state court decision that ignores an earlier arbitral award is subject to retrial under 580
No. 7 lit. a ZPO. The latter view seems to be preferable because it is in line with the binding
character of unchallenged arbitral awards (supra para. 37). The fact that arbitral awards can
be challenged is sufficient to safeguard the state courts last-word-competence.
E.
40 According to its wording, 1032 (1) ZPO applies to every action that is brought before a
state court. It also applies to set-offs and counterclaims if the claims are subject to an arbitration agreement.50 Consequently, 1032 (1) ZPO can also apply to those types of actions
which enable a judgment debtor to raise (substantive) defences against the enforcement of
the judgment (in particular 767 ZPO).51
46
47
48
49
50
51
BGH 13.01.2005, SchiedsVZ 2005, 95 (96).

Zller-Geimer (2014), 1032 paras13, 16; Haas, FS-Rechberger (2005), p.187 (198); cf. Lachmann
(2002), paras648 et seq.
Haas, FS-Rechberger (2005), p.187 (209 seq.); Musielak-Voit (2013), 1032 para.14; BeckOK/Wolf/
Eslami 1032 para. 23.
See Rosenberg/Schwab/Gottwald, Zivilprozessrecht (2004), 160 para. 24; Thomas/Putzo-Reichold
(2013), 580 para. 12.
BeckOK-Wolf/Eslami 1032 para. 9; MnchKommZPO-Mnch (2013), 1032 para. 13.
BGH 17.01.2008, NJW-RR 2008, 556 para. 10; BGH 29.07.2010, SchiedsVZ 2010, 275 para. 4; BGH
03.12.1986, NJW 1987, 651 (652); Zller-Geimer (2014), 1032 para.8; Stein/Jonas-Schlosser (2002),
1032 para.5; MnchKommZPO-Mnch (2013), 1032 para.11. See also OLG Mnchen 22.02.2006;
OLG Saarbrcken 16.9.2005.
1032 Huber/Bach
125
There are, however, certain types of actions or procedures where 1032 (1) ZPO will not 41
apply. Pursuant to 1033 ZPO, for instance, the arbitration agreement does not exclude
the jurisdiction of state courts over interim measures. The same position is often taken with
regard to the independent evidence procedure provided for in 485 seq. ZPO.52 However,
this position is only convincing when the arbitration rules on which the parties agreed do not
provide for a similar possibility. If they do, it seems reasonable to assume that the arbitration
agreement bars the parties from initiating evidence procedures before state courts.
Difficult questions may arise with regard to the special document-based procedures in 42
592 seq. ZPO (which are particularly relevant for claims resulting from bills of exchange,
602 seq. ZPO). These rules distinguish between the expedited document-based (summary) procedure and the so-called subsequent procedure (600 ZPO), which enables the
defendant under certain conditions to bring the dispute into the ordinary type of procedure
(without the restrictions of the expedited document-based procedure). With regard to the
subsequent procedure, it is widely accepted that 1032 (1) ZPO applies.53 With regard to the
expedited document-based procedure, however, the issue had led to controversies until the
BGH decided the matter in 2006.54 In this case, the BGH distinguished between the special
rules for expedited document-based proceedings in the case of bills of exchange or cheques
(602 seq. ZPO) and other cases of expedited document-based proceedings. With regard
to bills of exchange and cheques, the court affirmed an earlier judgment55 that the arbitration
agreement and 1032 (1) ZPO do not generally bar recourse to state courts for expedited
procedures under 592 seq. ZPO unless there is particular evidence that the parties, by
concluding the arbitration agreement, really wanted to renounce this type of procedure as
well.56 With regard to other types of the expedited document-based procedure (592 seq.
ZPO), however, the court held that the arbitration agreement should as a rule be regarded
as barring the way to the state court (1032 (1) ZPO). The BGH justified its distinction
by pointing to the need for fast procedures for bills of exchange and cheques, which leads
to the assumption that, as a rule, parties do not want to exclude the expedited procedure
provided for in 602 seq.ZPO. However, in the authors opinion the clarifications given by
the BGH do not change the basic principle that, in the end, the matter boils down to the correct interpretation of the parties intent. In this context, it can become relevant whether the
parties have agreed on a set of arbitration rules that provide for the possibility of an expedited
procedure agreeing on such rules would favour placing even actions for bills of exchange or
52
53
54
55
56
See Zller-Geimer (2014), 1032 para.11; MnchKommZPO-Mnch (2013), 1032 para.12; see also
OLG Koblenz15.07.1998, MDR 1999, 502 (503) for a case where the arbitral tribunal has not yet been
constituted (without deciding on the situation after the constitution of the arbitral tribunal).
BGH 28.10.1993, NJW 1994, 136 (137); Lachmann (2002), para.346; Reithmann/Martiny-Hausmann
(2004), para.3419. See also BGH 04.10.2001, NJW-RR 2002, 387 (387) where the court raised, but did
not have to decide on the question of whether the arbitration defence was admissible if it was raised for
the first time in the subsequent procedure whereas it had not yet been raised in the expedited documentbased procedure. Some courts (for example OLG Dsseldorf 14.04.1983, NJW 1983, 2149 (2150), OLG
Kln 09.11.2000 and OLG Bamberg 19.05.2004) seem to take the position that the arbitration defence
should be raised already in the expedited document-based procedure. For further considerations on
related questions see BGH 11.07.1985, NJW 1986, 2765; MnchKommZPO-Mnch (2013), 1032
para.16.
BGH 12.01.2006, SchiedsVZ 2006, 101 (102). See also BGH 31.05.2007, SchiedsVZ 2007, 215.
BGH 28.10.1993, NJW 1994, 136.
For the practical consequences that derive from the decision see Annen/Schmidt, SchiedsVZ 2007, 304
(305 seq.).
126
cheques under the 1032 (1) ZPO regime. As a matter of precaution, it may be advisable to
address that issue clearly (in one way or the other) in the contract.
III. Application to the Court to Determine Whether Arbitration is Admissible

(1032 (2) ZPO)
A.
Purpose and History
43 Pursuant to 1032 (2) ZPO, prior to the constitution of the arbitral tribunal an application
may be made to the court to determine whether or not arbitration is admissible. This provision is not based on the Model Law. A similar rule had existed, however, in the old German
law before the reform of 1998 (1046 ZPO pre-1998), albeit limited to negative declarations (i.e. stating the inadmissibility of arbitration). The German legislature decided to keep
this rule (in a somewhat modified form) for reasons of procedural economy and to extend it
to the possibility to ask for a positive declaration of the admissibility of arbitration (whether
or not, Zulssigkeit oder Unzulssigkeit).57 This is in line with one of the main objectives of the
1998 reform: to provide an avenue for an early decision on the jurisdiction issue.58
B.
Mandatory Character
44 1032 (2) ZPO is a mandatory provision; parties cannot derogate from it.59
C.
Preconditions
1.
Application to the Court
45 1032 (2) ZPO requires that one party make an application to the OLG for a declaration of
(non-)admissibility. The application may also be brought as a counterclaim against the other
partys application under 1035 ZPO that a court nominate an arbitrator.60 This is particularly relevant because it is disputed as to whether a court seized with authority to nominate
an arbitrator under 1035 ZPO also has authority to rule on the admissibility of arbitration
without a 1032 (2) ZPO counterclaim.61
46 The competent court for a 1032 (2) ZPO application is the OLG generally the one at the
seat of the arbitration (1062 (1) No. 2 ZPO).62 However, an application to a non-competent
OLG is sufficient to satisfy time limit requirements.63 For details on the procedure, see 1063
ZPO; and for the availability of remedies against the courts decision, see 1065 ZPO.64
57
58
59
60
61
62
63
64

See Part I, Bckstiegel/Krll/Nacimiento, Introduction para.43.
OLG Mnchen 04.09.2006.
See infra, Nacimiento/Abt/Stein, Comment to 1035 and, for instance, Bredow, 1035 und die K-Fragen
fr die Parteien, in: Bachmann/Breidenbach (eds), FS-Schlosser (2005), p.75.
See in more detail infra, Schroeder/Wortmann, 1062, paras 4 et seq.
Cf. OLG Mnchen 29.02.2012, SchiedsVZ 2012, 96 para. 54 (in regard to an application under 1040 (3)
sentence 2.
See infra, Schroeder/Wortmann, 1062 et seq.
1032 Huber/Bach
2.
127
Time Limit
The application must reach the court65 prior to the constitution of the arbitral tribunal. Ac- 47
cording to the predominant opinion, the basic rule is that the arbitral tribunal is constituted
when all arbitrators have accepted their nomination as arbitrators.66 As soon as the arbitral
tribunal has been constituted, the admissibility of arbitration can only be challenged before
the arbitral tribunal (1040 (2) ZPO).67
An application to a non-competent OLG is sufficient to satisfy time limit requirements.68
48
One author takes the position that an application under 1032 (2) ZPO should be admitted 49
even after the constitution of the arbitral tribunal, if the arbitral tribunal which regards itself
as competent does not make use of the possibility to make a preliminary ruling on that issue
(1040 (3) ZPO) and thus deprives the parties of their right to make challenge its ruling
before a state court under 1040 (3) sentence 2 ZPO.69 What is more, this view submits that
1032 (2) ZPO can be used after the constitution of the arbitral tribunal in order to examine
the admissibility of arbitration for possible enlargements of the claim, changes to the claim or
counterclaims that may be brought soon.70 This view should not be followed.71 It is contrary
to the clear wording of 1032 (2) ZPO, and there is no urgent need to correct that wording
because the parties can still raise the inadmissibility of arbitration at the enforcement stage or
by way of a challenge under 1059 ZPO.72
3.
Legitimate Interest in Applying for the Declaration
An application to the court under 1032 (2) ZPO is like any other action or motion only 50
admissible if the applicant has a legitimate interest for bringing it (Rechtsschutzbedrfnis).
It is unclear whether such a legitimate interest exists only when there appears to be a controversy between the parties.73 With a view to the principle of procedural economy, such a
requirement seems reasonable.
A legitimate interest in a 1032 (2) ZPO admissibility declaration may be missing where 51
there is already a procedure on the merits pending before the first-instance court, in the
course of which an objection under 1032 (1) ZPO is (or can be74) raised, as the parties will
65
66
67
68
69
70
71
72
73
74
It is not necessary that the application is delivered to the other party in time; BGH 30.06.2011, SchiedsVZ
2011, 281 para. 10.
BayObLG 09.09.1999, BayObLGZ 1999, 255 (263); Zller-Geimer (2014), 1032 para.25; Lachmann
(2002), para.675; Stein/Jonas-Schlosser (2002), 1032 para.21.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.38; Zller-Geimer (2014), 1032 para.25;
Cf. OLG Mnchen 29.02.2012, SchiedsVZ 2012, 96 para. 54 (in regard to an application under 1040 (3)
sentence 2
Zller-Geimer (2014), 1032 para.25; Haas, FS-Rechberger (2005), p.187 (196); Schroeter, SchiedsVZ
2004, 288, 291.
See Lachmann (2002), para.676.
In favour of such a requirement: Weigand-Wagner (2002), Germany, para. 84; Stein/Jonas-Schlosser
(2002), 1032 para.21; Spohnheimer, FS Kfer (2009), 357 (366). Contra Musielak-Voit (2013), 1032
para.12; Haas, FS-Rechberger (2005), p.187 (193).
OLG Mnchen, 22.06.2011, SchiedsVZ 2011, 340.
128
then will obtain a judgment of the first-instance court on the admissibility of arbitration.75
This would create unnecessary procedural expense to allow a parallel procedure before the
OLG under 1032 (2) ZPO. As a consequence, the procedure before the first-instance court
under 1032 (1) ZPO takes precedence over the procedure before the OLG under 1032
(2) ZPO. This result holds irrespective of which of the two procedures was brought first.76 If
an admissibility declaration under 1032 (2) ZPO is applied for first, but merit proceedings
are later instituted and the respondent objects to them under 1032 (1) ZPO, one should assume that the 1032 (2) ZPO application becomes inadmissible and should be dismissed.77
If the proceedings before the first-instance court end without a decision on the admissibility
of arbitration, the application under 1032 (2) ZPO should become admissible again.78
Nonetheless, in the authors opinion, a new application should be made in those cases.
52 Further, a legitimate interest in a 1032 (2) declaration ceases to exist when the arbitral
tribunal renders an award. In such a case, the applicant must initiate court review proceedings under 1040 (3) or 1059 ZPO (see infra para. 60).
53 In cases where the arbitrations seat is located outside Germany, a legitimate interest in a
1032 (2) ZPO admissibility declaration should only be assumed if a later arbitral award is
likely to have effects in Germany in particular if it is likely to be enforced in Germany. This is
due to the fact that the OLGs declaration will have effect only in Germany and will generally
not be subject to recognition in other countries.79
D.
No Effect on Limitation Period
54 An application for a 1032 (2) ZPO declaration does not lead to a suspension of the claims
limitation period under 204 BGB.80 Therefore, if the limitation period is about to lapse, the
claimant is well advised to initiate regular proceedings (be it before a state court or before an
arbitral tribunal) in addition to requesting a 1032 (2) ZPO declaration.
75
76
77
78
79
80
OLG Naumburg 05.03.2013, SchiedsVZ 2013, 237; OLG Frankfurt aM. 07.03.2012, IBR 2012, 683;
OLG Mnchen 22.06.2011, SchiedsVZ 2011, 340; cf. OLG Koblenz 04.06.1999, OLGR 2000, 48; KG
Berlin 13.08.2003; BayObLG 07.10.2003, SchiedsVZ 2003, 187 with note by Busse, p.190 and Bredow,
BB 1999, Beilage No. 11, p.13; Krll, NJW 2003, 791 (792); Musielak-Voit (2013), 1032 para.12; Haas,
FS-Rechberger (2005), p.187 (198); Schroeter, SchiedsVZ 2004, 288 (291); Mann/Lumpp, SchiedsVZ
2011, 323. Contra MnchKommZPO-Mnch (2013), 1032 para. 22; Stein/Jonas-Schlosser (2002),
1032 para.21.
Haas, FS-Rechberger (2005), p. 187 (198); BeckOK-Wolf/Eslami (2013), 1032 para. 25; Busse,
SchiedsVZ 2003, 189 (190 seq.). Contra Spohnheimer, FS Kfer (2009), 357 (367 seq.).
See BayObLG 07.10.2003, SchiedsVZ 2003, 187 with note by Busse, pp.190 seq.; Musielak-Voit (2013),
1032 para.12, with differences regarding the time when the application under 1032 (2) ZPO should
be rejected. In the authors opinion this should be done when the proceedings on the merits become
pending under 261 ZPO.
BayObLG 07.10.2003, SchiedsVZ 2003, 187 with note by Busse, pp. 190 seq.; Musielak-Voit (2013),
1032 para.12.
Cf. BGH 30.06.2011, SchiedsVZ 2011, 281 para. 12.
Schroeter, Der Antrag auf Feststellung der Zulssigkeit eines schiedsrichterlichen Verfahrens gem. 1032
Abs. 2 ZPO, SchiedsVZ 2004, 288 (293.). BeckOK ZPO-Wolf/Eslami (2013), 1032 para. 32; MusielakVoit (2013) 1032, para. 13; MnchKommZPO-Mnch (2013), 1032 para.29; contra Windthorst, Die
Wirkung des Antrags auf Feststellung der Zulssigkeit eines schiedsrichterlichen Verfahrens ( 1032 Abs.
2 ZPO) auf die Verjhrung, SchiedsVZ 2004, 230.
1032 Huber/Bach
E.
Decision of the Court
1.
Scope of the Decision
129
According to 1032 (2) ZPO, the court can determine whether or not arbitration is admis- 55
sible. 1032 (2) ZPO thus covers both positive declarations (that arbitration is admissible)
and negative declarations (that arbitration is not admissible). The scope of the control that
the court can exercise corresponds to the scope of control given to the court by 1032 (1)
ZPO.81 The court will therefore have to examine (1) whether the arbitration agreement
covers the dispute in question, (2) whether the subject matter of the dispute is arbitrable
under 1030 ZPO, and (3) whether the arbitration agreement is null and void, inoperative
or incapable of being performed.
The courts decision in a 1032 (2) application can only concern the inadmissibility of 56
arbitration as such, whereas the admissibility of specific procedural acts can only be reviewed
through enforcement or challenge procedures (1059 seq. ZPO).82 Nonetheless, the court
may rule on the admissibility of arbitration on a claim-by-claim basis, i.e. it can approach each
claim of the claimant and respondent individually and rule on admissibility separately for
each claim.83
2.
Effect of the Decision
The courts decision on the admissibility of arbitration has the effect of res iudicata for later 57
state court proceedings i.e. for a later decision on the Respondents arbitration defence
under 1032 (1) ZPO, for a later decision on a partys request for court control of an interim
award under 1040 (3) sentence 2 ZPO, and for a later challenge to the (final) arbitral award
under 1059 ZPO.84
According to the predominant opinion, the OLGs decision also has binding effect upon 58
the arbitral tribunal.85 If the OLG declares the arbitral proceedings inadmissible under
1032(2)ZPO (and if that decision has become final), the arbitral tribunal should not
render an award on the merits. If the arbitral tribunal nonetheless ignores the OLGs decision and renders an award on the merits, the respondent will be successful in challenging the
award under 1059 ZPO as the 1032 (2) decision has the effect of res iudicata for 1059
challenge procedures (see supra, para. 27).
procedure is necessary. Some scholars argue that an award made in spite of a 1032(2) decision is void ipso iure, i.e. without the need for any further challenge. 86 However, the BGH
81
82
83
84
85
86
BGH 19.07.2012, SchiedsVZ 2012, 281 para. 4.

Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.38; Schroeter, SchiedsVZ 2004, 288 (294
seq.).
OLG Hamburg 07.09.2009, IPRspr 2009 No 279, para. 26; Lachmann (2008), paras 664 seq.;
MnchKommZPO-Mnch (2013), 1032 para.24; Musielak-Voit (2013), 1032 para.10; Spohnheimer,
FS Kfer (2009), 357 (363). Contra OLG Jena 05.06.2003, NJW-RR 2003, 1506 (1506 seq.); differentiating Schroeter, SchiedsVZ 2004, 288 (294 seq.).
BeckOK-Wolf/Eslami (2013), 1032 para. 33; Spohnheimer, FS Kfer (2009), 357 (370).
BeckOK-Wolf/Eslami (2013), 1032 para. 33; Stein/Jonas-Schlosser (2002), 1040 para.12; Haas, FSRechberger (2005), p.187 (206); Zller-Geimer (2014), 1040 para.4; Illmer (2007), p. 103; Huber,
SchiedsVZ 2003, 84. Contra Musielak-Voit (2013), 1032 para. 13.
Huber, SchiedsVZ 2003, 73 (74); Musielak-Voit (2013), 1032 para.14; Haas, FS-Rechberger (2005),
pp.187 (207 seq.); Thomas/Putzo-Reichold (2005), 1032 para.5; Spohnheimer, FS Kfer (2009), pp.
130
seems to oppose this doctrine of ipso iure-voidness. In a recent decision it faced an award that
was rendered before a 1040 (3) decision had become final. The BGH argued that the ZPO
rules do not treat such awards as ipso iure void. On the contrary, the BGH saw the existence
of a challenge procedure under 1059 ZPO as evidence that the ZPO did not intend to
establish a rule of ipso iure voidness.87
60 The arbitral tribunal should also be regarded as being bound by the courts (final) decision
that arbitral proceedings are admissible.88 It should therefore not decline its jurisdiction but
decide on the merits. If the arbitral tribunal does not accept its jurisdiction despite the courts
decision, the arbitral proceedings should be regarded as being incapable of being performed
(cf. 1032 (1) last sentence ZPO) so that the case may be decided by the state court despite the prior conflicting 1032 (2) decision.89
3.
Possible Influence of Parallel Arbitral Proceedings or an Arbitral (Interim) Award on the

Courts Decision
61 Pursuant to 1032 (3) ZPO, the fact that proceedings under 1032 (2) ZPO are pending does neither prevent the arbitral proceedings from being commenced or continued nor
an arbitral award from being made. This gives rise to the question of how far these arbitral
proceedings (or an arbitral award on the jurisdiction issue) can influence the decision of the
state court.
62 First of all, the mere fact that there are parallel arbitral proceedings does not force the state
court to wait for the jurisdictional decision of the arbitral tribunal before deciding on the
application under 1032 (2) ZPO.90
63 However, the situation changes when the Arbitral Tribunal renders an award. When an
award is issued, it seems safe to assume that German OLGs will dismiss the 1032 (2) claim
because the award eliminates any legitimate interest in 1032 (2) proceedings. The BGH
recently held as much in a recent case where a 1040 (3) review of the Tribunals interim
jurisdictional award was pending before a state court. Before the court could make its 1040
(3) decision, the arbitral tribunal issued its final award. The BGH reasoned that a 1040 (3)
decision rendered after the final award will not render the award void ipso iure,91 because the
ZPO does not provide for ipso iure voidness. Rather, the ZPO challenge system and considerations of legal certainty require that the award be set aside exclusively through a 1059
ZPO challenge procedure. The BGHs reasoning relied heavily on the preclusionary effect
of the time limits for challenges set forth in 1059 (3) ZPO, which serve legal certainty by
making arbitral awards unchallengeable after a certain period has passed. The legal certainty
and legal clarity provided by 1059 (3)s time-preclusion rule would be undermined, so the
87
88
89
90
91
357 (375 et seq.). Contra Synatschke (2006), p.108; Lachmann (2008), para. 686.
BGH 19.09.2013, SchiedsVZ 2013, 333, para. 9; see 1040 para. 39.
Zller-Geimer (2014), 1040 para.4; Schroeter, SchiedsVZ 2004, 288 (296); contra Musielak-Voit (2013),
1032 para.13.
BeckOK-Wolf/Eslami (2013), 1032 para. 33; Haas, FS-Rechberger (2005), p.187 (206).
This question had been subject to some debate amongst German scholars before: Approving an ipso iurevoidness: Musielak-Voit (2013), 1040 para.12; HKZPO/Saenger 1032 para. 11; in tendency Huber,
SchiedsVZ 2003, 73 (75); opposing: Lachmann (2008), para. 749; Zller-Geimer (2014), 1040 para.
15; Haas, FS Rechberger (2005), 187 (202); differentiating Spohnheimer, FS Kfer (2009), pp. 357 (375
et seq. and 378 et seq.).
1032 Huber/Bach
131
BGH, by an ipso iure voidness doctrine,92 applies equally to 1032 (2) proceedings. Even if
a 1032 (2) decision is issued after an arbitral award is issued, it will not render the award
ipso iure void. 93 Instead, the respondent must challenge the award under 1059 (3) ZPO.
Therefore, the respondent no longer has a legitimate interest in a 1032 (2) decision.
Because an intervening arbitral award eliminates any legitimate interest in 1032 (2) ZPO 64
proceedings, a state court must generally dismiss the 1032 (2) action as inadmissible. However, courts should generally allow the applicant to amend its application as permitted under
263 ZPO. In essence, the court would permit the applicant to switch from a 1032 (2)
application to a 1040 (3) application or a 1059 ZPO challenge. The possibility of such
a modification, however, is only available when the 1032 (2) proceeding is still pending
before the OLG. It is barred once the proceedings reach the BGH.94
F.
It follows from 1025 (2) ZPO that the procedure under 1032 (2) ZPO may also be 65
available if the place of arbitration is outside Germany.95 However, in such a case the application should only be admissible if a later arbitral award is likely to have effects in Germany in
particular if it is likely to be enforced here. Otherwise, the plaintiff lacks legitimate interest
for his application.96
IV. Parallel Arbitral Proceedings

According to 1032 (3) ZPO, where an action or application under 1032 (1)or (2) ZPO 66
has been brought, arbitral proceedings may nevertheless be commenced or continued and
an arbitral award may even be made while the issue is pending before the court. There is no
lis pendens-objection in the relationship between the arbitral tribunal and the state courts.97
The purpose of this provision is to prevent the parties from using the court procedures as a
tactical tool to delay the arbitral proceedings.98 If the state court procedure has not been commenced for the sole purpose of delaying arbitration, it may well be advisable for the tribunal
to stay the proceedings despite not being forced to do so.99
92
93
94
95
96
97
98
99

Before the decision of the BGH, the predominant opinion amongst German scholars favoured the doctrine ipso iure voidness, arguing that the award would become void ipso iure when the courts decision
declaring the arbitral proceedings as inadmissible becomes final: Musielak-Voit (2013), 1032 para.15
(stating that a challenge procedure under 1059 may be made for declaratory purposes); Haas, FSRechberger (2005), pp.187 (209 seq.). Contra Spohnheimer, FS Kfer (2009), pp. 357 (378 et seq.).
See BGH 19.09.2013, SchiedsVZ 2013, 333, para. 12.
BGH 30.06.2011, SchiedsVZ 2011, 281 para. 12; Stein/Jonas-Schlosser (2002), 1032 para.23; MusielakVoit (2013), 1032 para.10; Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.31; Krll, NJW
2003, 791 (792); contra Weigand-Wagner (2002), Germany, para. 84; see infra, Schroeder/Wortmann,
1062 paras 16 et seq.
BGH 30.06.2011, SchiedsVZ 2011, 281 para. 12; similarly Spohnheimer, FS Kfer (2009), pp. 357 (381 et
seq.); more generous, Schroeter, SchiedsVZ 2004, 288 (290).
See Weigand-Wagner (2002), Germany, para.81 (with further references); Huber, SchiedsVZ 2003, 73
(74); Haas, FS-Rechberger (2005), pp.187 (194 seq.).
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.38; Musielak-Voit (2013), 1032 para.15;
Cf. Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.38; BGH 30.06.2011, SchiedsVZ 2011,
281, para. 11.; Stein/Jonas-Schlosser (2002), 1032 para.22; Lachmann (2008) para. 684. For conflicts
that may occur from parallel state court and arbitral proceedings see supra, paras 34 et seq. and 38 et seq.
132
67 The provision is based on Article 8 ML and extends the rule provided there to the procedure
of 1032 (2) ZPO.100 The provision is not mandatory; therefore, parties may well agree upon
a duty of the tribunal to stay proceedings as long as a state-court-proceeding is pending.
100
1033 Arbitration Agreement and Interim Measures by Court

It is not incompatible with an arbitration agreement for a court to grant, before or during
arbitral proceedings, an interim measure of protection relating to the subject matter of
the arbitration upon request of a party.
Short Bibliography: Bandel, Einstweiliger Rechtsschutz im Schiedsverfahren, Mnchen 2000;
Besson, Arbitrage international et mesures provisoires, Zrich 1998; Kreindler, Transnational Litigation, Dobbs Ferry 1997; Kreindler/Schfer/Wolff, Schiedsgerichtsbarkeit Kompendium fr die
Praxis, Frankfurt am Main 2006; Krll, Die internationale Zustndigkeit deutscher Gerichte fr
einstweiligen Rechtsschutz bei auslndischem Schiedsort, IHR 2005, 142; Krll, Die schiedsrechtliche Rechtsprechung 2004, SchiedsVZ 2005, 139; Krll, Die schiedsrechtliche Rechtsprechung
des Jahres 2009, SchiedsVZ 2010, 213; Lachmann, Handbuch fr die Schiedsgerichtspraxis, Kln
2008; Murray/Strner, German Civil Justice, Durham 2004; Rauscher, Europisches Zivilprozessund Kollisionsrecht, EuZPR/EulPR, Brssel I-VO, Lugbk 2007, Mnchen 2011; Reinelt/Strahl,
R. Arrest und einstweilige Verfgung, 1. Antrag auf dinglichen Arrest, in: Mes (edt.), Becksches
Prozessformularbuch, Mnchen 2013; Rosenberg/Schwab/Gottwald, Zivilprozessrecht, Mnchen
2004; Rtzel/Wegen/Wilske, Commercial Dispute Resolution in Germany, Mnchen 2005; Saenger,
Handkommentar: Zivilprozessordnung, FamFG, Europisches Verfahrensrecht, Baden-Baden
2013; Schroth, Einstweiliger Rechtsschutz im deutschen Schiedsverfahren, SchiedsVZ 2003, 102;
Schtze, Die verkannte Funktion der Schiedsvereinbarung im internationalen Zivilprozessrecht,
IPRax 2006, 442; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005; Steinbrck, Internationale
Zustndigkeit deutscher Gerichte fr selbststndige Beweisverfahren in Schiedssachen, IPRax 2010,
424.
Para.
I. Relevance of 1033 ZPO . . . . . . . . . . . . . . . . 1
III. Relationship between Court and
Arbitral Interim Measures . . . . . . . . . . . . . . . 8
IV. Scope of 1033 ZPO . . . . . . . . . . . . . . . . . . . 12
A. Applicable to German and Foreign
Arbitral Proceedings . . . . . . . . . . . . . . . . 12
B. Covering Applications
Before, During and After Arbitral
Proceedings and in Addition to the
Competence of the Arbitral Tribunal 13
V. Interim Relief Available from German
Courts in Overview . . . . . . . . . . . . . . . . . . . . . 14
A. Available Remedies under German
Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1. Pre-judgement Attachment
(Arrest) . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2. Preliminary Injunction
(Einstweilige Verfgung) . . . . . . . . . . 18
3. Independent Procedure for
the Preservation of Evidence
(selbststndiges Beweisfahren) . . . . . 22
Para.
B. Jurisdiction of the German Courts . . . 24
1. Jurisdiction under German Law . . 25
2. Jurisdiction under the BrusselsI
Regulation in the Case of an
Arbitration Agreement . . . . . . . . . . . 28
C. Interim Relief Proceedings Before
German Courts . . . . . . . . . . . . . . . . . . . . . 31
1. Stages of the Summary
Proceedings (Pre-judgment
Attachments and Preliminary
Injunctions) . . . . . . . . . . . . . . . . . . . . . 31
2. Ex parte Proceedings Available
in Urgent Matters . . . . . . . . . . . . . . . . 34
3. Standard and Means of Proof . . . . . 37
4. Independent Procedure for
the Preservation of Evidence
(selbstndiges Beweisverfahren) . . . . 38
D. Liability for Unjustified Interim
Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
E. Court and Attorneys Fees for
Interim Relief Applications . . . . . . . . . . 40
134
I.
Relevance of 1033 ZPO1
1 1033 Code of Civil Procedure (Zivilprozessordnung ZPO) clarifies that by entering into
a valid arbitration agreement the parties do not, by that act alone, oust the capacity and competence residing in the local German court of appropriate jurisdiction to otherwise entertain
requests for and grant interim, conservatory, temporary or comparable forms of relief.2
Whether before, during or after (cf. infra, para. 13) the pendency of the arbitral proceedings,
a party to an arbitration agreement is at liberty to apply to a German court of appropriate
jurisdiction for an interim measure of protection related to the subject matter in dispute. Accordingly, the potentially affected adverse party cannot invoke the arbitration agreement as
grounds, by themselves, to prevent the court from considering and granting the application.
To this extent, 1033 ZPO may be seen as constituting an exception to 1032 ZPO.3
2 1033 ZPO does not concern the jurisdiction of the court.4 Rather, the courts international,
local and subject matter jurisdiction (respectively) are to be assessed and, if at all, affirmed
pursuant to the general rules respecting such matters (cf. infra, paras 24 et seq.).
3 Once the jurisdiction of a German court in this context has been established, the rules of German civil procedure law foresee a number of interim measures. First, a pre-award attachment
(Arrest) is available to secure a monetary claim or a claim that can be converted into such
a claim (Sicherung der Zwangsvollstreckung wegen Geldforderungen). Second, a preliminary
injunction (einstweilige Verfgung) is available to secure any other claim or to preliminarily
regulate a disputed legal relationship (Sicherung eines Individualanspruchs or Regelung eines
streitigen Rechtsverhltnisses). Third, a procedure to preserve evidence is available (selbststndiges Beweisverfahren) (cf. infra, paras 14 et seq. for details about these remedies).
4 It should not be overlooked in this respect that 1033 ZPO is complemented by 1041
ZPO. 1041 ZPO serves as the basis for bestowing a concurrent power in the arbitrator
to order interim measures of protection, separate and apart from the powers of the local
court. Accordingly, under German arbitration law the parties may be in a position to choose
between seeking interim relief from a court of appropriate jurisdiction and from the arbitral
tribunal, to the extent the tribunal is already in office, still in office or the rules provide for an
expedited pre-trial procedure.5 In assessing and granting interim relief, the arbitral tribunal
is not necessarily restricted to German-style interim measures of protection, such as prejudgement attachments (Arrest) or preliminary injunctions (einstweilige Verfgung) pursuant
to 916 et seq. ZPO.6
5 In view of the foregoing, it is apparent that 1033 ZPO is an important provision for parties
and the arbitral tribunal alike. Timely, effective and efficient interim relief is often available
1
2
3
4
5
Cf. Zller-Geimer (2014), 1033 para.1; Schwab/Walter (2005), Chap. 7 para.12.
Cf. Schroth, SchiedsVZ 2003, 102 (104); Saenger-Saenger (2013), 1033 para.1.
Cf. Bandel (2000), p.277; Krll, IHR 2005, 142 (144).
Cf. Gottwald/Adolphsen, Das neue deutsche Schiedsverfahrensrecht, DStR 1998, 1017 (1020); Schroth,
SchiedsVZ 2003, 102 (104); MnchKommZPO-Mnch (2013), 1033 para.2; Kreindler/Schfer/Wolff
(2006), paras894 et seq.; cf. also Schfer, New Solutions for Interim Measures of Protection in International Commercial Arbitration: English, German and Hong Kong Law Compared, Electronic Journal
of Comparative Law 1998, 1 (8 et seq.), available at <www.ejcl.org/22/art22-2.html>, with a comparison
between the German free-choice legislative model and the English court-subsidiarity legislative model.
Cf. infra, Schfer, 1041 para. 21.
1033 Kreindler/Schmidt
135
only from the state courts.7 It goes without saying that the courts power to order interim
relief may be particularly important at the early stage when an arbitral tribunal has not yet
been fully constituted, is otherwise not yet seized of the file and in office or is not able or
inclined to render the relief sought.8
II.
Legislative History
1033 ZPO restates a principle of German arbitration law which was already established un- 6
der the pre-1998 reform regime9 and which is also reflected in Article9 UNCITRAL Model
Law (ML).10 At the same time, it is noteworthy that by distinction from Article9 ML, 1033
ZPO contains a qualifying clause. Namely, any interim measure of protection ordered by
the state court must be related to the subject matter of the arbitration. This limitation to the
subject matter of the dispute is, however, inherent to the otherwise established procedural
principle of German injunctive relief (cf. 935 ZPO).11 To that extent, it therefore does not
specifically limit the scope of interim relief available to parties to arbitration from a German
court of appropriate jurisdiction. The foregoing is of course separate and apart from the question of the relatedness to the subject matter of the arbitration of an interim measure sought
and perhaps also obtained from a court outside of Germany; that is outside of the scope of
1033 ZPO.
The 2006 amendments of the UNCITRAL Model Law, which included a number of pro- 7
visions on interim measures (Chapter IV A), have not been specifically transformed into
German law.12
III. Relationship between Court and Arbitral Interim Measures

It has been a matter of debate whether parties can opt out of access to court for interim 8
relief. In this case, interim remedies would not be available through state courts. While
German courts and most commentators find 1033 ZPO to be binding without an opt-out
option,13 the debate could be fuelled by the express provisions for interim relief procedures
in arbitration rules.14 Some commentators already argue in favour of the enforcement of an
7
8
9
10
11
12
13
14
Cf. Schtze, IPRax 2006, 442 (443); Musielak-Voit (2013), 1033 para.1.
Cf. Kreindler/Schfer/Wolff (2006), paras905 et seq.
LG Frankfurt 26.07.1982, NJW 1983, 761, (761); cf. Zller-Geimer (2014), 1033 para.1; cf. from a
comparative legal perspective Kreindler (1997), pp.115 et seq.; Besson, pp.147 et seq.
Cf. BT-Drs. 13/5274, 38.
OLG Mnchen 26.10.2000; OLG Nrnberg 27.10.2004; LG Berlin 06.02.2006, 5 O 39/06; LG Frankfurt
26.07.1982, NJW 1983, 761(763); Martens/Feldhoff-Mohr, Der Fall Roberts Ein Slalom zwischen
Staatsgericht und Schiedsgericht, SchiedsVZ 2007, 11 (21); Laukemann, Effektiver einstweiliger
Rechtsschutz an der Schnittstelle von Schiedsverfahren und staatlicher Justiz, ZZP 2013, 175 (180);
Schlosser, Der einstweilige Rechtsschutz in Sportangelegenheiten vor und nach Bildung des Schiedsgerichts, SchiedsVZ 2009, 84 (87); MnchKommZPO-Mnch (2013), 1033 para.18 ([T]he provision
is binding); Musielak-Voit (2013), 1033 para.3; Saenger-Saenger (2013), 1033 para. 4; Baumbach/
Lauterbach (2014), 1033 para.4; Berger, Die Rechtsstellung des Pre-Arbitral Referees, SchiedsVZ 2006,
176 (181); Lachmann (2008), para. 2853.
Cf. the introduction of the emergency arbitrator pursuant to Art. 29 of the 2012 ICC Rules. See also
DIS-Supplementary Rules for Expedited Proceedings or 20 (2) of the DIS Sports Arbitration Rules,
available at <http://www.dis-arb.de/en/16/regeln/uebersicht-id0>.
136
unconditional opt-out provision,15 some oppose the recognition of the opt-out agreement
only until such time as the arbitral tribunal has been constituted16 or the selected arbitration
institution if any provides for a standing body to be available to entertain applications for
interim relief.17
9 It is sensible to request that for the validity of opting-out of 1033 ZPO, a contractual process must be in place that provides for effective interim relief, i.e. that it is ensured that the
parties are not entirely deprived of interim measures of protection.18
10 Parties considering an opt-out need to be aware that under German arbitration law, a standard arbitration agreement which does not expressly address the issue of interim relief by the
state courts is not considered to impliedly exclude such interim relief by state courts, as is
evident from 1033 ZPO.19 Consequently, to the extent possible and already at the drafting
stage, parties should be explicit in their agreement to the extent that they agree to seek to oust
the courts jurisdiction to grant interim relief. It is also noteworthy that Art. 29 (7) of the ICC
Rules routinely provides for a concurrent jurisdiction of the emergency arbitrator rules and
interim measures from a competent court.
11 If interim measures are available under both 1033 ZPO and the arbitration rules, pursuant
to 1041 (2) sentence 1 ZPO the state proceedings take precedence over interim awards,
provided they have been lodged prior to applying for a declaration of enforceability of the
interim award. If an arbitral tribunal has already been constituted, the applicant must make
proof of his legitimate interest in legal action (Rechtsschutzbedrfnis) when turning to the
courts20 in order to avoid duplicative decisions.
IV. Scope of 1033 ZPO

A.
Applicable to German and Foreign Arbitral Proceedings
12 1033 ZPO applies to all arbitral proceedings regardless of their seat (cf. 1025 (1)ZPO
for a seat in Germany; cf. 1025 (2) ZPO for non-German arbitrations and where the seat
has not yet been determined).21 1025 (2) ZPO does not, however, provide an automatic
basis for the international jurisdiction of German courts if the parties arbitrate abroad.22 An
applicant for interim relief from a German court in support of arbitral proceedings abroad
15
16
17
18
19
20
21
22
Cf. Zller-Geimer (2014), 1033 para. 6; Steinbrck, IPRax 2010, 424 (427); Schtze, Einstweiliger
Rechtsschutz im Schiedsverfahren, BB 1998, 1650 (1650); id., IPRax 2006, 442 (443); Westpfahl,
Vorlufige Manahmen durch ein bei Groprojekten vereinbartes stndiges Schiedsgericht, SchiedsVZ
2006, 21 (25); cf. also Bandel (2000), p.334, who argues that the limitations that are inherent to any procedural exclusion agreement also apply if the main proceedings are conducted before an arbitral tribunal,
i.e. that the exclusion agreement is generally acceptable except for cases including the participation of
persons requiring special protection. In conventional commercial matters this is not the case.
Rosenberg/Schwab/Gottwald (2004), 176 para.21; cf. also Hauser, Schiedsverfahren, Eilrechtsschutz,
ICC-Schiedsordnung, RIW 2013, 364 (366).
Cf. Kreindler/Schfer/Wolff (2006), para.899.
LG Wiesbaden 18.12.2009, available at <juris>; LG Saarbrcken 05.02.2007; Cf. Bandel (2000), p.337;
Zller-Geimer (2014), 1033 para. 6; Steinbrck, IPRax 2010, 424 (427); Schtze, IPRax 2006, 442
(443).
Cf. Saenger-Saenger (2013), 1033 para. 4; Zller-Geimer (2014), 1033 para. 2; BT-Drs. 13/5274, 39.
Cf. BT-Drs. 13/5274, 31.
OLG Nrnberg 30.11.2004, SchiedsVZ 2005, 50 with note by Geimer, p.52; cf. Krll, SchiedsVZ 2005,
139 (143); Krll, IHR 2005, 142 (144), with further references.
137
must establish the international jurisdiction of the German court pursuant to the generally
applicable rules (for details see infra, paras 27 et seq.).23
B.
Covering Applications Before, During and After Arbitral Proceedings and in Addition
to the Competence of the Arbitral Tribunal
1033 ZPO is limited by its wording to interim measures of protection granted by a court 13
before or during arbitral proceedings. At the same time, the OLG Frankfurt has also seen
fit to rely on 1033 ZPO in a decision upholding its jurisdiction to grant post-award interim
relief.24 In the most recent case, the arbitral tribunal had issued a final and binding award
in favour of Respondent, confirming their decision to exclude Claimant from a national
football competition. Claimant intended to file petition for reversal of the award before the
state court and filed for an interim injunction to be admitted into the competition. While the
OLG Frankfurt held that such an application was permissible, it made clear that there was
little room for interim measures after a final and binding award had been issued. If the dispute
has already been settled in arbitration, the court does not have the power for a de novo review
of the underlying subject matter.
V.
Interim Relief Available from German Courts in Overview
A.
Available Remedies under German Law
German civil procedure law foresees two distinct categories of interim measures of protec- 14
tion, as is detailed below: the pre-judgement attachment (Arrest) and the preliminary injunction (einstweilige Verfgung), cf. 916, 935 et seq. ZPO. The availability of the remedy is
determined by the nature of the claim which is meant to be secured.25 Generally, the two
categories are mutually exclusive.26 Once the preconditions for the granting of the measure
are deemed to have been fulfilled, a court is compelled to grant a corresponding order.27 Also
available is a special procedure for the preservation of evidence (selbststndiges Beweisverfahren) pursuant to 485 et seq. ZPO.
1.
Pre-judgement Attachment (Arrest)
The pre-judgement or pre-award attachment is available to secure a potential future 15

monetary judgement, 916 (1) ZPO. It is an in rem measure. The applicant must make a
plausible showing (glaubhaft machen) of a prima facie claim for money against the opponent
(Arrestanspruch), as well as of a ground for attachment (Arrestgrund), 916 et seq. ZPO. As
such, ground for an attachment qualifies the likelihood that enforcement of a subsequently
23
24
25
26
27
On the applicability of Council Regulation (EC) No 44/2001 of December 22, 2000 on jurisdiction and
the recognition and enforcement of judgements in civil and commercial matters (Brussels I), see BGH
05.02.2009, SchiedsVZ 2009, 174 (174 et seq.) and Krll, SchiedsVZ 2010, 213 (221).
OLG Frankfurt 13.06.2013; ibid 20.12.2004; cf. Krll, Die Schiedsrechtliche Rechtsprechung 2005,
SchiedsVZ 2006, 203 (209).
Murray/Strner (2004), pp.434 and 437; cf. Stein/Jonas-Grunsky (2002), vor 916 para.5 and paras50
et seq.; Musielak-Huber (2013), 916 para.2.
Zller-Vollkommer (2014), vor 916 para.1; Musielak-Huber (2013), 916 para.5; Thomas/Putzo-Seiler
(2013), vor 916 para.8.
Zller-Vollkommer (2014), 916 para.1, 935 para.1; Stein/Jonas-Grunsky (2002), 917 para.4, 935
paras1 and 14.
138
rendered judgement would otherwise be frustrated or made substantially difficult due to

actions by or the financial situation of the opponent, cf. 917 ZPO (1).28
16 The attachment of the opponents assets is, therefore, seen as being necessary to preliminarily protect the plaintiffs prospects of executing a judgement (or an award) rendered in the
future. Mere financial difficulties of a debtor do not normally constitute grounds for an
attachment,29 nor does the fear of competitive claims of other creditors normally suffice.30
A statutory ground for attachment, however, exists if the execution of the subsequent judgement would have to take place in a foreign country that does not guarantee reciprocity with
regard to recognition and enforcement of a German judgement, 917 (2) ZPO.31
17 The enforcement of a pre-judgement attachment occurs in the same manner as the enforcement of a regular judgement, 930 et seq. ZPO. The exception is that the property is merely
attached, e.g. a lien is attached to movable property, and not liquidated, since the pre-judgement attachment only safeguards the rights.32 Pursuant to 923 ZPO, the pre-judgement attachment must specify an amount that the opposing party may furnish as security to prevent
the execution of the pre-judgement attachment. The opposing party can appeal against the
pre-judgement attachment pursuant to 924 ZPO (Widerspruch) in the event that the measure has been granted on an ex parte basis (cf. infra, paras 34 et seq.). Otherwise, the opposing
party can lodge an appeal pursuant to 511 et seq. ZPO.
2.
Preliminary Injunction (einstweilige Verfgung)
18 By contrast, preliminary injunctions are available to safeguard other rights or to provisionally

regulate a legal relationship, 935, 940 ZPO. By way of example, this broad remedy can
be invoked to authorize a preliminary order sequestering identified property in dispute, to
prohibit the debtor from disposing of specific property or to enjoin the debtor from engaging
in certain conduct.33 A typical preliminary injunction in the international business context is
an application against the beneficiary of a bank guarantee to prevent it from illegally drawing
on the bank guarantee.34
19 Pursuant to 938 ZPO, the precise form and content of the preliminary measure is left to the
discretion (freies Ermessen) of the court, within the parameters of the application.35 Similar to
the pre-judgement attachment, the underlying purpose is to secure the eventual implemen-
28
29
30
31
32
33
34
35
Cf. Rtzel/Wegen/Wilske (2005), p. 102; Zller-Vollkommer (2014), 917 para. 4; Musielak-Huber

(2013), 917 para.2.
BGH 19.10.1995, BGHZ 131, 95 (105); cf. Rtzel/Wegen/Wilske (2005), p. 102; Zller-Vollkommer
(2014), 917 para.9; Stein/Jonas-Grunsky (2002), 917 para.5; MnchKommZPO-Drescher (2012),
917 para.5.
BGH 19.10.1995, BGHZ 131, 95 (105); Zller-Vollkommer (2014), 917 para.9; MnchKommZPODrescher (2012), 917 para. 12; Murray/Strner (2004), p.435 with further references.
Cf. Zller-Vollkommer (2014), 917 paras15 et seq.; Musielak-Huber (2013), 917 paras5 et seq.
Murray/Strner (2004), p.437; cf. Rtzel/Wegen/Wilske (2005), p.103; Zller-Vollkommer (2014), 930
para.1; Thomas/Putzo-Putzo/Seiler (2012), vor 916 para.5.
Murray/Strner (2004), p.438; Stein/Jonas-Grunsky (2002), vor 935 paras41 et seq.; Zller-Vollkommer
(2014), 935 para.9; Musielak-Huber (2013), 938 paras 7et seq.
Cf. Zller-Vollkommer (2014), 940 para.8; Musielak-Huber (2013), 940 para.7; MnchKommZPODrescher (2012), 935 para. 32.
Zller-Vollkommer (2014), 938 para.2.
139
tation of a final judgement.36 A party seeking such relief must make a plausible showing of
the necessity for interim relief (936, 920 (2), 294 ZPO). Unnecessary delay in resorting
to court may be seen as evidence or an indication that the need for relief is not sufficiently
urgent.37
Preliminary injunctions should not be sought or granted as a means of pre-empting the 20
underlying decision on the merits of the matter (Verbot der Vorwegnahme der Hauptsache).38
Accordingly, only in exceptional circumstances are German courts empowered to order a
preliminary injunction that factually pre-empts the matter, such as provisional payments
(Leistungsverfgung).39
If the court orders a preliminary injunction, the opposing party may obtain the dissolution 21
of the preliminary restraint by posting alternative security (cf. 939ZPO). This measure is
available and applicable only to the extent the alternative security fully protects the interests safeguarded by the preliminary measure.40 The opposing party can appeal against the
preliminary injunction pursuant to 924, 936 ZPO (Widerspruch) in the event that the
measure was granted on an ex parte basis by the court competent to hear the main action on
the merits; otherwise, an appeal pursuant to 511 et seq. ZPO is admissible.
3.
Independent Procedure for the Preservation of Evidence (selbststndiges Beweisverfahren)
In terms of additional measures available, 1033 ZPO is construed to encompass the so- 22
called independent procedure for the preservation of evidence pursuant to 485 et seq.
ZPO (selbststndiges Beweisverfahren).41 This independent procedure allows, prior to or
during a litigation, the examination of witnesses (Zeugenvernehmung) and inspection of
objects (Einnahme des Augenscheins) as well as the assessment by an expert appointed by the
court (Begutachtung durch einen Sachverstndigen), 485 (1) ZPO. The procedure aims to
safeguard evidence and therefore may be available in situations where there is a relevant risk
that evidence may be lost or be rendered more difficult to obtain.42
36
37
38
39
40
41
42
Murray/Strner (2004), p. 438; Stein/Jonas-Grunsky (2002), vor 935 para. 1; MnchKommZPODrescher (2012), 935 para.2.
KG Berlin 09.02.2001, NJW-RR 2001, 1201 (1202); OLG Hamburg 20.03.2008, NJW-RR 2008, 1435
(1436); cf. Murray/Strner (2004), p.439; Zller-Vollkommer (2014), 940 para.4.
Cf. MnchKommZPO-Mnch (2013), 1033 para. 4; Murray/Strner (2004), pp. 439 et seq.; ZllerVollkommer (2014), 938 para.3.
Cf. Zller-Vollkommer (2014), vor 916 para. 1, 940, para. 6; Stein/Jonas-Schlosser (2002), 1033
para.1, arguing that courts should be careful not to order measures that factually pre-empt the matter
as the arbitral tribunal will likely be better suited to make such far reaching decisions. German law does
not provide for a remedy similar to the French rfr provision which pre-empts the matter, albeit on a
provisional basis (cf. Bandel (2000), p.270).
OLG Kln 27.11.1974, NJW 1975, 454 (454); Murray/Strner (2004), p.441; Zller-Vollkommer (2014),
939 para.1.
OLG Frankfurt 05.05.1993, BauR 1993, 505 (505); cf. also Krll, Das neue deutsche Schiedsrecht vor
staatlichen Gerichten: Entwicklungslinien und Tendenzen 1998-2000, NJW 2001, 1173 (1179); ZllerGeimer (2014), 1033 para.3; MnchKommZPO-Mnch (2013), 1033 para. 7; Saenger-Saenger (2013),
1033 para. 2; Stein/Jonas-Schlosser (2002), 1033 para.1; Musielak-Voit (2013), 1033 para.2; BT-Drs.
13/5274, 38; OLG Koblenz 15.07.1998, MDR 1999, 502 (502) (available at least until the constitution
of the arbitral tribunal); also differentiating between the stages before and after the constitution of the
arbitral tribunal: Schwab/Walter (2005), Chap. 7 para. 14; MnchKommZPO-Mnch (2013), 1033
paras 8 and 9.
Cf. Zller-Herget (2014), vor 485 paras 1 et seq., for details of the procedure.
140
23 Whether this kind of measure should be sought from the local court as opposed to the arbitral
tribunal itself, once constituted, will again invariably depend upon an array of jurisdictional,
factual and pragmatic considerations. This procedure is not available if the Brussels I Regulation is applicable in principle (for details see infra, paras 28 et seq.)
B.
Jurisdiction of the German Courts
24 German courts may be competent to hear applications or a pre-award attachment regardless

of the seat of the arbitration. Jurisdiction must be established pursuant to the general rules.
Those can be found in either the Council Regulation No. 44/2001 of December 22, 2000,
on jurisdiction and the recognition and enforcement of judgements in civil and commercial
matters (EuGVO)43 or the ZPO. The interaction of these two sets of rules is highly complex
and, especially in the case of interim measures, far from being settled.
1.
Jurisdiction under German law
25 Pursuant to 919 ZPO, the German court is competent to hear the application for a preaward attachment to the extent it has jurisdiction to hear the main action on the merits
(Gericht der Hauptsache) or, alternatively, if it is the Local Court (Amtsgericht), in the district
in which the assets at issue are located. Similarly and in reverse, 937 (1) ZPO provides
that the court hearing the main action must also be competent to hear any application for a
preliminary injunction. In urgent matters, the Local Court (Amtsgericht) in the district where
an object is located may grant a preliminary injunction, 942 ZPO. The competent court for
the independent procedure for the preservation of evidence is also either the court which
has jurisdiction over the merits proceedings (Gericht der Hauptsache) or, in urgent cases, the
Local Court (Amtsgericht AG) where the affected witness or object is located (486 (2)
and (3) ZPO).
26 With regard to determining which court will hear the main action, the regular jurisdictional
rules apply, including choice of forum agreements.44 In the context of arbitration, however,
where there is no court to hear the main action, the arbitral tribunal will decide the matter.
Accordingly, the reference to the competent court is, in an arbitration context, construed
as referring to the hypothetically competent court.45 The hypothetically competent court
is, depending on the amount in dispute, either a Local Court (Amtsgericht) or a Regional
Court (Landgericht LG).46 In the event that the parties have designated a specific town as
the seat of the arbitration, such choice is regarded as also designating the locally competent
court.47 However, the LG Berlin rejected this argument in a recent decision as the arbitration
agreement is usually not a choice of forum agreement within the meaning of 38 ZPO (or
Art. 23 EuGVO).48
43
44
45
46
47
48
f. ECJ 17.11.1998, C-391/95, ECR 1998, I-7091. On the applicability of the Brussels I Regulation in
court proceedings associated with arbitral proceedings in general see BGH 05.02.2009, SchiedsVZ 2009,
174 (174 et seq.); Krll, SchiedsVZ 2010, 213 (221).
Cf. Kreindler/Schfer/Wolff (2006), para.964: 1062 ZPO is not applicable.
Cf. Bandel (2000), p. 279; MnchKommZPO-Mnch (2013), 1033, para. 21; Stein/Jonas-Schlosser
(2002), 1033 para.3; contra Schwalb/Walter (2005), Chap. 7 para.13, court dealing with arbitration
matters pursuant to 1062 (1) ZPO.
Cf. Musielak-Voit (2013), 1033 para.3; Stein/Jonas-Schlosser (2002), 1033 para.3; MnchKommZPOMnch (2013), 1033 para.20.
LG Berlin 08.06.2011, 94 OH 2/10, available at <juris>; cf. also Zller-Geimer (2014), 1033 para.4.
141
Where the arbitration has its seat outside of Germany, there is conflicting jurisprudence. In 27
widely criticized decisions, the OLG Nrnberg and the OLG Dsseldorf construed the parties choice of Geneva as the seat of arbitration as a valid derogation from the international
jurisdiction of the German courts to entertain applications for interim measures.49 The court
thereby equated an arbitration agreement designating a foreign seat with a choice of forum
agreement. Such an approach, however, misconstrues the parties intentions when designating a foreign seat of their arbitration and ignores 1025 (2) ZPO, pursuant to which 1033
ZPO is also applicable in case of a foreign arbitration. In contrast, the OLG Kln had rightly
decided that a standard arbitration clause did not include an implied choice of forum clause.50
In view of this jurisprudence, for precautionary reasons parties to an arbitration agreement
with a non-German seat should include in their arbitration agreement language clarifying
that German courts are to be (exclusively) competent to hear applications for interim relief.
2.
Jurisdiction under the Brussels I Regulation in the Case of an Arbitration Agreement
As a general rule, the EuGVO is applicable if the defendant is domiciled in an EU Member 28

State and the dispute is a cross-border dispute in civil and commercial matters.51 Pursuant
to Art. 31 EuGVO, European and national jurisdictional provisions coexist in the case of
applications in provisional, including protective, measures. However, the ECJ held that the
jurisdictional provisions of the EuGVO apply only if the courts had jurisdiction as to the
substance of the matter in the main proceedings. Where the parties have validly excluded the
jurisdiction of the courts in an arbitration agreement, no provisional or protective measures
may be ordered on the basis of the EuGVO.52 This result may be explained by the lack of a
provision similar to 1033 ZPO in the EuGVO. Although this decision has been criticised
by commentators,53 parties to an arbitration should rely on national provisions to establish
jurisdiction for an application for interim measures, such as a pre-judgement attachment and
preliminary injunctions. It should be noted, however, that Art. 31 EuGVO and the jurisprudence of the ECJ still shape the interpretation of national law, a fact which is often overlooked.
First, the ECJ demands a real connecting link between the subject matter of the measures 29
sought and the territorial jurisdiction of the Member State of the court seized.54 This requirement has not yet been clarified by the ECJ or German courts. It should be seen in the context
49
50
51
52
53
54
OLG Nrnberg 30.11.2004, SchiedsVZ 2005, 50 (50) (with critical note by Geimer, p.52); OLG Dsseldorf 07.02.2008, SchiedsVZ 2008, 258 (258) (with critical note by Schlosser, p.261) critical review also
by Steinbrck, IPRax 2010, 424 et seq.; cf. also Krll, IHR 2005, 142 (143); Krll, SchiedsVZ 2005, 139
(143); Niggemann, Chronique de jurisprudence trangre Allemagne, Rev.Arb. 2006, 225 (238-239);
Schtze, IPRax 2006, 442 (443 et seq.).
OLG Kln 12.04.2002, GRUR-RR 2002, 309 (310); cf. also the Austrian OGH 04.09.2001, IPRax 2003,
64 (64) (with note by Reiner, p.74: no derogation).
Cf. Rauscher-Mankowski (2011), EuZPR, Vorbem Art. 2 Brssel I-VO paras 10 et seq.; Musielak-Stadler
(2013), Art. 2 EuGVO paras1 et seq.
ECJ 17.11.1998, C-391/95, ECR 1998, I-7091.
MnchKommZPO-Gottwald (2008), Art. 31 EuGVO para.7; Rauscher-Leible (2011), EuZPR, Art. 31
Brssel I-VO, para. 20; He/Vollkommer, IPRax 1999, 220 (227); cf. also Stein/Jonas-Schlosser (2002),
1033 para.3, who wants to reintroduce the Brussels regime through the back door if national provisions
refer to the jurisdiction of the court of the main proceedings (like 937 (1) or 919 ZPO).
ECJ 17.11.1998, C-391/95, ECR 1998, I-7091 para. 40. See also Austrian OGH 28.02.2012, GRURInt
2012, 826 (828); ibid 16.12.2010, GRURInt 2011, 450 (452).
142
of the execution of such an interim award. The subject matter of the interim measure is closely
linked to a Member State only if it intended to be executed in that state.55
30 Second, the ECJ has excluded specific remedies under national law as not constituting
interim or protective measures within the meaning of Art. 31 EuGVO.56 Injunctions that
factually pre-empt the matter, such as provisional payments (Leistungsverfgungen), may
not be within the scope of Art. 31 EuGVO unless repayment is guaranteed if the plaintiff is
unsuccessful as regards the substance of his claim and the measure sought relates to specific
assets located within the confines of the territorial jurisdiction of the court to which an application is made.57 It is a matter of debate whether the German independent procedure for
the preservation of evidence (selbststndiges Beweisverfahren) may be regarded as an interim
or protective measure within the meaning of Art. 31 EuGVO. In a 2005 decision, the ECJ
held that a preliminary hearing of witnesses prior to the bringing of proceedings under
the civil procedure laws of the Netherlands does not constitute a provisional or protective
measure, meaning that applicants may not rely on national jurisdictional provisions for such
procedures if the EuGVO is applicable in principle.58 Pursuant to the reasoning of ECJ, a
measure may be seen as interim or protective only if the court decides on the basis of detailed knowledge of the actual circumstances in which the measures are to take effect. For
example, a measure does not pursue the aim of Art. 31 EuGVO if it is intended to enable the
applicant to decide whether to bring a case or to determine whether it would be well founded
or to assess the relevance of evidence which might be adduced in that regard.59 Whereas the
German independent procedure for the preservation of evidence (selbststndiges Beweisverfahren) does not require the court to have detailed knowledge of the actual circumstances in
which the measures are to take effect and does not lead to a recognizable decision under the
EuGVO, it is not covered by the jurisdictional provision of Art. 31 EuGVO.60 Parties to an
international arbitration should therefore request such measures before the arbitral tribunal
if possible.
C.
Interim Relief Proceedings Before German Courts
1.
Stages of the Summary Proceedings (Pre-judgment Attachments and Preliminary

Injunctions)
31 Interim relief (pre-judgement attachments and preliminary injunctions) is regarded as a

summary proceeding that consists of two stages: a decision-making stage (summarisches
Erkenntnisverfahren)61 and a separate decision-enforcement stage (Vollziehungsverfahren),
similar to the usual distinction made under German civil procedure law.62 The rules established for ordinary court proceedings at the decision-making stage are also applicable to the
55
56
57
58
59
60
61
62
Rauscher-Leible (2011), EuZPR, Art. 31 Brssel I-VO, paras 24 et seq.

ECJ 17.11.1998, C-391/95, ECR 1998, I-7091 paras 45 et seq.
ECJ 17.11.1998, C-391/95, ECR 1998, I-7091 para. 47; cf. also Rauscher-Leible (2011), EuZPR, Art. 31
Brssel I-VO, paras 10 et seq.
ECJ 28.04.2005, C-104/03, ECR 2005, I-3481. This judgement was confirmed in the recent recast of the
EuGVO of 12.12.2012, see Regulation (EU) No. 1215/2012, O.J. L 351/1, Recital (25).
ECJ 28.04.2005, C-104/03, ECR 2005, I-3497 paras 16 et seq.
OLG Kln 24.05.2006, IHR 2006, 147; Rauscher-Leible (2011), EuZPR, Art. 31 Brssel I-VO, paras 13a
et seq; MnchKommZPO-Gottwald (2013), Art. 31 EuGVO para.2; Hess/Zhou, IPRax 2007, 183 (189).
Zller-Vollkommer (2014), vor 916 para.3; Baumbach/Lauterbach (2014), vor 916 para.12.
Walker, Der einstweilige Rechtsschutz im Zivilprozess und im arbeitsgerichtlichen Verfahren, Tbingen
1993, p.61; Thomas/Putzo-Putzo/Seiler (2012), vor 916 para.1.
143
decision-making stage of interim relief proceedings, unless they are supplanted by specific
rules in 916 et seq. ZPO.63
An interim relief procedure requires an application.64 By initiating interim proceedings, a 32
party does not waive its right to raise the objection of an arbitration agreement.65 Therein, the
applicant must specify the substantive right on which it relies (Arrestanspruch or Verfgungsanspruch), as well as the ground for seeking the measure (Arrestgrund or Verfgungsgrund)
(cf. supra, paras 15 et seq.). In particularly urgent matters, the presiding judge can handle the
application, 944 ZPO. If this is the case, an order may be obtained within hours.66 If an
interim measure of protection is applied for prior to the initiation of regular court proceedings, upon application of the opponent the judge can set a time limit within which a regular
suit needs to be initiated, 926, 936) ZPO. In the context of an arbitration agreement, the
judge may order the initiation of (arbitral) proceedings.67
In the event that an order is granted, the respondent has various means of recourse (Wider- 33
spruch, Berufung, Aufhebung). If it is denied, the applicant may appeal the decision (sofortige
Beschwerde, Berufung).68 These means of recourse can overlap.69
2.
Ex parte Proceedings Available in Urgent Matters
Both a pre-judgement attachment and a preliminary injunction can be obtained from the 34
German courts on an ex parte basis irrespective of the constitutional principle of audiatur et
altera pars, cf. Article 103 (1) German Constitution (Grundgesetz GG).70
An application for a pre-award attachment is usually decided without a prior hearing of the 35
opponent if the purpose of the measure would otherwise be frustrated,71 e.g. if the measure
for its effectiveness requires an element of surprise.72 In the event the decision is rendered
without a hearing, an order (Beschluss) is issued by the court. Alternatively, the court renders
a judgement (922 (1) ZPO). With respect to ex parte measures, courts usually make use of
their power pursuant to 921 ZPO to request the furnishing of security by the applicant.73
The opponents right to be heard is exercised ex post in the oral hearing following an objection, 924 (2) ZPO.74
With respect to preliminary injunctions, 937 (2) ZPO expressly provides that, in urgent 36
cases or in the event that the application for an interim measure is rejected, the decision may
63
64
65
66
67
68
69
70
71
72
73
74
Zller-Vollkommer (2014), vor 916 para.3.

OLG Frankfurt 20.01.2009, SchiedsVZ 2010, 144 (149).
Cf. Schtze, IPRax 2006, 442 (443); Kreindler/Schfer/Wolff (2006), para.907.
Cf. Stein/Jonas-Schlosser (2002), 1033 para.4; Musielak-Voit (2013), 1033 para.4; Schwab/Walter
(2005), Chap. 7 para.13; MnchKommZPO-Mnch (2013), 1033 paras 25 et seq.
Cf. Stein/Jonas-Grunsky (2002), 924 paras 2 et seq.; Zller-Vollkommer (2014), 922 paras 13, 17;
MnchKommZPO-Drescher (2012), 924 paras2 et seq.
Cf. Stein/Jonas-Grunsky (2002), 924 paras2 et seq.; MnchKommZPO-Drescher (2012), 924 para.3;
Cf. Stein/Jonas-Grunsky (2002), vor 916 para.38; Zller-Vollkommer (2014), 921 para.1; MusielakHuber (2013), 921 para.6.
Zller-Vollkommer (2014), 922 para.1; MnchKommZPO-Drescher (2012), 922 para.2.
Cf. Stein/Jonas-Grunsky (2002), 921 para.1; Musielak-Huber (2013), 921 para.2.
Cf. Murray/Strner (2004), p.436.
Stein/Jonas-Grunsky (2002), vor 916 para.38; Zller-Vollkommer (2014), vor 916 para.1a; Baumbach/
Lauterbach (2014), 922 para.2.
144
be given without a hearing. Accordingly, inter partes proceedings are the norm75 and ex parte
proceedings require the showing of specific urgency which courts frequently deny.76
3.
Standard and Means of Proof
37 Specific rules apply to the standard of proof, 920 (2), 294 (1) ZPO (Glaubhaftmachung).77
Thus the standard of proof is lower in interim relief proceedings than in ordinary court proceedings. The applicant must make a showing only of a prima facie case.78 A typical means of
making such a showing of the applicants entitlement to the claimed right (Arrestanspruch
or Verfgungsanspruch) as well as the grounds for seeking the measure (Arrestgrund or Verfgungsgrund) is by way of a sworn affidavit (eidesstattliche Versicherung).79 In ruling on the
application, the judge will apply a balance of convenience,80 i.e. it suffices for the judge to hold
that the facts as alleged are more likely to be correct than not.81
4.
Independent Procedure for the Preservation of Evidence (selbststndiges Beweisverfahren)
38 In an independent procedure for the preservation of evidence (selbststndiges Beweisverfahren), an applicant must name the opponent, the matter of fact on which evidence should be
heard, the means of evidence (witness, inspection of objects or expert) and show a prima
facie case on the necessity of this procedure, 487 ZPO. The court decides usually after hearing the opponent ( 490 (1) ZPO) if it is not urgent. A denied application may be appealed.
A decision granting the taking of evidence is final and binding, 490 (2) ZPO.
D.
Liability for Unjustified Interim Measures
39 Pursuant to 945 ZPO, an applicant for an interim measure is statutorily liable for the damages sustained by the opposing party in the event the provisional measure enforced against
the opposing party subsequently proves to have been unjustified from the outset.82 In that
case, the applicant is liable regardless of negligence or fault.83 An indemnification claim based
on such liability can be brought in the arbitral proceedings.84
75
76
77
78
79
80
81
82
83
84
Stein/Jonas-Grunsky (2002), 937 para.1; Musielak-Huber (2013), 937 para.4; MnchKommZPODrescher (2012), 937 para.5.
Cf. OLG Kln 19.03.2002, NJW-RR 2002, 1595 (1956); OLG Karlsruhe 15.04.1987, NJW-RR 1987,
1206; OLG Frankfurt 28.07.1977, MDR 1978, 315.
Cf. Zller-Vollkommer (2014), 920 paras 8 et seq.; MnchKommZPO-Drescher (2012), 920 paras12 et
seq.; MnchKommZPO-Mnch (2013), 1033 para. 22.
Cf. Rtzel/Wegen/Wilske (2005), p.101; Musielak-Huber (2013), 920 para.9; cf. from a comparative
legal perspective on the applicable standard, Kreindler (1997), p.113.
Cf. OLG Celle 12.06.1986, NJW-RR 1987, 447 (448); cf. Rtzel/Wegen/Wilske (2005), p.101; MusielakHuber (2013), 920 para.10; Baumbach/Lauterbach (2014), 920 para.14.
Cf. Musielak-Huber (2013), 920 para. 11.
Cf. Rtzel/Wegen/Wilske (2005), p. 101; Musielak-Huber (2013), 920 para. 9; MnchKommZPODrescher (2012), 920 para. 14.
Cf. Murray/Strner (2004), pp.441 et seq. with further references; Stein/Jonas-Grunsky (2002), 945
paras1 et seq.
Cf. BGH 22.01.2009, BGHZ 180, 72 (76); Zller-Vollkommer (2014), 945 para. 13; MnchKommZPODrescher (2012), 945 para. 3.
Schwab/Walter (2005), Chap. 17 para.13; Bandel (2000), p.269.
E.
145
Court and Attorneys Fees for Interim Relief Applications
Any application to court automatically triggers court fees (Gerichtsgebhren) as well as the 40
applicable statutory entitlement to attorneys fees (Anwaltsgebhren). Under German civil
procedural law, the level of such fees is determined by the amount in dispute. Somewhat
different than in the case of state court litigation, the amount in dispute that is to be taken into
account with respect to interim relief proceedings is usually reduced by two thirds or one half
as compared to the amount in dispute in state court litigation.85
The court fee is determined pursuant to Nos 1410 et seq. of the Cost Schedule, Annex 1 to 41
the Court Fees Act (Gerichtskostengesetz GKG).86 The attorneys fees comprise the following components, depending upon the individual case: procedural fee (Verfahrensgebhr,
No. 3100 Cost Schedule (Vergtungsverzeichnis VV) Lawyers Fees Act (Rechtsanwaltsvergtungsgesetz RVG), hearing fee (Terminsgebhr, No. 3104VV RVG) and settlement
fee (Einigungsgebhr, No. 1000/1003 VV RVG).87 When making a decision on costs, the
court will consider only statutory fees; any hourly rates paid to the attorney will not form the
basis of its decision. The usual cost provisions (cf. 91 et seq. ZPO costs follow the event
approach) apply to interim relief proceedings.88
85
86
87
88
Reinelt/Strahl, para. 18; MnchKommZPO-Drescher (2012), 922 para. 30.

Reinelt/Strahl, para. 19.
Musielak-Huber (2013), 922 para.15; MnchKommZPO-Mnch (2013), 1033 para. 30.
Musielak-Huber (2013), 922 para. 7.
Chapter III
Introduction to 10341039 ZPO*
Short Bibliography: Bischof, RVG: Erste Gebhrenprobleme fr Schiedsverfahren und Mediation,
SchiedsVZ 2004, 252; Geisinger, Independence of arbitrators: the parties duty to research the
arbitrators background and the arbitrators duty of disclosure, IBA Selection on Business Law, Committee D News, February 2003, p.58; Gtz, Der Schiedsrichter zwischen Dienstleistungserbringung
und Richterttigkeit Zum sogenannten Spruchrichterprivileg im System der Schiedsrichterhaftung, SchiedsVZ 2012, 311 Hberlein, Wie befangen darf ein Schiedsrichter sein?, Anmerkung
zum Schiedsverfahren DIS-SV-217/02, BB 2003, Beilage No. 8, p. 7; Kreindler/Schfer/Wolff,
Schiedsgerichtsbarkeit: Kompedium fr die Praxis, Frankfurt 2006; Lachmann, Handbuch fr die
Schiedsgerichtspraxis, Kln 2008; Lionnet, Der Schiedsrichtervertrag, in: DIS (ed.), Status, Aufgaben, Rechte und Pflichten des Schiedsrichters, DIS Materialien, Vol. 1, Kln 1997, p.63; Lrcher/
Lrcher, Das Schiedsverfahren national/international nach deutschem Recht, Heidelberg 2001;
Lotz, Die Unparteilichkeit und Unabhngigkeit des parteiernannten Schiedsrichters, AnwBl. 2002,
202; Raeschke-Kessler/Berger, Recht und Praxis des Schiedsverfahrens, Kln 1999; Schwab/Walter,
Schiedsgerichtsbarkeit, Mnchen 2005; Wagner, in: Weigand (Hrsg.), Practitioners Handbook on
International Arbitration, Mnchen/Copenhagen 2002; Weigel, Befangenheit im Schiedsgerichtsverfahren, MDR 1999, 1360.
Para.
Principles and General Overview. . . . . . . . . 1
Party Autonomy and System of
Checks and Balances. . . . . . . . . . . . . . . . . . . . . 5
III. Subsidiary Competence of National
Courts in Arbitral Proceedings . . . . . . . . . . . 9
IV. Duties of the Parties and the Arbitrator . . 11
I.
II.
I.
Para.
A. The Parties Duties . . . . . . . . . . . . . . . . . . 12
B. The Arbitrators Duties . . . . . . . . . . . . . . 14
V. The Arbitrators Contract: Necessary
and Advisable Contents of the
Arbitrators Contract . . . . . . . . . . . . . . . . . . . . 23
VI. Liability of the Arbitrator . . . . . . . . . . . . . . . 29
Principles and General Overview1
Arbitration stands and falls with the arbitral tribunal. This relates not only to the right selec- 1
tion of a tailor-made arbitral tribunal in the sense of necessary expertise and background
adapted to the specific needs of the case. Such requirements are given consideration through
the party autonomy granted to the parties in the selection of the arbitral tribunal.
Even more importance must be attributed to the fact that the arbitrator administers justice 2
and must therefore be given the same respect and position as a judge in a state court. This is
why arbitration as a whole requires that the arbitrator be impartial and independent. Only if
this basic requirement is fulfilled may arbitration and state court justice be treated as equivalent. This is why, on the one hand, the German arbitration law provides for party autonomy
in vast parts of the rules on the arbitral tribunal. On the other hand, however, it provides
*
1
The authors wish to express sincere appreciation to Dr. Constantin Dchs for his valuable assistance in
the drafting of the chapter on the Arbitral Tribunal.
148
for a detailed system of checks and balances so as to ensure the arbitrators position as an
independent and impartial organ of justice.
3 10341039 Code of Civil Procedure (Zivilprozessordnung ZPO) deal with the formation of the arbitral tribunal, including the composition of the tribunal (1034ZPO) and the
appointment of arbitrators (1035 ZPO). Sometimes it may also be necessary to appoint a
substitute arbitrator (1039 ZPO) either because an arbitrator has successfully been challenged (1036, 1037 ZPO) or becomes unable to perform his mandate (1038 ZPO).
4 Consequently, 1034 and 1035 ZPO deal with the initial appointment of arbitrators, which
in principle allows the parties a large freedom of appointment. Such autonomy is controlled
by the provisions of 1036 et seq. ZPO, which are concerned with the subsequent removal
of an appointed2 arbitrator. Removal may be based either on subjective grounds (1036,
1037 ZPO) or objective procedural impediments (1038 ZPO).
II.
Party Autonomy and System of Checks and Balances
5 The provisions are based on the principle of autonomy, which means that the parties have
the power to agree on an appointment procedure. The principle of autonomy is strongly
reflected in 1035 (1) ZPO but can also be found in various other provisions.3
6 Although the parties enjoy broad discretion with respect to the formation of the arbitral tribunal, party autonomy is not granted without limits. The limitations are intended to provide
for procedural fairness; they also help to ensure that the arbitral award can be recognised and
enforced at a later stage.
7 Where the parties have refrained from exercising their autonomy, statutory default rules
apply. Such rules enable the parties to economize on transaction costs because they are
spared the burden of negotiating complex issues of dispute resolution at the time of contract
formation.4
8 1034 ZPO may serve as an example to illustrate the previously described principle of
party autonomy, its limitations, as well as the operation of statutory default rules: Pursuant
to 1034 (1) sentence 1 ZPO, the parties have the autonomy to determine the number of
arbitrators. Accordingly, the parties may agree upon a sole arbitrator or a panel of two, three
or more arbitrators.5 Failing such determination, the statutory default rule of 1034 (1)
sentence 2 ZPO applies, stating that the tribunal shall consist of three arbitrators. However,
where the parties have reached an agreement granting preponderant rights to one party with
regard to the composition of the arbitral tribunal and such rights place the other party at a
disadvantage, party autonomy is limited by 1034 (2) ZPO insofar as the other party may
request the court to appoint the arbitrator or arbitrators in deviation from the agreed nomination procedure. This limitation comes into play, for instance, if the parties had agreed that
all arbitrators should be nominated by one party.
3
4
5
Both, the challenge (1036, 1037 ZPO) as well as the removal of an arbitrator (1038 ZPO) require a
preceding appointment of the arbitrator; cf. MnchKommZPO-Mnch (2013), 1038 para.8.
Cf. 1034 (1) sentence 1, 1035 (4) and (5), 1037 (1), 1038 (1) sentence 1 alternative 3, 1039 (2) ZPO.
Baumbach/Lauterbach (2014), 1034 para.3.
Introduction to 1034-1039 Nacimiento/Abt/Stein
149
III. Subsidiary Competence of National Courts in Arbitral Proceedings

By concluding a valid arbitration agreement, the parties preclude the jurisdiction of national 9
courts. Therefore, a court before which an action is brought in a matter that is the subject of
a valid arbitration agreement must reject the action as inadmissible pursuant to 1032 ZPO,
provided that the respondent raises an objection prior to the beginning of the oral hearing
on the substance of the dispute.
Just as party autonomy is not granted limitlessly, the preclusion of national courts is not 10
absolute in the sense that courts cannot become involved with the dispute in any way as soon
as a valid arbitration agreement is concluded. Sometimes it might be necessary for a neutral
party to intervene with the arbitral proceedings even at the stage of composing the arbitral
tribunal. If, for example, a party refuses to cooperate within an appointment procedure or
a party is disadvantaged with regard to the composition of the arbitral tribunal, support of
a neutral governing body is needed. Since the 10th Book of the ZPO is designed for ad hoc
proceedings, there is no arbitration institution to take charge of these matters. Instead, a party
may request a court to intervene where the law provides for such an exception.6
IV. Duties of the Parties and the Arbitrator

From the beginning of the arbitration throughout the entire arbitral process, the parties and 11
arbitrators are subject to certain obligations. This applies both to the relationship among the
parties as well as between the parties and the arbitral tribunal.
A.
The Parties Duties
When entering into an arbitration agreement, the parties equally assume the obligation to 12
cooperate in and to support and advance the arbitral proceedings.7
The parties main duty vis--vis the arbitrators is their remuneration including the payment 13
of the advance on costs.8 It is standard practice in Germany that the parties are requested to
pay a deposit for the costs and fees of the arbitrators.9 In general, each side pays half of the
advance as is explicitly stipulated in Section25 DIS Rules while also being general practice
in ad hoc arbitrations. Both parties are jointly and severable liable for the payment of the
tribunals fee and the cost incurred. Where a party refuses to pay its share, the other party may
opt to pay the whole advance on costs. Alternatively, the party has also the option to either
terminate the arbitration agreement because of breach of contract10 or pursue its claim for
payment of the advance on costs before the state courts.11 It is recognized under German case
9
10
11
Cf. 1034 (2), for details see Kreindler/Schfer/Wolff (2006), para.427; 1035 (3)-(5), for details see
Zller-Geimer (2014), 1035 paras14 et seq.; Kreindler/Schfer/Wolff (2006), paras431 et seq.; 1037
(3), 1038 (1) sentence 2 ZPO.
BGH 07.03.1985, NJW 1985, 1903 (1904); id. 14.07.1988, NJW 1988, 1215; AG Dsseldorf 17.06.2003,
SchiedsVZ 2003, 240; LG Arnsberg 07.08.2006; Kreindler/Schfer/Wolff (2006), para.206.
LG Arnsberg 07.08.2006; Bischoff, SchiedsVZ 2004, 252; Weigand-Wagner (2002), Germany, para.139;
Kreindler/Schfer/ Wolff (2006), paras586 et seq.
For details see Part II, von Schlabrendorff/Sessler, 1057 paras 15 et seq.
Zller-Geimer (2014), 1029 ZPO paras97 seq.
BGH 22.2.1971, BGHZ 55, 344 (349 seq.); id. 10.04.1980, BGHZ 77, 65 (67); id. 07.03.1985, NJW
1985, 1903; Weigand-Wagner (2002), Germany, para.394; Musielak-Voit (2013), 1035 para.27.
150
law that such claim can be made in proceedings based purely on documents, thus providing
the claimant with a simplified and expedited proceeding.12
B.
The Arbitrators Duties
14 The nominated arbitrator must be independent and impartial. If this requirement is not
fulfilled, the parties may challenge the respective arbitrator pursuant to the procedure set
forth in 1036, 1037 ZPO.
15 The nominated arbitrator is therefore obliged to disclose all circumstances which could
give rise to doubt as to his independence and impartiality.13 Such duty to disclose applies
throughout the entire arbitral proceedings, 1036 (1) sentence2ZPO.14
16 1036 ZPO is not very precise when it comes to determining what circumstances must be
disclosed. However, parties and prospective arbitrators may refer to the International Bar
Association (IBA) Guidelines on Conflict of Interest in International Arbitration.15 These
guidelines represent what is considered best practice in international commercial arbitration.16 For instance, all business contacts to a party or to other arbitrators, as well as prior
knowledge of the dispute, must be disclosed.17
17 If an arbitrator breaches his duty of disclosure, he can be held liable for resulting damages,18
i.e. reimbursement of the costs arising in connection with the nomination of a substitute
arbitrator and possible repetition of the arbitral proceeding.
18 Furthermore, arbitrators are obliged to actively support the proceedings so as to contribute
to a rapid conclusion of the same. If an arbitrator hinders the progress of the proceedings and
at the same time refuses to resign from his office voluntarily, the parties can agree to remove
him from his office, pursuant to 1038 (1) ZPO.19 This is another example of the underlying
principle of party autonomy.
19 If the parties, however, cannot agree on terminating the idle arbitrators office, each of the
parties is entitled to file an application with the competent court to rule on the arbitrators
incapability, incapacity or failure for some reason to act within a reasonable time and, in case
of affirmation, to terminate such arbitrators office.20
12
13
14
15
16
17
18
19
20
AG Dsseldorf 17.06.2003, SchiedsVZ 2003, 240; LG Bielefeld 21.10.2003.

Geisinger, IBA Selection on Business Law, Committee D News, February 2003, pp. 58 et seq.; Lotz,
AnwBl. 2002, 202 (208); Stein/Jonas-Schlosser (2002), 1036 paras35 et seq.; Raeschke-Kessler/Berger
(1999), para.480; Hberlein, BB 2003, Beilage No. 8, pp.7 et seq.; Weigel, MDR 1999, 1360 (1362); for
details see infra, Nacimiento/Abt/Stein, 1036 paras 10 et seq.
Lrcher/Lrcher (2001), para. 110; Musielak-Voit (2013), 1036 para. 2; MnchKommZPO-Mnch
(2013), 1036 para.17.
Kreindler/Schfer/Wolff (2006), paras538 et seq.
For details see infra, Nacimiento/Abt/Stein, 1036 paras17 et seq.
Musielak-Voit (2013), 1036 para.2; OLG Karlsruhe 14.07.2006, SchiedsVZ 2007, VIII, stating that an
arbitrators prior business contacts with one party are to be disclosed in order to enable the other party to
judge the arbitrators independence and impartiality. For details see infra, Nacimiento/Abt/Stein, 1036
paras 10 et seq.
Raeschke-Kessler/Berger (1999), para. 482; Lachmann (2008), para. 1044; for details also see infra,
Nacimiento/Abt/Stein, 1036 paras 20 et seq.
Weigand-Wagner (2002), Germany, para.130; Musielak-Voit (2013), 1038 paras5 et seq.
151
The arbitrator must hold office and carry out his duties in person; he cannot entrust a third 20
party with the exertion of his office.21
Throughout the entire arbitral proceedings, the parties have the authority to issue directives. 21
These directives, however, must not conflict with the objectives of the arbitration, i.e. they
must not predict a certain outcome and they must not be unacceptable for the arbitrator.22
Generally and without explicit agreement, the arbitrator is obliged to keep the arbitral pro- 22
ceedings confidential, as well as all the facts which he takes note of during the proceedings.
The parties can, however, authorize the arbitrator to, e.g. release a statement to the press or to
publish the award. If on the other hand parties wish to keep everything strictly confidential,
this must be expressly provided for in the arbitrators contract.23
V.
The Arbitrators Contract: Necessary and Advisable Contents of the

Arbitrators Contract
With the appointment of an arbitrator, the so-called arbitrators contract is concluded be- 23
tween the parties and the arbitrator.24
The arbitrators contract is independent from the arbitration agreement and its content is to 24
be determined by the parties and the arbitrators. The contents are to be dealt with exclusively
between the parties and the arbitral tribunal. An arbitrator cannot file an application with
the Higher Regional Court (Oberlandesgericht OLG), the normally competent court for
arbitration issues, aimed at the conclusion of an arbitrators contract with specific contents.
Such requests do not fall under 1025 et seq. ZPO.25
In institutional arbitration, the relationship between the parties and the arbitrators in par- 25
ticular the remuneration is generally already regulated by the respective arbitration rules.
Subsequently, there is often little need to enter into a separate written contract.
In ad hoc proceedings, however, the conclusion of an explicit and separate agreement in 26
writing with the arbitrator is advisable and common practice. The parties may decide which
national law shall be applicable to the arbitrators contract; usually the same choice of law
is made as for the arbitration agreement. In case of doubt, the law of the state in which the
award is issued is applicable.26
It is advisable to precisely stipulate the remuneration of the arbitral tribunal so as to avoid 27
later disputes on this issue. In the absence of a specific agreement, the arbitrator is nevertheless entitled to claim remuneration. In ad hoc arbitrations, it is common and good practice
that the parties and the arbitrators agree at the very beginning of the arbitral procedure on
the standards for fees. Guidelines for the arbitrators fees have been developed by the German Bar Association and the German Association of Judges in a model arbitrators contract.
These guidelines are largely based on the statutory fee scheme of the court fee for counsel
in German court proceedings, set forth in the law governing the remuneration of lawyers in
21
22
23
24
25
26
Baumbach/Lauterbach (2014), Annex to 1035 para.7; MnchKommZPO-Mnch (2013), vor 1034

para.17; OLG Mnchen 25.02.2013, SchiedsVZ 2013, 230.
Musielak-Voit (2013), 1035 para.24; Kreindler/Schfer/Wolff (2006), para.579.
Lrcher/Lrcher (2001), para.21; Lachmann (2008), paras146 et seq.
OLG Mnchen 20.12.2006; Lionnet, Der Schiedsrichtervertrag, DIS Materialien Band 1 (1997), pp.63 et
seq.; Kreindler/Schfer/Wolff (2006), paras566 et seq.
Kreindler/Schfer/Wolff (2006), para.562; Zller-Geimer (2014), 1035 para.23.
152
court proceedings (Rechtsanwaltsvergtungsgesetz RVG). However, to what extent these

guidelines meet the needs of practice, in particular in international arbitral proceedings, is
doubtful.27 Other possible alternatives are fees calculated on the basis of institutional fee
arrangements (e.g. DIS Rules), agreed hourly rates or even an agreed lump sum. Where no
agreement can be reached in arbitral proceedings which have their place of arbitration in
Germany, the arbitrator is entitled to reasonable fees.28 Pursuant to 315 et seq. Civil Code
(Brgerliches Gesetzbuch BGB), these can be determined by the arbitrator as the usual
remuneration but are also subject to court control upon request of a party.29 In general, fees
calculated on the basis of the DIS Rules or on the Model Arbitrators contract prepared by
the Bar Association are considered to be appropriate.30 Furthermore, a German court has
found it to be reasonable that an arbitrator request an amount equal to the earnings of a court
judge, taking into consideration the office expenses.31 It has therefore considered a rate of
150 per hour to be modest.32 A German court also ruled that in case of premature termination of an arbitrators office, the arbitrator is entitled to reasonable arbitrators fees. However,
such fees are subject to considerable deductions if the arbitral proceedings were not yet far
advanced and if the arbitrator had not yet taken much action.33
28 The arbitrators fees, as well as other costs of the arbitral proceedings, are generally requested
to be paid as an advance on costs. The advances are requested and collected by the chairman
for the members of the arbitral tribunal and should be deposited in a fiduciary account.34 It is
standard practice that the advance requested is sufficient to cover all expected costs and fees.
VI. Liability of the Arbitrator

29 As to liability of the arbitrator for breach of duties, a distinction must be made between cases
where a breach of duty occurred in connection with deciding the dispute and cases where
other duties, i.e. the duty of disclosure, are breached.35
30 State court judges may invoke the so-called privilege of judges,36 which does not apply per se to
arbitrators. Under the applicable case law and supported by legal literature, it is assumed that
the parties implicitly agree to treat the arbitrators liability equivalent to the judges liability.37
Such assumption is excluded only where the privilege of liability has been explicitly excluded
27
28
29
30
31
32
33
34
35
36
37
The Model Contract is available at <www.anwaltsverein.de>; for different suggestions on how to calculate
the remuneration on the basis of the RVG see Bischoff, SchiedsVZ 2004, 252; Elsing, in: DIS (ed.) (2005),
p.3; cf. Part IV, Wilske, Ad hoc Arbitration in Germany, paras45 et seq.
Based on the provisions of the German Civil Code governing a service contract, 611 et seq. BGB.
LG Bielefeld 21.10.2003.
LG Arnsberg 07.08.2006; LG Mnchengladbach 14.07.2006; cf. Krll, SchiedsVZ 2007, 150; for details see
also infra, von Schlabrendorff/Sessler, 1057.
OLG Dresden 20.03.2007, BRAK-Mitteilungen 3/2007, 131.
Ibid.
LG Mnchengladbach 14.07.2006.
Schlosser, Der Schiedsgerichtsobmann als Vertragspartner, SchiedsVZ 2004, 21.
See infra, Nacimiento/Abt/Stein, 1036 paras 20 et seq.; also BGH 19.11.1964, BGHZ 42, 313 (316);
Kreindler/Schfer/Wolff (2006), paras585 et seq.; Musielak-Voit (2013), 1035 para.25.
As provided for under 839 (2) BGB.
BGH 06.10.1954, BGHZ 15, 12 (14); Lachmann (2008), para.4321; Bamberger/Roth-Reinert (2013),
839 para.96; Soergel-Vinke (2005), 839 para.209; MnchKomm-Papier (2013), 839 para.324; for a
detailed discussion of an application of 839 (2) BGB by analogy see Gtz, SchiedsVZ 2012, 311.
153
by the parties.38 Such privilege, however, applies only if the arbitrator breaches a duty in connection with deciding the dispute, e.g. during the gathering of facts or by falsely applying the
law, since an arbitrator shall not face stricter liability than a judge at a state court.39
If, however, the breach of duty is not related to deciding the dispute, the arbitrator cannot 31
refer to this privilege and may be held liable for damages.40 This breach of duty is then considered a breach of contract and thus the damages are assessed according to the principles of
280 (1), 311 (2) and (3) BGB41 or 280 (1) BGB.42
Such breach may occur in particular where the arbitrator terminates his office without 32
grounds and at an inopportune moment. The same applies if the arbitrator provides the parties with grounds for termination because of severe contractual fault. Pursuant to the applicable case law and supported by legal literature, the arbitrator is liable and must compensate
the parties for damages caused by his breach of contract.43 Such liability is derived from the
general application of the principles of a service contract.44
The former restrictive view denying the arbitrator any possibility to terminate his mandate 33
because of the particular character of his duties can no longer be upheld. Such view purports
that an arbitrator could not be replaced.45 The new arbitration law, however, provides for
the explicit possibility for the arbitrator to withdraw from his office, either under 1037 or
1038 ZPO, simply based on a respective request from a party. Under such circumstances, a
withdrawal does not constitute a breach of the arbitrators contract.46 As a result, the arbitrator may resign with cause but he has no general right of termination.
38
39
40
41
42
43
44
45
46
But see also critical view by Lachmann (2008), paras4331 et seq. who notes that such assumption may not
be justified since the parties are rarely conscious of the possibility to negotiate requirements and scope of
the arbitrators liability.
BGH 06.10.1954, BGHZ 15, 12 (14 et seq.).
Schwab/Walter (2005), Kap. 12 para.9.
Musielak-Voit (2013), 1036 para. 3; different view, adopting the principles of Art. 34 German
Constitution (Grundgesetz GG) Zller-Geimer (2014), 1036 para.17.
Kreindler/Schfer/Wolff (2006), para.610; Schwab/Walter (2005), Kap. 13 para.13; Lachmann (2008),
paras4333 et seq.
The prevailing view qualifies the arbitrators contract as a service contract under 626, 627 BGB, but see
also different opinion MnchKomm-Henssler (2013), 627 para.23 arguing that the arbitrators position
may not be qualified as service vis--vis the parties.
Very restrictive view RG 29.11.1904, RGZ 59, 247 (249); id. 01.10.1921, RGZ 101, 392 (395 seq.); see
also Schwab/Walter (2005), Kap. 13 para.10.
Lachmann (2008), paras4371 seq.
1034 Composition of Arbitral Tribunal

(1) The parties are free to determine the number of arbitrators. Failing such determination, the number of arbitrators shall be three.
(2) If the arbitration agreement grants preponderant rights to one party with regard to
the composition of the arbitral tribunal which place the other party at a disadvantage, that other party may request the court to appoint the arbitrator or arbitrators
in deviation from the nomination made, or from the agreed nomination procedure.
The request must be submitted at the latest within two weeks of the party becoming aware of the constitution of the arbitral tribunal. 1032 (3) applies mutatis
mutandis.
Short Bibliography: Kornblum, Probleme der schiedsgerichtlichen Unabhngigkeit, Mnchen
1968; Lachmann, Handbuch fr die Schiedsgerichtspraxis, Kln 2008; Lionnet/Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit, Stuttgart Berlin 2005; Lrcher/
Lrcher, Das Schiedsverfahren national/international nach deutschem Recht, Heidelberg 2001;
Raeschke-Kessler/Berger, Recht und Praxis des Schiedsverfahrens, Kln 1999; Schtze/Tscherning/
Wais, Handbuch des Schiedsverfahrens Praxis der deutschen und internationalen Schiedsgerichtsbarkeit, Berlin 1990; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005.
I.
II.
III.
IV.
I.
Para.
Purpose of the Provision . . . . . . . . . . . . . . . . . 1
Derogation From the Provision . . . . . . . . . . 6
Content in Detail . . . . . . . . . . . . . . . . . . . . . . . 11
A. Number of Arbitrators ( 1034 (1)
ZPO). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
B. Preponderance ( 1034 (2) ZPO) . . . 16
1. Ascertainment of Preponderance . 17
2. General Terms and Conditions . . . 25
Para.
C. Appointment of Arbitrators by a
State Court (1034 (2) ZPO). . . . . . . 31
1. Jurisdiction . . . . . . . . . . . . . . . . . . . . . . 31
2. Application within the
Preclusion Period of Two Weeks. . 32
3. The Decision of the Court . . . . . . . . 41
4. Effects on the Arbitral
Proceedings . . . . . . . . . . . . . . . . . . . . . 44
5. Costs and Amount in Dispute . . . . 46
Purpose of the Provision1
1 1034 Code of Civil Procedure (Zivilprozessordnung ZPO) serves two purposes within
the system of the German arbitration law.
2 Firstly, it establishes party autonomy in regard to the number of arbitrators (Section 1 sentence 1) and in sentence 2 it stipulates a statutory case, i.e. the composition in the absence of
a deviating party agreement.2
3 Secondly, it intends to help ensure the equal treatment of the parties3 necessary for a proper
award in the long term. To this end, 1034 (2) ZPO provides a party with a remedy in the
case of an unbalanced appointment procedure; this is because an outweighing influence of
one party on the constitution of the tribunal is likely to result in an impartial tribunal. Trying
to prevent this, 1034 (2) ZPO corresponds with 1036 ZPO and so extends the protec1
2
3
Bill of the Arbitration Law Reform Act, BT-Drucks 13/5274, S. 39.
MnchKommZPO-Mnch (2013), 1034 para. 2; BeckOK ZPO-Wolf/Eslami (2013), 1034 para. 1;
Musielak-Voit (2013), 1034 para. 1; Zller-Geimer (2014), 1034 para.2.
1034 Nacimiento/Abt/Stein
155
tion of the infringed party: The latter aims at removing hindrances to an impartial decision
in the shape of personal characteristics of an arbitrator after the tribunals constitution, while
1034 (2) ZPO seeks to remove a structural risk beforehand. As such, it attempts to cut to
the root of the evil.4
II.
Legislative History
Section 1 of 1034 ZPO implements Art. 10 of the UNCITRAL Model Law (ML).5 While 4
the establishment of party autonomy regarding the number of arbitrators was already contained in the provisions predecessor ( 1028 ZPO pre-1998), the statutory number of three
arbitrators was not.6 It replaced the rule that in the absence of an agreement, the tribunal was
to consist of two arbitrators. In doing so, the legislator solved the problem of deadlocks in
the decision making, which according to the old law ( 1033 no. 2 ZPO pre-1998) even
led to the arbitration agreements invalidity.7 As it was seldomly clear until the end of the
proceedings whether the two arbitrators would reach a unanimous decision or be saddled in
a deadlock, these provisions could result in unacceptable delay and costs.
There is no precedent in the Model Law for 1034 (2) ZPO; however, the legislator was 5
inspired by 1038 of the Netherlands Code of Civil Procedure.8 The old law ( 1025 ZPO
pre-1998) deemed an arbitration agreement under undue influence of one party invalid,
whereas 1034 (2) ZPO now upholds the parties choice for arbitration but ensures a balanced composition of the tribunal by allowing access to state courts in the event of undue
influence.9
III. Derogation from the Provision

1034 (1) ZPO is explicitly subject to party agreements. Whether Section 2, in contrast, 6
must be considered a mandatory provision can still prove a controversial issue. On the one
hand, it might be argued that derogating from the protection provided for in this provision
would be equal to defencelessly submitting oneself to the opponent. For 1036 ZPO, this
argument leads to the conclusion that it would be inadmissible to agree on the exclusion of
the possibility to challenge an arbitrator beforehand.10
On the other hand, one might question the comparability of the situations encompassed by 7
1034 and 1036 ZPO. Firstly, derogating from 1034 ZPO would not lead to a complete
loss of protection by state courts, as 1036 ZPO still provides a remedy in the event of impartial arbitrators. This argument is supported by considerations regarding what at the end
of the day is actually of the essence. What really matters is that there is an impartial tribunal;
equal influence on the tribunals constitution is merely of secondary importance.
4
5
6
8
9
10
For a more thorough evaluation and references see infra, Nacimiento/Abt/Stein, 1036 paras 7 et seq.
Bill of the Arbitration Law Reform Act, BT-Drucks 13/5274, S. 39.
Bill of the Arbitration Law Reform Act, BT-Drucks 13/5274, S. 39; MnchKommZPO-Mnch (2013),
1034 para.1.
Bill of the Arbitration Law Reform Act, BT-Drucks 13/5274, p. 39; MnchKommZPO-Mnch (2013),
1034 para. 1; BeckOK ZPO-Wolf/Eslami (2013), 1034 para. 1.
Bill of the Arbitration Law Reform Act, BT-Drucks 13/5274, p. 39.
Stein/Jonas-Schlosser (2002), 1034 para. 2; Baumbach/Lauterbach (2014), 1034 para. 5; BeckOK
ZPO-Wolf/Eslami (2013), 1034 para. 17; Musielak-Voit (2013), 1034 para. 5; BGH 01.03.2007.
See infra, Nacimiento/Abt/Stein, 1036 paras 4 seq. with references.
156
8 Secondly, 1034 and 1036 ZPO are not exactly comparable regarding the point in time. For
example, derogating from 1036 ZPO in the arbitration agreement, i.e. before the potentially
partial arbitrator is named, means to relinquish ones remedy before the impartiality becomes
known. In contrast, the problem envisaged by 1034 ZPO (a structural defect of the appointment mechanism) is already manifested in the arbitration agreement and thus known
to the parties. Hence, the argument that a derogation from 1034 ZPO would amount to
submitting oneself to the unknown, like in 1036 ZPO, is not sound.
9 On the other hand, the two week period of 1034 (2) ZPO only commences when a party
gains knowledge of the constitution of the tribunal, i.e. the names of all arbitrators.11 The
legislator thereby expressed the opinion, that a party only needs to deal with an improperly
constituted tribunal (including any imbalance regarding the appointment mechanism) after
the constitution has been completed.12 Accordingly, the point in time of signing the arbitration agreement is of no relevance.
10 All in all, better reasons militate for the mandatory nature of the provision, especially since
there is always the possibility to knowingly let the two week period expire. One should not
assume that in practice parties are always fully aware of what they sign. As such, it seems
appropriate to grant them more, rather than less, protection in regard to aspects as vital as
circumstances that may influence the impartiality of the tribunal.
IV. Content in Detail

A.
Number of Arbitrators ( 1034 (1) ZPO)
11 The parties are free to agree on the number of arbitrators ( 1034 (1) sentence1 ZPO). In the
absence of any such agreement, the number of arbitrators is three (1034 (1) sentence2).
The subsequent question on how to determine the individual to be arbitrator is answered by
1035 ZPO.
12 An agreement on the number of arbitrators is possible in advance (as well as during) the
proceedings and in neither case is a particular form required.13
13 Tribunals with three arbitrators are mostly encountered in practice,14 but there is no general
rule as to the choice of the number of arbitrators. Whether a tribunal should consist of one
or three persons cannot be generally stated. Being mindful of time and cost efficiency, the
choice should always be made in accordance with the specific character of the dispute and
should thus take into account, inter alia, the amount in dispute, the complexity of the dispute,
as well as the number and nationality of the parties involved.
14 Uncomplicated disputes with a lower value in dispute which are intended to be conducted
economically are usually decided by a single arbitrator.15 However, even in these situations
some parties deem it essential to appoint their own arbitrator. This is often encountered
where the parties speak a different language or are of different nationality and wish to have
11
12
13
14
15
Musielak-Voit (2013), 1036 para. 7; MnchKommZPO-Mnch (2013), 1037 para. 11.

Musielak-Voit (2013), 1036 para. 7.
MnchKommZPO-Mnch (2013), 1034 para. 4; BeckOK ZPO-Wolf/Eslami (2013), 1034 para. 4;
different view Thomas/Putzo-Reichold (2013), 1034 para. 1 who demands the formal requirements of
1031 ZPO.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 39; Lachmann (2008), para. 778; Baumbach/
Lauterbach (2014), 1034 para. 4.
Lrcher/Lrcher (2001), para. 86; Lachmann (2008), para. 781.
157
the specific language or nationality respresented in the arbitral tribunal. It is also to be

remembered that insurance companies often refuse to recognize an award rendered by a
single arbitrator.16 This is a particularly significant issue which must be kept in mind if the respondent desires recourse from his insurance company with regard to compensation claims
awarded against him.
A three-person tribunal is also advisable if the facts require a high degree of expertise and 15
both parties wish to nominate an expert to ensure that the tribunal is composed of appropriate experts. It must not be forgotten, however, that the costs of the proceedings increase substantially with the growing number of arbitrators and that proceedings are often prolonged
due to additional organisational requirements.
B.
Preponderance ( 1034 (2) ZPO)
If a party is disadvantaged by the arbitration agreement due to less influence on the constitu- 16
tion of the tribunal compared with the other party, a state court can be called upon to appoint
the tribunal in deviation from the nomination made.
1.
Ascertainment of Preponderance
It must be shown that firstly, the appointment procedure entails a disproportionate balance 17
and that secondly, this leads to a disadvantage to the party invoking 1034 (2) ZPO. This
party bears the burden of proof. The threshold, however, is rather low. This disproportionate
balance can be assumed if one party has a greater influence on the formation of the arbitral
tribunal. Every advantage, irrespective of its extent, suffices in that regard.17 Concern over lack
of balance in the composition and the possible results thereof are considered as sufficient.18
The provision avoids subjective elements in the establishment of this situation and concen- 18
trates on a purely objective criterion so that its implementation in practice is facilitated.19
Ultimately, an imbalance in favour of one party always leads to a disadvantage of the other
if the applying party itself cannot avail itself of any circumstances to compensate for the
imbalance.20
Legal practice has developed a number of examples of such imbalance. Courts have e.g. found 19
such imbalance to exist if one party has a greater influence than the other on the nomination of the crucial arbitrator, i.e. on the nomination of the sole arbitrator or the chairman. In
particular, the passing of the right of nomination of an arbitrator to the other party following
failure by one party to nominate an arbitrator within the time allowed has been declared to
be inadmissible.21 An agreement according to which the vote of an arbitrator nominated by a
16
17
18
19
20
21
Lionnet/Lionnet (2005), pp. 176, 237.

MnchKommZPO-Mnch (2013), 1034 para. 9 referring to Kornblum (1968), pp. 196 et seq. for more
references.
Musielak-Voit (2013), 1034 para. 4; MnchKommZPO-Mnch (2013), 1034 para. 9; ZllerGeimer(2014), 1034 para.9.
BGH 05.11.1970, BGHZ 54, 392 = NJW 1971, 139; OLG Neustadt 16.02.1955, NJW 1955, 635; LG
Bonn 03.11.1995, NJW 1996, 2168; MnchKommZPO-Mnch (2013), 1034 para.10; Zller-Geimer
(2014), 1034 para.9; different opinion Schwab/Walter (2005), Chap. 9 para.10, who also lists older
judgments and literature in footnote 35.
158
party is decisive in the case of a tie was also deemed inadmissible.22 Furthermore, letting the
right to issue an award pass on to the remaining arbitrator if the other party fails to nominate
its own arbitrator leads to an imbalance in the sense of 1034 (2) ZPO.23 To prevent this
last case, the parties can stipulate in the arbitration agreement that after the unsuccessful expiration of the period for nominating an arbitrator, the opportunity to appoint an arbitrator
should be assigned to a third party (appointing authority).24
20 As a rule, choosing an arbitrator from a list of possible arbitrators is not objectionable if
adequate scope for selection is ensured and no danger of excessive influence of one party
arises due to the arbitrators available on the list.25 In the majority of cases, the list of arbitrators will be issued by an association, such as a chamber of industry and commerce, a capital
market group or any other incorporated society or unincorporated association.26 There is no
disadvantage where either both parties are members of the association or where neither of
the parties belongs to the association.27
21 In other disputes, where only one party belongs to the association and the other does not,
the case is not so clear-cut. In such disputes there will generally be a disadvantage to the
non-member party,28 especially where the whole list of arbitrators has been issued by the
association and all of the listed arbitrators belong to the association.29 However, even in these
cases an exception has to be made as long as diversity is ensured and the association does not
solely represent the interests of the member party.30 20 of the Local Usage for the Hamburg
Trade in Commodities (Platzusancen fr den hamburgischen Warenhandel), requiring that
the arbitrator must have his place of residence and habitual domicile in Germany, was not
deemed to place the non-German party in disadvantage vis--vis the German party, since this
provision applies irrespective of the nationality of the parties.31
22
23
24
25
26
27
28
29
30
31
Schtze/Tscherning/Wais (1990), para.158.

BGH 05.11.1970, BGHZ 54, 392 = NJW 1971, 139; Schlosser (1989), para.473; Stein/Jonas-Schlosser
(2002), 1034 para.3; in a decision based on foreign law, which contains correction opportunities, the
BGH expressed the opposite view in BGH 15.05.1985, BHGZ 90, 70 = NJW 1986, 3027, due to the
special constellation of the case the decision does not seem applicable to domestic cases.
E.g. Warenverein der Hamburger Brse (cf. BGH 19.12.1969, BGHZ 51, 255 = NJW 1969, 750). Arbitration agreements providing for a selection of arbitrators listed by an association must not be confused
with the purely internal proceedings of such associations. The latter ones are often described as arbitral
proceedings which is incorrect since the panel of the association deciding over the internal dispute cannot be qualified as an arbitral tribunal pursuant to 1025 et seq. ZPO. Cf. BGH 27.05.2004, NZG 2005,
358 (360).
BGH 19.12.1969, BGHZ 51, 255 = NJW 1969, 750; id. 27.05.2004, NZG 2005, 358; OLG Karlsruhe
27.02.1957, NJW 1957, 1036; Lachmann (2002), para.162; Stein/Jonas-Schlosser (2002), 1034 para.4;
also applicable to participation of registered associations (Verein).
Cf. BGH 19.12.1969, BGHZ 51, 255 = NJW 1969, 750; Lachmann (2008), para.162.
Cf. OLG Hamburg 15.01.1975, MDR 1975, 409.
OLG Hamburg 27.03.2006; but see critical comments by Krll, Schiedsrechtliche Rechtsprechung 2006,
SchiedsVZ 2007, pp.145 (150 seq.) and Lachmann (2008), para. 943, both rightly pointing out that such
a provision, in the present status of development in the arbitration practice, may not have a reasonable
justification for its existence anymore.
159
In view of the principle that a person cannot decide his own case,32 imbalance also arises 22
in the event that an arbitrator is specified in the arbitration agreement and this arbitrator
has a close relationship to one party. Such a close relationship exists if one party or its legal
representative is appointed as arbitrator.33
Another special case is the appointment of an arbitral tribunal consisting of three arbitrators 23
if there are several parties on one side which are not able to agree on one joint arbitrator.
In such case, the one-person applicant who could freely appoint its arbitrator would
have more influence on the composition of the arbitral tribunal than the opposing party
comprised of several persons which would be forced to agree on a joint arbitrator or, in case
of failure, to accept an arbitrator appointed by the court.34 Recently, the OLG Koblenz had
to deal with an arbitration in relation to claims of a partner who had left his law firm. The
arbitration clause entitled every partner of the law firm to appoint one arbitrator. When
the other three partners each appointed an arbitrator, the claimant requested the court to
nominate one common arbitrator for the three respondents. The court rejected this motion
and highlighted that 1034 (2) ZPO could only be invoked in exceptional cases and that
with the agreement as it was, it could be expected that in a dispute there would be a certain
preponderance on the side of the respondents.35
Furthermore, difficulties can arise in connection with the liquidation of a company if the liq- 24
uidator as applicant is bound by an arbitration agreement that contains an appointment
procedure that entails a disproportionate balance. It is considered to lead to a disadvantage to
the liquidator if the two arbitrators to be nominated by the parties are already named in the
arbitration agreement, because the liquidator had no influence on such nomination. In such
a case, he is bound by the arbitration agreement but not by the pre-nominated arbitrator and
thus may invoke 1034 (2) ZPO.36
2.
General Terms and Conditions
A matter discussed quite controversially concerns arbitration agreements in general terms 25

and conditions. As a rule, the inclusion of an arbitration agreement in such terms is possible.37 Dispute arises, however, if the arbitration clause stipulates something that might
trigger 1034 (2) ZPO, because this might also indicate unfairness in the sense of the German substantive law for general terms and conditions ( 307 et seq. German Civil Code,
Brgerliches Gesetzbuch BGB). Applying 307BGB could lead to the invalidity of the
clause, while 1034 (2) ZPO only provides the infringed party with a remedy but keeps the
arbitration agreement alive.38 It is thus questionable whether one rule prevails over the other
(as lex specialis).
32
33
34
35
36
37
38
Schwab/Walter (2005), Chap. 9 para.6.

See Schwab/Walter (2005), Chap. 9 para.6; KG Berlin 11.08.2004, SchiedsVZ 2005, 100 (101): The
senate granted the application of the administrator-in-insolvency in accordance with 1034 (2) ZPO to
nominate another arbitrator instead of the chairman already named in the arbitration agreement of the
parties. The arbitrator named in the agreement was closely related to the other party, so that an objective
imbalance in the composition of the arbitral tribunal could be assumed.
This case is discussed in detail infra, Nacimiento/Abt/Stein, 1035 paras 38 et seq.
KG Berlin 11.08.2004.
BGH 01.03.2007; BGH 13.01.2005 = BGHZ 162, 9; BGH 10.10.1991 = BGHZ 115, 324;
MnchKommZPO-Mnch (2013), 1029 para. 22; Lachmann (2008), para. 348.
See already supra para. 5.
160
26 The German Federal Supreme Court (Bundesgerichtshof) was confronted with a case where
the arbitration agreement was contained in general terms and conditions and called for only
one arbitrator who was already named in the terms.39 Thus, the issuer of the terms was the
only party to have any influence on the constitution of the tribunal, which is a case of preponderance in the sense of 1034 (2) ZPO.40 The opposing party failed to invoke 1034 (2)
ZPO within the two week period but argued before the court that as the arbitration agreement contained an unreasonable disadvantage it violated 307 BGB and was therefore
void.
27 The court found that there was indeed an unreasonable disadvantage but that it could not
lead to the agreements invalidity because 1034 (2) ZPO provided a specific remedy for
such cases. As a consequence, there was only a two week period to invoke the state court.
This court decision established clarity but at the expense of a rather harsh solution, which
appears particularly drastic when keeping in mind that an application for restitutio in integrum
(Wiedereinsetzung in den vorigen Stand) is considered impossible.41 The decision has therefore
been criticised for two particular reasons:
28 First, Lachmann rightly points out that the party which proved itself weaker by having to
accept the general terms is not very likely to suddenly grow strong and invoke its rights
during the two week period.42 In other words, the decision of waiving the right of litigation
in such a case may not be as freely taken as it should be under German constitutional law.43
29 The second reason why the decision warrants criticism concerns the applicable law of the
European Union when a consumer is involved. The European Court of Justice held that a
specific directive44 required that a national court concerned with an action for annulment of an
arbitration award must [of its own motion] determine whether the arbitration agreement is void
and annul that award where that agreement contains an unfair term, even though the consumer
has not pleaded such invalidity in the course of the arbitration proceedings, but only in that of the
action for annulment.45 The argument of having disregarded this ruling is the basis for further
criticism of the abovementioned ruling of the German Federal Supreme Court.46 It should
be mentioned, however, that the ruling of the European Court of Justice is itself currently
criticised for being inconsistent with the previous line of jurisprudence.47
30 All in all, this question appears to be far from resolved. However, if the European Court
of Justice actually meant to forbid preclusion in cases as the one decided by the German
Federal Supreme Court, this jurisprudence will be reiterated in the future, probably leading
39
40
41
42
43
44
45
46
47
BGH 01.03.2007.
The different view of the Higher Regional Court Celle (OLG Celle 04.11.1999, OLGR 2000, 57) has
therefore rightly been harshly criticized by Mankowski, Zur formularmigen Schiedsrichterbenennung,
EWiR 2000, 411 and Krll, Schiedsklauseln in Satzungen zur Abgrenzung von Vereingericht und
Schiedsgericht, ZIP 2005, 13 et seq.
Lachmann (2008), para. 935.
Ibid.
Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts, Official Journal L
095, 21/04/1993 P. 00290034.
EuGH 26.10.2006, C-168/05, paras 38, 39.
Thode, Schiedsvereinbarungen in Verbraucher-Bautrgervertrgen, DNotZ 2007, 404.
Wagner, Keine Prklusion des Einwandes der Nichtigkeit einer Schiedsvereinbarung wegen Missbruchlichkeit in Verbrauchervertrgen, SchiedsVZ 2007, 46 (49).
161
to a reduction of arbitration clauses in general terms and conditions where one party is a
consumer.48
C.
Appointment of Arbitrators by a State Court (1034 (2) ZPO)
1.
Jurisdiction
The application to the state court for the appointment of another arbitrator who does not 31
favour any of the parties is to be made to the OLG, namely the OLG specified to have jurisdiction in the arbitration agreement, or in the absence of said specification, the OLG at the place
of arbitration (1062 (1) No. 1 ZPO).
2.
Application Within the Preclusion Period of Two Weeks
The application must refer to the dispute with which it is concerned.49 However, the appli- 32
cation need not contain a proposal for a different composition of the arbitral tribunal, as
detailed instruction of the court is not necessary.50 This provides the court with a high degree
of flexibility because it is free to nominate a suitable candidate for a balanced composition of
the arbitral tribunal, thereby contributing to procedural simplicity.
The application to the court to appoint a neutral arbitrator must be made within two weeks, 33
according to 1034 (2) ZPO. The receipt of the application at the court is decisive for compliance with this deadline.51 The length of such deadline corresponds to that of the deadline
applicable for the challenge of arbitrators, according to 1037 (2) sentence 1 ZPO.52
The period commences when the applicant first has knowledge of the composition of the 34
arbitral tribunal, 1034 (2) sentence 2 ZPO. This point is usually reached when the names
of all members of the arbitral tribunal are known to it.53 Only then is there a reason for a party
to have reservations about neutrality and the manner of nomination.54 If, however, the arbitrators are specified from the outset, the period begins to run as soon as the disadvantaged
party gains knowledge of the initiation of an arbitration.55 If a lawyer is instructed, the period
begins upon his acquiring knowledge of the composition of the arbitral tribunal.56 Others
are of the opinion that the receipt of notification of the composition of the arbitral tribunal is
not alone sufficient, but that the party must actually have acquired knowledge of the notice.57
The application does not need to be delayed until the nomination of an arbitrator by the 35
parties, but can be made when the candidate is known even before his nomination by the
48
49
50
51
52
53
54
55
56
57
Hilbig, Absoluter Verbraucherschutz bei unzulssigen AGB-Schiedsvereinbarungen?, SchiedsVZ 2010,

74 (75).
Cf. Lachmann (2008), para. 953.
MnchKommZPO-Mnch (2013), 1034 para. 15; Musielak-Voit (2013), 1034 para. 7; BeckOK ZPOWolf/Eslami (2013), 1034 para. 18.
Ibid.
Stein/Jonas-Schlosser (2002), 1034 para.7, as a consequence, the notification must have been received
by the person competent for handling the arbitral proceedings.
162
other party,58 However, no application is permissible before the initiation of the proceedings
as specified under 1044 ZPO.59
36 The short period of two weeks is intended to prevent delaying tactics and to clarify the
situation.60 Regarding how strictly this should be handled, some commentators argue that
since the period is not deemed to be a deadline that cannot be derogated from (Notfrist),
restitution to the previous position (Wiedereinsetzung) must be possible in order to guarantee the party a right to a balanced arbitral tribunal in cases where the party failed to meet
the deadline without fault.61 However, according to the majority opinion, an application to
the court is always inadmissible after expiration of the two week deadline.62 The remaining
options are either an application to the court to set aside the award according to 1059 (2)
No.2(b)ZPO, or a challenge of an arbitrator according to 1037, 1036 ZPO.63
37 It is assumed that a party who does not meet the statutory two week period for an application
to the court under 1034 (2) ZPO is also precluded from arguing the issue of preponderance in subsequent set-aside proceedings under 1059(2)No.1(d)ZPO.64 This is asserted
to establish legal certainty and to avoid allowing a party to bring forward issues that should
be resolved at the beginning of any arbitral proceedings.65
38 Some commentators hold the view that an award issued by a tribunal which is improperly
constituted could, in exceptional cases which constitute a breach of ordre public, be set aside
under 1059 (2) No. 2 (b) ZPO.66 However, this opinion is disputed with reference to the
two week period set forth in 1034(2)sentence 2 ZPO, which would otherwise be superfluous.67
39 A party who has co-operated in the appointment of an arbitrator on whom the imbalance of
the arbitral tribunal is based, has forfeited its rights under 1034(2) ZPO.68
40 The application is not subject to challenge in accordance with 1065 ZPO.
3.
The Decision of the Court
41 The court will decide on a well-grounded application, a condition which is satisfied if an

imbalance is established by undisputed or proven facts, or if the opponent agrees to the
nomination by the court.69
42 The court has three possible methods to nominate. The state court can either replace individual arbitrators or nominate an entirely new tribunal. Alternatively, the state court can
58
59
60
61
62
63
64
65
66
67
68
69
Musielak-Voit (2013), 1034 para.7; Lachmann (2008), para. 952.

Raeschke-Kessler/Berger (1999), para.512; MnchKommZPO-Mnch (2013), 1034 para. 15.
MnchKommZPO-Mnch (2013), 1034 para.15; Musielak-Voit (2013), 1034 para.7; BeckOK ZPOWolf/Eslami (2013), 1034 para. 18.
Musielak-Voit (2013), 1034 para.7; MnchKommZPO-Mnch (2013), 1034 para.15.
MnchKommZPO-Mnch (2013), 1034 para.15; Lachmann (2008), para.2252.
Musielak-Voit (2013), 1034 para.7 in conjunction with 1036 para.10.
MnchKommZPO-Mnch (2013), 1034 para.15; Habscheid, Das neue Recht der Schiedsgerichtsbarkeit,
JZ 1998, 445 (447 seq.).
163
merely determine a mechanism for a new nomination of the arbitrators by the parties. The
court is not prevented from choosing a combination of the nomination methods open to it.70
The nomination by the court can be made without an oral hearing, provided that 1063 (1) 43
sentence 2 ZPO which sets forth that the opposing party must be heard beforehand is
observed.
4.
Effects on the Arbitral Proceedings
While the proceedings to review the imbalance regarding the composition of the arbitral 44
tribunal are pending, the arbitral proceedings can be initiated and continued and an award
can be rendered, 1034 (2) sentence 3, 1032 (3) ZPO.71
If the court decides to replace one or more arbitrators, the arbitral proceedings must begin 45
again from the start with the new tribunal.72 Any results already obtained by the former
arbitral tribunal (e.g. expert reports, witness testimonies, etc.) may only be used by the newly
constituted tribunal with the consent of the parties.73 An award already issued is subject to
being set aside under 1059(2)No. 1 (d) ZPO.74
5.
Costs and Amount in Dispute
Regarding costs and amount in dispute for applications to the state court, reference is made 46
to the commentary on 1035 ZPO and 1037 ZPO.75
70
71
72
73
74
75
MnchKommZPO-Mnch (2013), 1034 para.16; Stein/Jonas-Schlosser (2002), 1034 para.9; MusielakVoit (2013), 1034 para.8.
Baumbach/Lauterbach (2014), 1034 para.12; BeckOK ZPO-Wolf/Eslami (2013), 1034 para. 16.
Ibid.
See infra, Naciminento/Abt/Stein, 1035 paras 46 et seq. and see infra, Naciminento/Abt/Stein, 1037
paras 28 et seq.

(1) The parties are free to agree on a procedure of appointing the arbitrator or arbitrators.
(2) Unless otherwise agreed by the parties, a party shall be bound by his appointment
of an arbitrator as soon as the other party has received notice of the appointment.
(3) Failing an agreement between the parties on the appointment of the arbitrators, a
sole arbitrator shall, if the parties are unable to agree on his appointment, be appointed, upon request of a party, by the court. In an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two arbitrators thus appointed
shall appoint the third arbitrator who shall act as chairman of the arbitral tribunal.
If a party fails to appoint the arbitrator within one month of receipt of a request to
do so from the other party, or if the two arbitrators fail to agree on the third arbitrator within one month of their appointment, the appointment shall be made, upon
request of a party, by the court.
(4) Where, under an appointment procedure agreed upon by the parties, a party fails
to act as required under such procedure, or if the parties, or two arbitrators, are
unable to reach an agreement expected of them under such procedure, or a third
party fails to perform any function entrusted to it under such procedure, any party
may request the court to take the necessary measure, unless the agreement on the
appointment procedure provides other means for securing the appointment.
(5) The court, in appointing an arbitrator, shall have due regard to any qualifications required of the arbitrator by the agreement of the parties and to such considerations
as are likely to secure the appointment of an independent and impartial arbitrator.
In the case of a sole or third arbitrator, the court shall also take into account the advisability of appointing an arbitrator of a nationality other than those of the parties.
Short Bibliography: Berger, Schiedsrichterbestellung im Mehrparteienschiedsverfahren: Der Fall
Ducto Construction vor franzsischen Gerichten, RIW 1993, 702; Berger, Das neue Schiedsverfahrensrecht in der Praxis Analyse und aktuelle Entwicklungen, RIW 2001, 7; Diesselhorst,
Mehrparteienschiedsverfahren: internationale Schiedsverfahren unter Beteiligung von mehr als
zwei Parteien, Frankfurt am Main 1994; Elsing, Internationale Schiedsgerichte als Mittler zwischen
den prozessualen Rechtskulturen, BB 2002, Beilage No. 7, p. 19; Gerasimtchuk, Multi-Party Arbitration, in: Trunk/Musin (eds), International Commercial Arbitration and International Maritime
Law from a German and Russian Perspective, Mnster 2004, p. 12; Hamann/Lennarz, Parallele
Verfahren mit identischem Schiedsgericht als Lsung fr Mehrparteienkonflikte?, SchiedsVZ
2006, 289; Hantke, Die Bildung des Schiedsgerichts, SchiedsVZ 2003, 269; Koussoulis, Fragen zur
Mehrparteienschiedsgerichtsbarkeit, insbesondere zur Bestellung der Schiedsrichter, ZZP 1994,
195; Krll, Schiedsrechtliche Rechtsprechung 2003, SchiedsVZ 2004, 113; Krll, Die Entwicklung
des Rechts der Schiedsgerichtsbarkeit in den Jahren 2003 und 2004, NJW 2005, 194; Krll, Die
schiedsrechtliche Rechtsprechung 2004, SchiedsVZ 2005, 139; Krll, Die schiedsrechtliche Rechtsprechung 2012, SchiedsVZ 2013, 185; Lachmann, Handbuch fr die Schiedsgerichtspraxis, Kln
2008; Lrcher/Lrcher, Das Schiedsverfahren national/international nach deutschem Recht,
Heidelberg 2001; Lrcher/Lrcher, Organisation eines Ad-hoc Schiedsverfahrens, SchiedsVZ
2005, 179; Massuras, Dogmatische Strukturen der Mehrparteienschiedsgerichtsbarkeit, Frankfurt
am Main 1998; Miles, Practical Issues for Appointment of Arbitrators, Lawyer vs Non Lawyer and
165
Sole Arbitrator vs Panel of Three (or More), (2003) 20(3) J.Int.Arb. 219; Raeschke-Kessler/Berger,
Recht und Praxis des Schiedsverfahrens, Kln 1999; Schiffer, Mandatspraxis Schiedsverfahren und
Mediation, Kln Berlin Mnchen 2005; Schtze, Schiedsgericht und Schiedsverfahren, Mnchen
1999; Schtze/Tscherning/Wais, Handbuch des Schiedsverfahrens Praxis der deutschen und internationalen Schiedsgerichtsbarkeit, Berlin 1990; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen
2005; Schwartz, Multi-Party Arbitration and the ICC. In the Wake of Dutco, (1993) 10(3) J.Int.Arb.
5; Timm, Richterliche Nebenttigkeit in Schiedsgerichten, in: Kbler (ed.), Freundesgabe fr Alfred
Sllner, Gieen 1990, p. 561; Weber, Wider den Verlust des Bestellungsrechts bei Nichteinigung
der Mehrparteiengegenseite auf einen Schiedsrichter, in: Bachmann (ed.), FS-Schlosser, 2005, p.
1; Wagner in: Weigand (Hrsg.), Practitioners Handbook on International Arbitration, Mnchen/
Copenhagen 2002.
Para.
I. Relevance of 1035 ZPO . . . . . . . . . . . . . . . . 1
III. Opting Out of 1035 ZPO . . . . . . . . . . . . . . 4
IV. Detailed Commentary . . . . . . . . . . . . . . . . . . . 5
A. Agreement on Procedure for
Selecting Arbitrators (1035 (1)
ZPO). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1. Party Autonomy in the
Procedure for Selection of
Arbitrators . . . . . . . . . . . . . . . . . . . . . . . . 5
2. Nomination of Arbitrators in
the Arbitration Clause. . . . . . . . . . . . . 6
3. Appointment by a Third Party . . . . . 8
4. Selection of Arbitrators. . . . . . . . . . . . 9
B. Binding Nature of Appointment
(1035 (2) ZPO) . . . . . . . . . . . . . . . . . . 17
1. Receipt of Notice . . . . . . . . . . . . . . . . 17
2. The Agreement with the
Arbitrators . . . . . . . . . . . . . . . . . . . . . . . 20
C. Rules for Appointing the Arbitrators if the Parties Have Not Agreed
on an Appointment Procedure
(1035 (3) ZPO) . . . . . . . . . . . . . . . . . . 21
I.
Para.
1. Scope. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2. Nomination of Arbitrators. . . . . . . . 22
D. Procedure in Case of Difficulty in
Conducting an Agreed Nomination
Process (1035 (4) ZPO) . . . . . . . . . . 28
1. Court Appointed Arbitrator . . . . . . 28
2. Valid Arbitration Agreement
Required . . . . . . . . . . . . . . . . . . . . . . . . 30
3. Time Limit . . . . . . . . . . . . . . . . . . . . . . 31
E. Particularities in Case of a
Nomination by the Court
(1035(5) ZPO) . . . . . . . . . . . . . . . . . . 32
F. Court Decision . . . . . . . . . . . . . . . . . . . . . 34
V. Multi-Party Arbitration . . . . . . . . . . . . . . . . . 36
A. Types of Multi-Party Arbitration. . . . . 36
B. Arbitrator Selection . . . . . . . . . . . . . . . . . 38
1. Multiple Claimants or Defendants
Not Compulsively Connected . . . . 39
2. Multiple Claimants or Defendants Compulsively Connected . . . . 45
VI. Costs and Amount in Dispute . . . . . . . . . . . 46
1035 Code of Civil Procedure (Zivilprozessordnung ZPO) stipulates the procedure for 1
appointing the arbitrators. The most important advantage of arbitration, namely the freedom
of the parties in choosing the arbitrators, is enshrined in this section. The statutory provisions
to be invoked in default of selection by the parties ensure the proper and efficient constitution of the tribunal and thus the basis for any arbitration.2
II.
Legislative History
The matters dealt with in 1035 ZPO correspond to those formerly found in the previous 2
version of 1029 and 1030 ZPO prior to Germanys arbitration law reform in 1998. 1035
1
2
166
ZPO largely corresponds to Article 11 UNCITRAL Model Law (ML), with the exception
of Article 11 (1) ML which, subject to agreement of the parties, prohibits the exclusion of
a person from acting as an arbitrator on grounds of his nationality.3 1035 (2) ZPO, which
incorporates the provisions of the old 1030 ZPO pre-1998 in the amendment for the purposes of expediting the proceedings, has no precedent in the Model Law.4
3 The new drafting of the provision was based on the intention to avoid problems with the
appointment of the tribunal, which previously resulted in the invalidity of the arbitration
clause, and to render German law more accessible to foreigners by means of adopting uniform provisions.5
III. Opting out of 1035 ZPO

4 1035 ZPO confers upon the parties the power to agree on an appointment procedure. As
a default rule, this section fills the gap that occurs when the parties have not provided for the
appointment procedure and provides further assistance for this process.
IV. Detailed Commentary

A.
Agreement on Procedure for Selecting Arbitrators (1035 (1) ZPO)
1.
Party Autonomy in the Procedure for Selection of Arbitrators
5 The agreement is a procedural agreement and therefore does not require any specific form.
1031 ZPO does not apply.6 The procedural agreement can be made only after the conclusion of the arbitration agreement. Even after appointment of the arbitrators, the parties may
extend an arbitral tribunal consisting of one arbitrator to one consisting of three arbitrators
or, vice-a-versa, reduce an arbitral tribunal consisting of three arbitrators to a single arbitrator.7 If the agreements that are combined contain different provisions on the appointment
of arbitrators, in cases of doubt the claimant may choose between them.8 Although 1035
ZPO does not itself restrict party autonomy, the parties are not entirely free to agree to any
procedure for constituting the arbitral tribunal. Rather, the appointment procedure must
meet basic requirements of procedural fairness and falls under the regulation of 1034 (2)
ZPO.9
2.
Nomination of Arbitrators in the Arbitration Clause
6 The parties can already nominate the arbitrators in the agreement, even by the description
of the office concerned (e.g. presiding judge of the commercial chamber at Regional Court
(Landgericht) XY).10 If an official institution is nominated as arbitrator, this is interpreted
as the nomination of the head of the institution or a member of the institution nominated
by him.11 The parties can also name the arbitrators in the agreement. However, it should be
3
4
5
6
7
8
9
10
11
Stein/Jonas-Schlosser (2002), 1035.

Raeschke-Kessler/Berger (1999), para.489.
BGH 28.04.1960, NJW 1960, 1296; Musielak-Voit (2013), 1035 para.3.
167
noted that between the conclusion of the arbitration agreement and the commencement of
the arbitration, a long period may elapse. Unlike under the former 1033No.1ZPO, the
refusal or unavailability of the persons who are named as arbitrators does not render the entire arbitration agreement void. Considerable delay is nonetheless caused because the court
must, according to subsection 4, be requested to intervene.12 However, if the parties make the
arbitration agreement explicitly subject to the condition that the person named as arbitrator
actually acts as such, the agreement will be invalid in the event the named arbitrator is not
available.13
The parties usually agree that the arbitrators will be nominated only when the arbitral tribu- 7
nal is to be established.
3.
Appointment by a Third Party
The parties can also agree that the arbitrators be nominated by a third party (appointing 8
authority) and specify the manner in which the nomination is to take place.14 Such a third
party may be already named, may be an arbitration institution or specified by an office (e.g.
president of the Regional Court (Landgericht) or Higher Regional Court (Oberlandesgericht)
or the president of the chamber of industry and commerce). An agreement according to
which one party may choose between two possible third parties authorised to nominate is
also admissible insofar as they are clearly identifiable.15 The appointment is not an official
activity requiring approval, but a purely private activity in private law.16 Nomination by the
third party of himself is, in cases of doubt, excluded.17 It is disputed whether the party entitled
to nominate must be impartial or whether it is sufficient that the arbitrator nominated by
him is impartial.18 In order to ensure fair and objective proceedings, the party entitled to
nominate should be impartial.19 The selection of an independent arbitrator by a third party
close to a party is unlikely to be acceptable to the other side. In order to prevent that the
opposing party initiates challenge proceedings pursuant to 1034 (2) and 1036 ZPO, a
purely objective appointment must be ensured by the impartiality of the third party. It must
also be noted that the third party is not obliged to nominate an arbitrator.20 It is therefore
advisable to ascertain prior to the conclusion of an arbitration clause that the person named
is prepared to appoint an arbitrator. If the third party does not in fact nominate an arbitrator,
1035 (4)ZPO provides that the court should nominate the arbitrator upon application,
unless the parties have agreed on a substitute appointing authority.
12
13
14
15
16
17
18
19
20
Lrcher/Lrcher (2001), para. 53, MnchKommZPO-Mnch (2013), 1035 para. 13; Musielak-Voit
(2013), 1035 para.3, Zller-Geimer (2014), 1039 para.1; OLG Frankfurt 02.11.2007, BeckRS 2007,
18114.
OLG Koblenz 19.02.2004; Krll, SchiedsVZ 2005, 139 (142).
Schtze (1999), para.31; Lachmann (2008), para.810.
Cf. Zller-Geimer (2014), 1035 para.8a.
Schwab/Walter (2005), Chap. 10 para. 3; Musielak-Voit (2013), 1035 para. 5; MnchKommZPOMnch(2013), 1035 para.14; different opinion Zller-Geimer (2014), 1035 para.8a.
168
4.
Selection of Arbitrators
a.
Party Autonomy
9 i. No Statutory Limitation of Selection: The parties are free in the choice of arbitrators within
the limits of 1036 ZPO.21 Only natural persons can be arbitrators. If a legal person is specified in the arbitration agreement as responsible for the arbitration, it is to be ascertained by
interpretation which natural person according to the law, statute or the intention of the parties is meant.22
10 ii. No Requirement of Legal Education: The law does not specify any special qualifications or
requirements as to the education, experience or capacity of an arbitrator.23 In particular, the
arbitrator does not need to have the qualification for judicial office (Befhigung zum Richteramt), i.e. a completed legal education and training. Nevertheless, at least for the chairman
this is often agreed in practise. If however the arbitration agreement only entitles the parties
to nominate arbitrators who fulfil the German qualification for judicial office (Befhigung
zum Richteramt), this would entail the exclusion of legally qualified candidates from states
other than Germany. Thus, to avoid this restriction, it is advisable to include the general
requirement of a completed legal education in the arbitration agreement.24 Judges, university
professors and lawyers comprise the legal professions.
b.
Agreed Qualifications of Arbitrators
11 i. Party Autonomy: Lawyers or non-lawyers can be nominated as arbitrators, although the

parties may contractually establish particular requirements.25 It is admissible to specify the
qualifications in the arbitration agreement, such as a specific education, in-depth knowledge
in a specific field of law, technical or linguistic competence. This can, however, be a disadvantage because the relevant qualifications often become clear only when the dispute arises.26
Extremely tight conditions could render the selection of an arbitrator more difficult.
12 ii. Deviation from Agreed Qualifications: Defects in the composition of the arbitral tribunal
can, according to 1027 ZPO, be cured by engaging without objection (rgelose Einlassung)
with an improperly constituted arbitral tribunal. If, on the other hand, the neutrality of the
arbitral tribunal is at risk, the parties retain their right to object.27
c. Appointment of Judges or other Civil Servants as Arbitrators
13 i. Judges: The parties often agree that the chairman of the arbitral tribunal should be a
judge or presiding judge at the Regional Court (Landgericht) or Higher Regional Court
(Oberlandesgericht).28 However, the nomination of civil servants is not automatically possible. Pursuant to German law, it is required that they obtain the approval of their superiors
prior to accepting the nomination as an arbitrator. Approval for such activities other than
the actual job of a judge may be granted according to 40 German Judges Act (Deutsches
Richtergesetz DRiG) intended to promote confidence in the independence of individual
21
22
23
24
25
26
27
28
As to cultural issues and criteria for selection see Elsing, BB 2002, Beilage No. 7, paras19 et seq.
For criteria see Miles (2003), 20 (3) J.Int.Arb., paras219 et seq.
Lrcher/Lrcher, SchiedsVZ 2005, 179 (181).
Musielak-Voit (2013), 1035 paras4 seq.
Lrcher/Lrcher,SchiedsVZ 2005, 179 (181).
In practice this may result in the arbitral proceedings being conducted like state court proceedings, thus
giving up certain autonomies granted in arbitration.
169
judges and their judgments if the judge has been nominated by both parties or by a neutral
third party. A declaration of the parties that they agree to the composition of the arbitral
tribunal suffices.29 As, however, 40 (1) DRiG is not merely a formal procedural provision,
it is not adequate if the common nomination is only made pro forma, but such nomination
of the judge is in fact made by one party alone.30 It follows that a provision in the arbitration
agreement according to which each party is entitled to nominate a judge as arbitrator will not
be seen as an advance approval within the meaning of 40 DRiG.31
The approval must be refused if the judge, at the time of the decision on the approval, is 14
concerned in the matter or could become concerned with the matter according to the
work distribution plan of the court (40 (1) sentence 2 DRiG).32 In some federal states
of Germany, a restrictive practise with regard to this approval has been established. This is
intended to promote the independence and status of the courts, in particular having regard
to possibly disproportionately high fees of an arbitrator compared to a judges salary and to
possible delays caused to proceedings before the state court. Apart from the delays in the
nomination of the arbitrator due to the requirement of obtaining approval, the propriety of
appointing a state judge as arbitrator must be considered. Arbitration precisely depends on
party autonomy and the freedom to decide procedure, with which a judge is possibly less
familiar.
ii. Other Civil Servants: The conditions are less stringent for other civil servants. The condi- 15
tions for the granting of approval for activities beside the actual job, contained in the Federal
Civil Servants Act (Bundesbeamtengesetz BBG), are, on the whole, identical, irrespective
of whether federal civil servants or civil servants of a state (Bundesland) are concerned. The
crucial issue is whether the concern arises that official interests would be affected by the side
activities. A ground for refusal exists, for example, if the side activity by its nature and scope
would demand so much work of the civil servant that the proper fulfilment of his official
duties could be hindered, e.g. the time demands of the side activity exceeds one fifth of the
normal weekly working time.33
iii. Consequences of Absence of Authorisation: Even if the preconditions are satisfied, the grant- 16
ing of approval is at the discretion of the superior.34 Whether such activity of a judge or civil
servant as an arbitrator without the necessary valid permission would affect the arbitration
itself or an award, is an issue which has not been finally clarified. The leading opinion in
legal literature is that there would be no effect on the arbitration agreement and the arbitral
proceedings.35 However, the German Federal Court of Justice (Bundesgerichtshof BGH)
has indicated in a judgment that a breach of 40 DRiG could result in defective arbitral proceedings.36 In the case concerned, the permission granted to the chairman of the tribunal was
29
30
31
32
33
34
35
36

KG Berlin 06.05.2002, SchiedsVZ 2003, 185 (186).
Krll, NJW 2005, 194 (196) refers to OLG Hamm 18.09.2003.
Lachmann (2008), para. 851; Schwab/Walter (2005), Chap. 9 para. 2; Timm, FS-Sllner (1990),
paras561 etseq.
See 65 (2) Federal Civil Service Act (Bundesbeamtengesetz BBG); 42 (2) Federal Civil Service
Framework Act (Beamtenrechtsrahmengesetz BRRG); Lachmann (2008), para.835.
OLG Stuttgart 16.07.2002, SchiedsVZ 2003, 84; Lachmann (2008), para.860; Zller-Geimer (2014),
1035 para.33; Schtze (1999), para.26; Musielak-Voit (2013), 1035 para.17; Krll, NJW 2005, 194
(196); id., SchiedsVZ 2004, 113 (115).
BGH 11.02.1971, BGHZ 55, 313 (319).
170
defective because of personal involvement. The court found that the defect was not serious
enough to justify setting aside the award since the involvement of the arbitrator consisted
only in the formal signing of the arbitration agreement. Setting aside an award due to the
participation of an arbitrator without valid permission would be unreasonable. Ultimately,
the parties cannot be penalised because an arbitrator has not obtained effective permission,
which is, after all, an internal matter subject to disciplinary sanctions, without consequences
for the award.37
B.
Binding Nature of Appointment (1035 (2) ZPO)
1.
Receipt of Notice
17 The nominating party is bound by its nomination on receipt of the nomination notice not
when knowledge of the nomination is obtained.38 Revocation is valid only if received by the
opponent prior to or simultaneously with the nomination (130 Civil Code (Brgerliches
Gesetzbuch BGB). As the notice is a procedural act, it can no longer be challenged.39 It
is also binding whether the other party has availed of its right of nomination or not.40 If the
arbitrator nominated does not accept the appointment or is prevented from doing so, the
nomination ceases to have binding effect.41 In that event, 1038 ZPO applies.
18 If a third party is entitled to nominate an arbitrator, the nomination, by analogous application
of subsection 2, becomes irrevocable on its receipt by one of the parties.42
19 No particular form for the nomination is prescribed. It must come from the nominating
party. If, on the other hand, the arbitrator nominated contacts the other party, it can usually
be assumed that he does so with the authority of the nominating party.43
2.
The Agreement with the Arbitrators
20 Under the prevailing opinion in Germany, the contract with the arbitrator to be distinguished from the arbitration agreement44 is entered into upon acceptance by the arbitrator
vis--vis the nominating party and information of the other party, in accordance with 1035
(2) ZPO.45 The probably better view, however, holds that the arbitrators contract is concluded at a later point in time when the parties and the arbitral tribunal agree in detail on their
respective rights and duties.46 In arbitral proceedings under institutional rules, the details of
the relationship between the parties and the arbitral tribunal are covered by such rules. The
37
38
39
40
41
42
43
44
45
46
OLG Stuttgart 16.07.2002, SchiedsVZ 2003, 83 (84) with note by Nacimiento/Geimer; Stein/JonasSchlosser (2002), 1036 para. 1; different opinion Schwab/Walter (2005), Chap. 9 para. 3; cf. also
Lachmann (2008), paras863 et seq.
OLG Bamberg 03.02.2010, SchiedsVZ 2010, 279 et seq.
Krll, SchiedsVZ 2004, 113 (115) referring to KG Berlin 09.07.2003 (unpublished).
Krll, SchiedsVZ 2004, 113 (115) referring to OLG Hamm 18.09.2003.
Ibid.
Lionnet/Lionnet (2005), paras257 et seq.; MnchKommZPO-Mnch (2013), Vor 1034 para.6.
Hantke, SchiedsVZ 2003, 269 (273); Lionnet/Lionnet (2005), paras197 seq.; Schtze (1999), para.49;
Discussed in detail by Lachmann (2008), para.4119.
171
arbitrators contract is of relevance, however, in ad hoc proceedings,47 particularly with regard

to the arbitrators fees.48
C.
Rules for Appointing the Arbitrators if the Parties Have Not Agreed on an Appointment
Procedure (1035 (3) ZPO)
1.
Scope
1035 (3) ZPO refers to the case where the parties have not specifically agreed on a proce- 21
dure for the composition of the arbitral tribunal.49 Objections to the appointing procedure
may be treated and resolved as preliminary issues in the procedure for a substitute appointment.50
2.
Nomination of Arbitrators
a. Sole Arbitrator: If the parties have agreed on a single arbitrator, they must agree on his 22
identity. There is no statutory period set for reaching such agreement. Some authors argue
that the period of one month should be taken as a guideline.51 If the parties cannot agree, the
arbitrator is to be appointed by the court on the application of one of the parties. The court
is free in its selection and is not bound by the instructions of any party.52 The parties cannot
confer the power to appoint an arbitrator on any court other than the Higher Regional Court
(Oberlandesgericht).53
b. Three Arbitrators: If the tribunal consists of three arbitrators, each party selects one arbi- 23
trator and the two arbitrators thus selected agree on selecting the chairman. The legal time
limits applicable are as follows: if a party has not nominated its arbitrator within one month
after receipt of the request to do so, or if the two arbitrators nominated by the parties do not
agree on a chairman within one month after their appointment, the arbitrator or chairman
is to be appointed by the court on the application of one of the parties. Where the two party
appointed arbitrators are unable to agree on a chairman, they are not entitled to amend the
procedure of appointment as agreed by the parties.54
No particular form for the request to nominate an arbitrator is prescribed, although it should 24
be delivered in a manner that evidences receipt. It must contain a request to the other party to
nominate an arbitrator within the statutory one month period.55 The dispute to be resolved
47
48
49
50
51
52
53
54
55
As to the legal nature of the arbitrators contract cf. Schwab/Walter (2005), Chap. 11 para.9; MnchKommZPO-Mnch (2013), Vor 1034 para.5; Baumbach/Lauterbach (2014), Anh 1035 para.1.
See typical contents in Hantke, SchiedsVZ 2003, 269 (273) and Lachmann (2002), paras4173.
Since no independent procedure is provided for, see also Schwab/Walter (2005), Chap. 10 para.28.
Lachmann (2008), para.796; Musielak-Voit (2013), 1035 para.9; different opinion MnchKommZPOMnch (2013), 1035 para.21: The expiry of a period for agreement need not be awaited as failure to
agree is not a condition.
Hantke, SchiedsVZ 2003, 269 (271).
OLGNaumburg 21.02.2012; approvingly Krll, SchiedsVZ 2013, 185 (191); OLG Mnchen 21.12.2011,
SchiedsVZ 2012, 111 (112).
OLG Hamm 07.03.2002, SchiedsVZ 2003, 80, only the parties may amend the appointment procedure.
BGH 28.04.1960, NJW 1960, 1296; Stein/Jonas-Schlosser (2002), 1035 para.5: As the opponent is
intended only to be protected against too short a period, the period can also be longer. According to
the KG Berlin 17.03.2003, if the applicant sets a period of less than one month, the request is devoid of
effect because of the incorrect period, so that the party requested can effectively name its arbitrator even
172
by the arbitrator must also be clearly discernible in the request.56 The majority opinion is
that the effectiveness of the request is subject to the requesting party also nominating an
arbitrator.57 If this arbitrator instead of the party requests the other party to appoint an arbitrator, this will also be seen as an effective request to nominate, which triggers the one month
period.58
25 The opinion that the party who fails to nominate an arbitrator within the one month provided by 1035 (3) ZPO loses the right to do so, is sometimes expressed,59 as is the opinion
that the nomination can be made after the expiration of that period at any time until the
other party requests the court to make the nomination.60 The better view is in favour of late
nomination, as long as no nomination has been made by the court.61 Experience shows that
the court usually takes account of and acts on a late nomination.62
26 The court will only make the appointment upon request from one of the parties. One of
the appointed arbitrators can only make this request if he has been authorised to do so by a
party.63 The OLG Mnchen has refused to appoint a mediator when one party had failed to
participate in the nomination of a mediator as a preliminary means of dispute resolution. The
court did however nominate an arbitrator instead, as it understood the refusal to participate
in the nomination of the arbitrator as a failure of the mediation.64
27 c. Two Arbitrators: 1035 (3) ZPO does not provide specifically for the case of an arbitral
tribunal composed of two arbitrators. Since this is an admissible (but not advisable) option
under German law, the analogous interpretation of 1035 (3) sentence 2 ZPO leads to the
appointment of one arbitrator by each party.65
56
57
58
59
60
61
62
63
64
65
later (even after the expiry of a month). Critical Krll, SchiedsVZ 2004, 113 (116): For the purpose of
effectively conducting arbitral proceedings it is preferable to hold the request to be valid in such a case
and extend the period to the statutory one month. Similarly OLG Naumburg 19.05.2003, SchiedsVZ
2003, 235.
Zller-Geimer (2014), 1035 para.14; Schwab/Walter (2005), Chap. 10 para.20.
For a detailed discussion cf.Musielak-Voit (2013), 1035 para. 9; in favour inter alia Schwab/Walter
(2005), Chap. 10 para.18: The arbitrator should be so clearly described that the other party can inform
itself about him (also BGH 28.04.1960, NJW 1960, 1296 and OLG Naumburg 19.05.2010, SchiedsVZ
2010, p. 229.).
Affirmed BayObLG 16.01.2002, NJW-RR 2002, 933 (934): A late nomination is regarded as having only
the force of suggestion vis--vis the court requested under 1035 (4) ZPO or an offer to supplement
the arbitration agreement vis--vis the claimant who has applied to the court; Krll/Kraft, Ten Years of
UNCITRAL Model Law in Germany, (2007) World Arbitration and Mediation Review 439, 474 seq.
Zller-Geimer (2014), 1035 para. 15; BayObLG 16.01.2002, NJW-RR 2002, 933; cf. Bill of the
Arbitration Law Reform Act, BT-Drs.13/5274, p.40.
OLG Naumburg 19.05.2003, SchiedsVZ 2003, 235 (236); OLG Koblenz 22.10.2001, OLGR Koblenz
2002, 115; Lachmann (2008), para. 799; Schwab/Walter (2005), Chap. 10 para. 21; Zller-Geimer
(2014),1035 para.15; Musielak-Voit (2013), 1035 para.10.
Hantke, SchiedsVZ 2003, 269 (271); Schwab/Walter (2005), Chap. 10 para.24; OLG Koblenz 29.09.2011,
SchiedsVZ 2012, 136: The time limit of one month starts with the nomination of the claimants arbitrator
and not with their request to appoint the respondents arbitrator of the same.
OLG Mnchen 15.11.2012, in Krll, SchiedsVZ 2013, 185 (191).
173
D.
Procedure in Case of Difficulty in Conducting an Agreed Nomination Process (1035

(4) ZPO)
1.
Court Appointed Arbitrator
If the parties have agreed on a nomination procedure but disagree on its implementation the 28
court must, on application, determine the procedure to be followed.66 Such disagreement
may arise if one party or a third party refuses to cooperate in the nomination procedure
(because of a dispute as to whether the third party was entitled to nominate the arbitrator
or because a necessary agreement cannot be reached. The courts determination would
also include a declaratory judgment on whether the nomination of an arbitrator has been
effective.67 The failure of the nomination procedure no longer results in the cancellation of
the arbitration agreement, as it once did under the old law.68 The OLG Mnchen has therefore
rightfully rejected the argument that an arbitration clause should be void because the two appointing authorities mentioned in the arbitration clause had refused to appoint an arbitrator;
1035 (4) ZPO explicitly covers this exact case.69
Where the parties have concluded two separate and conflicting arbitration agreements, each 29
providing for a different nomination procedure, the application to set aside the nomination
of an arbitrator was held admissible under 1035(4)ZPO. The claimant consequently was
held to be entitled to choose under which arbitration provisions the proceedings are to be
filed.70
2.
Valid Arbitration Agreement Required
The appointment of an arbitrator by the court requires a valid arbitration agreement.71 Such 30
requirement is reviewed by the court, although the court does not take the final decision on
the validity of the arbitration agreement within the appointment procedure.72
3.
Time Limit
If one party requests the court to nominate an arbitrator because the other party has not 31
fulfilled its duty to make a nomination in time, in principle it is necessary that the requesting
party has called upon the other party to nominate an arbitrator, so that the period within
which to do so has commenced to run.73 It has even been held by the KG Berlin that such a
time limit only begins to run if the requesting party sets the correct deadline for making the
nomination.74 This, however, appears too strict and the same court has recently decided that
even if the requesting party sets a deadline that is too short, this will trigger the one month
66
67
68
69
70
71
72
73
74
OLG Koblenz 12.06.2008: A procedure pursuant to 1035 (4) ZPO is inadmissible if the parties did not
try to reach an agreement beforehand or if the competent court has not been called.
BayObLG 12.04.2000, BB 2000, Beilage No. 12, p.12.
OLG Mnchen 29.01.2010, SchiedsVZ 2010, 168 et seq.
OLG Hamm 07.03.2002, SchiedsVZ 2003, 79; the court further established that once claimant has
exercised his right to choose an arbitration agreement, such choice becomes binding.
OLG Mnchen 04.09.2006, OLGR Mnchen 2006, 869; OLG Naumburg 19.05.2003 (unpublished).
See OLG Mnchen 23.05.2007 (unpublished) which explicitly states that the court does not need to
decide with final and binding effect on the validity of the arbitration agreement.
OLG Naumburg 19.05.2003, SchiedsVZ 2003, 235.
KG Berlin 17.03.2003.
174
deadline.75 The deadline may be set informally, while return receipt is not required but may
be useful for evidence purposes.76 The requesting party remains bound by its choice (1035
(2) ZPO)77 Such binding effect, however, expires if the nominated arbitrator does not accept
the office.78
E.
Particularities in Case of a Nomination by the Court (1035 (5) ZPO)
32 If the court nominates an arbitrator, according to subsection 5 it is obliged to ensure his

independency and impartiality.79 The court is further obliged to also take account of the
agreement of the parties, and the criteria expressed therein, in its selection of an arbitrator.80
In the absence of statutory provision, it can be argued that if this principle is not observed by
the state court and an arbitrator not meeting the necessary requirements is appointed, any
party should be entitled to challenge the arbitrator appointed by the court.81
33 The provisions of 1035 (5) sentence 2 ZPO refer to international arbitration cases of
nomination of individual arbitrators or of the chairman of three arbitrator tribunals and
have rather declaratory significance.82 This provision urges that on the appointment of an
individual arbitrator or of a chairman, an arbitrator with a nationality other than that of the
parties is to be considered. This would, however, be appropriate only if the parties themselves
are of different nationalities.83 No ground for challenge of the arbitrator arises where the
court breaches 1035(5)sentence 2 ZPO.84
F.
Court Decision
34 The application for the nomination of an arbitrator is made to the Higher Regional Court
(Oberlandesgericht OLG) (1062 (1) No. 1 ZPO). The decision of the OLG is not appealable (1065 (1) sentence 2 ZPO) so that clarity as to the composition of the tribunal
is established.85 The court also reviews the arbitration agreement for obvious invalidity.86 As
this, however, is merely a preliminary issue, the decision nominating an arbitrator is not a
legally effective decision as to the validity of the arbitration agreement.87
35 If the arbitrator appointed by the court does not act, 1039 ZPO applies.
75
76
77
78
79
80
81
82
83
84
85
86
87
KG Berlin 13.05.2013.
KG Berlin 17.03.2003.
OLG Hamm 18.09.2003.
As a consequence, a clause providing that the appointed arbitrator shall decide the dispute alone where
the other party has failed to appoint its arbitrator is invalid, BGH 05.11.1970, BGHZ 54, 392.
OLG Stuttgart 05.10.2009, SchiedsVZ 2010, 144: The professional position held by the arbitrator is not
as crucial as their expertise and personality.
Musielak-Voit (2013),1035 para.19; MnchKommZPO-Mnch (2013), 1035 para.59 (exclusion of
challenge problematic but has to be accepted).
Ibid.
Raeschke-Kessler/Berger (1999), para.506, BGH 19.07.2012, SchiedsVZ 2012, p. 281 seq.
Lachmann (2008), para.813; BayObLG 04.06.1999, BB 1999, 1785.
BGH 27.02.1969, NJW 1969, 978 (979); Lachmann (2008), para.809.
V.
Multi-Party Arbitration
A.
Types of Multi-party Arbitration
175
Generally,88 multi-party arbitrations are situations with more than two parties on either the 36
claimant or the respondent side, although two cases must be distinguished. First, multi-party
arbitration in the narrower sense arises when claims are made by several claimants or against
several respondents.89 Second, multi-party arbitration in the broader sense concerns the
cases of chains of claims in which several claims in a chain are combined in one proceeding, as, for example, in disputes between principal and general contractor and consortia and
subcontractors.90 Either the principal makes claims against the general contractor and at the
same time the consortial contractors or the contractor puts forward regress claims against the
subcontractors in the same proceeding. In civil litigation, the latter claims would have to be
made separately. However, in arbitration they can be combined in one proceeding, provided
that parties have agreed to such combined arbitration.91
The advantage of such combination in one proceeding is mainly, apart from the savings in 37
cost, the avoidance of the risk of contradictory judgments for the defendants.92 However,
contradictory judgments may also be avoided by parallel proceedings with tribunals with
identical members.93
B.
Arbitrator Selection
When it comes to arbitrator selection, it is problematic how in multi-party arbitration a bal- 38

anced and neutral composition of the arbitral tribunal if it is to consist of more than one
arbitrator for all parties can be achieved in the absence of the parties contractual agreement on the composition of the tribunal for such cases. If the arbitration agreement expressly
stipulates that every party can only nominate one arbitrator even if it is a multiparty, the court
will hold the parties to this agreement. The OLG Frankfurt appointed an arbitrator for the
respondent in a case in which the two respondents could not agree on a common arbitrator.
The court argued that the parties themselves had knowingly curtailed their procedural rights
by concluding such an arbitration agreement.94
88
89
90
91
92
93
94
With regard to the specific situations in corporate dispute see generally Part IV, Duve, Arbitration of
Corporate Law Disputes in Germany.
Lionnet/Lionnet (2005), p.431; Koussoulis, ZZP 1994, 195 (199); as to arbitrations initiated by groups
of individuals (which may be thousands) or in other words group actions see Hanotiau, A new
development in multicontract multi-party proceedings: classwide arbitration, Arb.Int. 2004, 39; see
generally Diesselhorst (1998); Massuras (1998).
Schiffer, para.217; Lachmann (2008), para.2804.
Lionnet/Lionnet (2005), p.431.
Lachmann (2002), para.2805; Gerasimtchuk, in: Trunk/Musin (eds) (2004), p.12; a listing of advantages
and disadvantages of combined and parallel proceedings can be found in Hamann/Lennarz, SchiedsVZ
2006, 289 (295); cf. also the legal concept of a third party notice (Streitverkndung) as provided for in
72-74 ZPO and its application in arbitral proceedings: Elsing, Streitverkndung und Schiedsverfahren,
SchiedsVZ 2004, 88; Nicklisch, Multi-Party Arbitration and Dispute Resolution in Major Industrial Projects, (1994) 11(4) J.Int.Arb. 57.
Hamann/Lennarz, SchiedsVZ 2006, 289; Gerasimtchuk, in: Trunk/Musin (eds) (2004), p.12 (19).
176
1.
Multiple Claimants or Defendants Not Compulsively Connected
39 The statutory nomination provision of 1035 ZPO is tailored solely to the normal case
of a dispute between two parties. The application of these provisions to multi-party situations compels the multiple parties combined together on one side of the dispute to jointly
nominate one arbitrator.95 In the case of non-agreement by the parties, the state courts will
nominate the missing arbitrator.96 Against that, the other side consisting of only one party
would have no difficulty in nominating its own arbitrator, as it does not have to reach an
agreement thereon with others. The former situation, however, conflicts with German law
according to which both parties must, in principle, have the same influence on the composition of the arbitral tribunal.97
40 The problem generally cannot be solved by increasing the number of arbitrators (one
party/one judge), since the side consisting of only one party would be under-represented.98
Nevertheless, the parties have the autonomy to increase the number of arbitrators by mutual
agreement of all parties.99 The mere increase in the number of arbitrators, however, does not
resolve the problems of multi-party arbitration.
41 The associated question of whether the right of one party to the nomination of its own
arbitrator has priority over the principle of equality in appointing the tribunal has not been
consistently decided.100
42 In the opinion which has come to prevail, in cases of multiple parties on claimant or respondent side with possibly conflicting interests (e.g. two respondents who are not jointly
and severally liable), the principle of both parties right to equal opportunity in selecting one
arbitrator has received preferential treatment and has become a part of the public policy.101
This opinion is based on a leading judgment of the French Cour de Cassation, which had
decided that the compulsion of the multiple parties combined together on one side of the
dispute to jointly agree on one arbitrator is not compatible with the principle of equality
and violates the French ordre public.102 German courts have ruled accordingly.103Additionally,
this favoured approach is also consistent with the rules of major arbitration institutions.104
Hence, it follows that the side which can agree on an arbitrator has no right to the nomination
95
96
97
98
99
100
101
102
103
104
MnchKomm-Mnch (2013), 1035 para. 65; Schwab/Walter (2005), Chap. 10 para. 14; Lachmann
(2008), para.2818; Koussoulis, ZZP 1994, 195 et seq.
Stein/Jonas-Schlosser (2002),1034 para.11.
BGH 03.07.1995, BGHZ 65, 59; id. 29.03.1996, NJW 1996, 1753; Lionnet/Lionnet (2005), p.431.
MnchKomm-Mnch (2013), 1035 para.66; cf. also Musielak-Voit (2013), 1035 para.7.
Wilke, Prozessfhrung in administrierten internationalen Handelsschiedsverfahren, Augsburg
2005, p. 71. retrievable from the German National Library website free of charge: http://d-nb.
info/978321804/34.
Hantke, SchiedsVZ 2003, 269 (272).
BGH 29.03.1996, NJW 1996, 1753 (1755);OLG Frankfurt 24.11.2005, SchiedsVZ 2006, 219; Lachmann
(2008), para. 2820; Schwab/Walter (2005), Chap. 10 para. 15; Stein/Jonas-Schlosser (2002), 1034
para.11; Raeschke-Kessler/Berger (1999), paras783 et seq.; Berger, RIW 1993, 702 (707); Berger, RIW
2001, 7 (13).
BKMI et Siemens v. Societ Ducto, Rev.Arb. 1992, 470 et seq. = BB 1992, Beilage No. 15, p.27; cf. Berger,
RIW 1993, 702; Gerasimtchuk, in: Trunk/Musin (eds) (2004), paras12 (13 et seq.); Schwartz, (1993)
10(3) J.Int.Arb. 5.
KG Berlin 21.04.2008 20 SchH 04/07; OLG Frankfurt 24.11.2005, SchiedsVZ 2006, 220.
Cf. s.13 DIS Rules; Art.12 (8) ICC Rules; Art. 8 (5) Swiss Rules; Art. 8 LCIA Rules; Art.6 (5) AAA
Rules; Art.18 WIPO Rules.
177
of its arbitrator if the other side that comprises of more than one party cannot agree on an
arbitrator. In these cases, the principle of equality of arms can only be upheld if the agreed
appointing authority or the state court with jurisdiction for the default nomination, appoints
the two arbitrators to be appointed by the parties or even the entire tribunal including the
chairperson.105 A nomination already made by one of the parties will consequently be of no
effect.106
Whether the appointing authority or the state court with jurisdiction for the default nomina- 43
tion will, in such cases, appoint only the two party-nominated arbitrators or the entire tribunal, including the chairman, has not been finally decided by the German courts. However,
the prevailing opinion appears to favour nomination of the entire tribunal including the
chairman.107 Many arbitration institutions have also incorporated this view in their arbitration rules.108 Others, including some arbitration institutions, favour a nomination only of the
two party-nominated arbitrators by the state court or appointing authority.109
However, the court nomination procedure as a last resort to resolve situations in which multi- 44
parties cannot agree on an arbitrator is unavailable if the parties have explicitly excluded the
jurisdiction of the court for such cases. In this instance, the arbitration agreement, unless
agreed otherwise, will become void and non-performable.110
2.
Multiple Claimants or Defendants Compulsively Connected
Inequality in the selection of the arbitrators does not arise if the parties are necessarily 45
(compulsorily) in agreement. This is the case if no conflict of interest between the parties is
possible,111 i.e. when their interests are purely homogenous.112 This necessary agreement has
been recognised in cases of compulsory joinder of parties (e.g. joint and several debtors, joint
creditors, shareholders) and administrative communities.113 In these instances, the parties are
obliged to cooperate because of material or procedural law and hence must agree on a mutual
arbitrator, regardless of any possible inadequacies concerning the nomination procedure.114
Otherwise, the court will nominate the common arbitrator for these multiple parties.115
105
106
107
108
109
110
111
112
113
114
115
Schwab/Walter (2005), Chap. 10 para.15; Lachmann (2008), para.2820; cf. also Musielak-Voit (2013),
1035 para.7; Schwartz, (1993) 10 (3) J.Int.Arb. 5 (14).
See critical view of Weber, in: Bachmann (ed.), p.1063.
BGH 29.03.1996, NJW 1996, 1753 (1755); OLG Frankfurt 24.11.2005, SchiedsVZ 2006, 219; MusielakVoit (2013), 1035 para.7; Lachmann (2008), para.2820; Schwab/Walter (2005), Chap. 10 para.15;
Raeschke-Kessler/Berger (1999), para.787; Raeschke-Kessler, SchiedsVZ 2003, 145 (151); Berger, RIW
1993, 702 (707); Berger, RIW 2001, 7 (13).
Art. 12 (8) ICC Rules; Art. 8 (5) Swiss Rules; Art. 8 LCIA Rules; Art. 6 (5) AAA Rules.
Stein/Jonas-Schlosser (2002), 1034 para.17; sec.13 DIS Rules; Art.18 WIPO Rules.
Zller-Geimer (2014),1035 para.19.
Stein/Jonas- Schlosser (2002), 1034 para.11.
OLG Frankfurt 24.11.2005, SchiedsVZ 2006, 219 (222); MnchKommZPO-Mnch (2013), 1035
para.75; Schwab, Die Gleichheit der Parteien bei der Bildung des Schiedsgerichts, BB 1992, BB Beilage
No.15, p.17 (18).
Baumbach/Lauterbach (2014), 1035 para. 8; MnchKommZPO-Mnch (2013), 1035 para. 75;
Schwab/Walter (2005), Chap. 10 para.14; Stein/Jonas-Schlosser (2002), 1034 para.16; Thomas/PutzoReichold (2013), 1035 para.5.
178
VI. Costs and Amount in Dispute

46 The costs of the court application to nominate an arbitrator are, in principle, borne by the
party for whom an arbitrator is appointed, if that party has failed to co-operate. However,
the party making the request to appoint an arbitrator for the other party will need to bear the
costs if its request to the other party to nominate an arbitrator has been faulty for lack of an
appointment of its own arbitrator.116
47 If the court is called upon because the agreed nomination mechanism fails, it seems reasonable to let the parties share the costs for the court and bear their own costs in accordance with
91a, 92, 98 ZPO.117 After all, in such a situation it is only a question of coincidence which
party makes the application to the court first.118
48 The judgments of German courts do not provide a consistent reasoning in determining the
value in dispute in the court nomination procedure.119 The judgments vary from one tenth
of the entire value of the case120 to one fifth,121 one quarter122 or a third123 and even up to the
entire value in dispute.124 In a recent decision, the OLG Mnchen has expressly revised its
previous stance based on the entire amount in dispute125 and applied only a fraction.126 The
prevailing opinion amongst legal scholars is that the court costs should be half a fee based on
the entire value in dispute.127
116
117
118
119
120
121
122
123
124
125
126
127
OLG Naumburg 19.05.2010, SchiedsVZ 2010, p. 229.

OLG Mnchen 06.11.2006, pointing out that there is no losing party in such case, otherwise there might
be a race to the court house; in that sense also Krll, SchiedsVZ 2005, 139 (142) referring to BayObLG
11.11.2004; against the application of 91a ZPO in nomination proceedings OLG Brandenburg
02.10.2003.
OLG Mnchen 22.04.2010 and 05.04.2012.
Krll, SchiedsVZ 2005, 139 (142).
OLG Dresden 26.10.2004.
OLG Celle 15.08.2003.
Hanseat. OLG Hamburg 19.04.2010; OLG Mnchen 05.07.2010; OLG Frankfurt 16.09.2010; OLG Kln
11.08.2011 and 22.07.2003 (unpublished); OLG Frankfurt 08.10.2003, SchiedsVZ 2004, 168.
BayObLG 05.10.2004, SchiedsVZ 2004, 316 with note by Wagner; KG Berlin 17.03.2003 (unpublished).
Such as e.g. OLG Mnchen 10.01.2007, OLGR 2007, 189.
OLG Mnchen 23.05.2007 (unpublished).
Musielak-Voit (2013), 1035 para.32; MnchKommZPO-Mnch (2013), 1035 para.364; Zller-Geimer
(2014), 1035 para.37.
1036 Challenge of an Arbitrator

(1) When a person is approached in connection with his possible appointment as an
arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts
as to his impartiality or independence. An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall without delay disclose any
such circumstances to the parties unless they have already been informed of them
by him.
(2) An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality or independence, or if he does not possess qualifications agreed to by the parties. A party may challenge an arbitrator appointed
by him, or in whose appointment he has participated, only for reasons of which he
becomes aware after the appointment has been made.
Short Bibliography: Geisinger, Independence of arbitrators: the parties duty to research the arbitrators background and the arbitrators duty of disclosure, IBA Section on Business Law, Committee
D News, February 2003, p. 58; Gnther, Merging Law Firms and Coping with Conflicts of Interest,
in: Karrer (ed.), Conflicts of Interest in International Commercial Arbitration, Basel 2001, p. 45;
Krll, Naumburg Higher Regional Court offers good example of how German arbitration law balances partys need and protects arbitral process, (2002) 17 (6) Mealeys I.A.R. 27; Krll, Die Ablehnung eines Schiedsrichters nach deutschem Recht, ZZP 2003, 195; Krll, Die schiedsrechtliche
Rechtsprechung 2012, SchiedsVZ 2013, 185; Lachmann, Handbuch fr die Schiedsgerichtspraxis,
Kln 2008; Lachmann, Gedanken zur Schiedsrichterablehnung aufgrund Soziettszugehrigkeit,
in: Schtze (ed.), FS-Geimer, 2002, p. 513; Lionnet/Lionnet, Handbuch der internationalen und
nationalen Schiedsgerichtsbarkeit, Stuttgart Berlin 2005; Lrcher/Lrcher, Das Schiedsverfahren
national/international nach deutschem Recht, Heidelberg 2001; Mankowski, Die Ablehnung
von Schiedsrichtern, SchiedsVZ 2004, 304; Raeschke-Kessler/Berger, Recht und Praxis des Schiedsverfahrens, Kln 1999; Schtze, Schiedsgericht und Schiedsverfahren, Mnchen 1999; Schtze/
Tscherning/Wais, Handbuch des Schiedsverfahrens Praxis der deutschen und internationalen
Schiedsgerichtsbarkeit, Berlin 1990; Wagner, in: Weigand (Hrsg.), Practitioners Handbook on
International Arbitration, Mnchen/Copenhagen 2002; Weigel, Befangenheit im Schiedsgerichtsverfahren, MDR 1999, 1360.
I.
II.
III.
IV.
Para.
Derogation from the Provision . . . . . . . . . . . 4
Content of the Provision in Detail . . . . . . . . 6
A. Scope of the Provision. . . . . . . . . . . . . . . . 6
B Distinction between 1034 (2)
ZPO and 1036, 1037 ZPO . . . . . . . . 7
C. Disclosure Obligation ( 1036 (1)
ZPO). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1. Duty to Disclose . . . . . . . . . . . . . . . . . 10
2. IBA Guidelines on Conflicts
of Interest in International
Arbitration. . . . . . . . . . . . . . . . . . . . . . . 17
Para.
3. Sanctions in Case of Nondisclosure . . . . . . . . . . . . . . . . . . . . . . . . 20
D. Grounds for Challenge ( 1036
(2) ZPO) . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2. Impartiality and Lack of
Independence . . . . . . . . . . . . . . . . . . . 27
3. Challenge of an Arbitrator in
the Absence of Qualifications. . . . . 49
4. Ground for Challenge as
Ground for Setting Aside after
Award Issued . . . . . . . . . . . . . . . . . . . . 52
5. Limitation of the Challenge
Possibilities . . . . . . . . . . . . . . . . . . . . . . 55
180
I.
1 The arbitration, like any state court proceeding, should result in an independent and fair decision.2 Impartiality and independence of the decision makers are guaranteed by the German
constitution as part of the rule of law no matter whether the decision maker is a state judge or
an arbitrator.3 While the parties have a legitimate interest in appointing arbitrators with the
necessary expertise in the relevant business sector and business environment, it is nonetheless pivotal for the arbitrators to have a distance to the parties which is at least comparable to
that of state judge,4 albeit with certain restrictions.5
2 1036 ZPO serves the purpose of resolving any concerns regarding the neutrality of the arbitrators at the earliest possible stage in order to prevent any later delay in the proceedings and
thereby ultimately prevent the setting aside of an award.6 When the provision was introduced
as part of the reform of the arbitration law, German law for the first time contained a genuine
provision for the challenge of an arbitrator instead of a cross-reference to the provisions on
the challenge of a judge; this was done with the intention to facilitate the access of foreign
parties to German arbitration.7
II.
Legislative History
3 In 1036 ZPO, Article 12 of the UNCITRAL Model Law has been completely adopted.8
As the criteria of impartiality and independence were already applied before the reform of
the arbitration law on 1 January 1998, previous judgements can therefore still be referred to.9

4 In view of the constitutional guarantee of an impartial and independent arbitrator, it would
be inadmissible to agree on the exclusion of the possibility to challenge an arbitrator beforehand.10 Whether the parties can agree on a limitation of the grounds for challenge, is a related
but different question. Such a prior agreement should only be admissible if grounds are excluded that do not go to the core of the principle of impartiality and independence; such an
example may be to agree that a challenge cannot be brought on the ground that the arbitrator
formerly was a member of a law firm that represents one of the parties.11 In any event, the
1
2
3
4
5
6
7
10
11
MnchKommZPO-Mnch (2013), 1036 para.2; Stein/Jonas-Schlosser (2002), 1036 para.30.
BGH NJW 1976, 109 (110).
Steiner, Das Verhltnis von Schiedsgerichtsbarkeit und staatlicher Gerichtsbarkeit, SchiedsVZ 2013, 15
(17).
Cf. inra, paras 32 seq.
Musielak-Voit (2013), 1036 para.1; BeckOK ZPO-Wolf/Eslami (2013), 1036 para. 1.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 40; Lachmann (2008), para. 967;
MnchKommZPO-Mnch (2013), 1036 para. 4; OLG Frankfurt 04.10.2007, SchiedsVZ 2008, 96 (99).
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.40; BeckOK ZPO-Wolf/Eslami (2013),
1036 para. 1.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 40; Lrcher/Lrcher (2001), para. 108;
BGH 27.02.1957, NJW 1957, 791; Musielak-Voit (2013), 1036 para.11; MnchKommZPO-Mnch
(2013), 1036 para. 43; Zller-Geimer (2014), 1036 para.6.
Hanefeld/Wittinghofer, Schiedsklauseln in Allgemeinen Geschftsbedingungen, SchiedsVZ 2005, 217
(226); Musielak-Voit (2013), 1036 para. 11; for an even more liberal approach see Zller-Geimer
(2014), 1036 para.10.
181
principle that the parties themselves or their legal representatives cannot be arbitrators is
undisputed and indispensable.12 The prohibition against being judge in ones own case also
applies if, in a dispute between a nominee and a third party, the real principal (behind the
nominee) were intended to be arbitrator or, if a legal entity is a party to the arbitration, a
member of the bodies of that legal entity were intended to be arbitrator.13
Such prior agreements need to be differentiated from a waiver of a challenge that is made 5
once a ground for challenge has become known. Such a waiver is undoubtedly possible.14
There may be good grounds for a party not to bring a challenge and there is certainly no
injustice done to a party which consciously leaves a partial arbitrator in office.15 It is accepted
that even in state litigation, the parties can declare their consent to a prejudiced judge.16
IV. Content of the Provision in Detail

A.
Scope of the Provision
Pursuant to 1049 (3) ZPO, 1036 ZPO also applies to experts. Experts may thus be chal- 6
lenged on the basis of the same grounds which entitle the parties to challenge an arbitrator.
Experts are also subject to the same duties of disclosure as arbitrators.17
B.
Distinction between 1034 (2) ZPO and 1036, 1037 ZPO
In view of the identical preclusion periods contained in 1034 and 1037 ZPO, the differ- 7
ence between these two provisions and the reasons for the existence of 1034ZPO should
be highlighted.
1034 (2) ZPO addresses the case that the arbitration agreement provides one party with 8
a disproportionate influence in the composition of the arbitral tribunal. It is intended to
equip the infringed party with the means for removing such a structural risk that may lead
to an impartial decision.18 This is achieved by entitling the court to nominate an appropriate
arbitrator without taking recourse to the previously applicable appointment procedure.19
In contrast to 1034 ZPO, a successful challenge will only lead to a new nomination in 9
accordance with 1039 ZPO under the very same rules initially agreed by the parties.20
Therefore, the challenge procedure cannot provide a remedy to a party disadvantaged by the
nomination structure.21 1036 ZPO is not directed at avoiding disadvantages with regard to
the composition of the arbitral tribunal, but rather at ensuring due process in relation to the
personal characteristics of an individual.
12
13
14
15
16
17
18
19
20
21
Zller-Geimer (2014), 1036 para.10; Musielak-Voit (2013), 1036 paras5 et seq. with further references.
Stein/Jonas-Schlosser (2002), 1036 para.6; Musielak-Voit (2013), 1036 para.5; different view BGH
03.07.1975, NJW 1976, 109 which considered the nomination of a member of the body of the legal
entity admissible when the parties agreed on this nomination after the dispute had arisen.
Musielak-Voit (2013), 1036 para. 11; MnchKommZPO-Mnch (2013), 1036 para. 43; Lachmann
(2008), para. 979.
The challenge procedure for experts differs from the challenge procedure for arbitrators, see infra,
Nacimiento/Abt/Stein, 1037 para. 18.
Baumbach/Lauterbach (2014), 1034 para.5; Weigand-Wagner (2002), Germany, para.100.
182
C.
Disclosure Obligation ( 1036 (1) ZPO)
1.
Duty to Disclose
10 A person who is proposed as an arbitrator must disclose all circumstances which could give
rise to doubt as to his independence and impartiality.22 While no timeframe for the making
of such a disclosure before an appointment as arbitrator is stipulated, it needs to be made at
a time when it can still fulfil its purpose of informing the parties.23 The disclosure obligation
continues to exist throughout the arbitral proceedings until the formal termination of the
proceedings (1036 (1) sentence 2 ZPO).24 Any disclosure after the appointment of the
arbitrator needs to be made without undue delay.25
11 The disclosure obligation of subsection 1 is more extensive than the challenge possibility of
subsection 2: While all circumstances likely to give rise to doubts are to be disclosed, only
the justified doubt as to impartiality or independence opens up the way for a challenge.26 Disclosure therefore does not automatically mean that a ground for challenge exists.27 Equally,
it is not decisive whether the circumstances under the disclosure obligation would actually
justify a challenge if they had been disclosed.28
12 The duty to disclose underlines the essential character of the quality of impartiality and
independence. In contrast to state courts with their pre-established chambers of judges,
arbitral proceedings first require the establishment of the deciding body. The disclosure thus
serves the purpose of allowing the parties to critically verify whether the proposed arbitrator
is independent and impartial, or if there are grounds for doubts in this regard.29 The parties
must therefore be fully informed of any relevant connection between a party and a proposed
arbitrator. Consequently, the arbitrators duty of disclosure must be severely observed and
enforced.30 It is irrelevant whether the arbitrator feels obliged to disclose or not. The failure to
disclose may lead to liability for damages but in itself does not generally constitute a ground
for challenge.31 However, if the failure generates justified doubts as to the arbitrators independence and impartiality, it indirectly gives reason for a challenge.32
13 All business and closer personal contacts to a party or to other arbitrators and prior knowledge
of the dispute are to be disclosed.33 If the arbitrator is under a professional confidentiality
obligation he must, if he is not released from such confidentiality obligation, refuse to take
up the function of arbitrator without giving grounds; if the duty to disclose arises during the
22
23
24
25
26
27
28
29
30
31
32
33
See for international context Geisinger, IBA Section on Business Law, Committee D News, February
2003, pp.58 et seq.; Weigel, MDR 1999, pp.1360 et seq.; Raeschke-Kessler/Berger (1999), para.480.
Lrcher/Lrcher (2001), para.108; MnchKommZPO-Mnch (2013), 1036 para.17.
Without undue delay has the meaning as established under 121 (1) sentence 1 Civil Code (Brgerliches Gesetzbuch BGB).
Mnch-KommZPO-Mnch (2013), 1036 para. 20; Musielak-Voit (2013), 1036 para. 2; Lachmann
(2008), para.1038; OLG Hamm 05.10.2011; KG Berlin 07.07.2010, SchiedsVZ 2010, 225 (227).
Schtze (1999), para.39; Weigel, MDR 1999, pp.1360 et seq.
OLG Karlsruhe 14.07.2006.
Ibid.
OLG Karlsruhe 14.07.2006; (2007) Int.A.L.R. N-36 with note by Marenkov.
OLG Frankfurt 10.01.2008, NJW 2008, 1325 (1326); cf. Lachmann (2008), para. 1034.
OLG Frankfurt 10.01.2008, NJW 2008, 1325 (1326); Musielak-Voit (2013), 1036 para.2.
183
proceedings, the arbitrator must be allowed to step down from his office with only referring
to the confidentiality obligation as a ground for this decision.34
The exploratory process regarding potential arbitrators which most parties nowadays con- 14
duct prior to a nomination appears to be problematic in connection with the disclosure obligation.35 The aim of this procedure is to find out whether persons chosen as candidates for
arbitrators are prepared and suitable to take up the function proposed. In order to preserve
impartiality, comments on the actual case must be avoided in this phase.36
In the selection of arbitrators, it has become usual in Germany to select the arbitrators for the 15
particular case from a number of potential arbitrators after telephone inquiries and personal
acquaintance. This procedure is justified by the requirements of the parties to be convinced
of the person, his language knowledge and expertise.37 Meetings in the office of the candidate
and within a reasonable period in view of the purpose of the nomination are regarded to not
affect later arbitral proceedings. The International Court of Arbitration at the International
Chamber of Commerce considered 50 to 60 hours of comprehensive introduction of an
arbitrator to the case by the legal advisor of the party nominating him, to be unreasonable.38
While such prior enquiries may not be subject to the duty of disclosure because they are
usual, there are good reasons in favour of the duty to disclose such meetings.
Because the duty to disclose has to be observed throughout the proceedings, direct unilateral 16
contacts of a party with an arbitrator should be avoided in order not to give rise to the suspicion of manipulation. Such contact is at most thinkable with the chairman. This should in
every case be disclosed to the other party as well as the other arbitrators.39
2.
IBA Guidelines on Conflicts of Interest in International Arbitration
The list of conflicts of interest prepared by the working group of the International Bar Associ- 17
ation (IBA) is helpful for any arbitrator who may wonder whether he should disclose certain
facts. In view of the increasingly global operation of law firms, conflicts of interest are a considerable problem for lawyers.40 The draft regulation prepared by the working group of the
International Bar Association on this issue was accepted on 22 May 2004 by the IBA Council
as IBA Guidelines on conflicts of interest in international arbitration.41 The Working Group
consisted of 19 experts in international arbitration from 14 countries. They drafted these
guidelines with the hope that they would find general acceptance within the international
arbitration community and that they would therefore help parties, practitioners, arbitrators,
34
35
36
37
38
39
40
41
Lachmann (2008), para.1045; Stein/Jonas-Schlosser (2002), 1036 para.35.

Cf. comprehensively Lachmann (2008), paras1031 et seq.
Cf. e.g. Rule 5.1 sentence 2 Rules of Ethics for International Arbitrators of the International Bar
Association.
Lrcher/Lrcher (2001), para.114.
Ibid., para.113.
Ibid., para. 115; cf. e.g. Rule 5.3 Rules of Ethics for International Arbitrators of the International Bar
Association.
Lachmann, FS-Geimer (2002), p.513; Gnther, in: Karrer (ed.) (2001), pp.45 et seq; Lachmann (2008),
para. 979.
Available at <www.ibanet.org>; see also Wijnen/Voser/Rao, Background Information on the IBA Guidelines on Conflicts of Interest in International Arbitration, (2004) 5 BLI 433; Meyerson, Revised Code of
Ethics for Commercial Arbitrators explained, (2004) 59 Dispute Resolution Journal 10.
184
institutions and the courts in their decision-making process on these very important questions of
impartiality, independence, disclosure, objections and challenges made in that connection.42
18 In these guidelines, a general abstract standard is firstly defined and illustrated by examples
comprised in a red, green and yellow list in each case.43 The red list contains the obvious cases
in which objectively justified doubts as to the independence of the arbitrator arise. The red
list is divided into two sections, namely a waivable and a non-waivable list. Instances of the
principle that no one can be a judge in his own case are contained in the non-waivable list.
The waivable list contains situations that are serious but not as severe and require not only
disclosure but also a specific waiver from the prejudiced party. In contrast to the red list,
the green list contains cases in which no objective indication of lack of independence arises.
These circumstances must nonetheless be disclosed. In the yellow list, situations in which
justified doubt as to independence could arise from the point of view of the parties are laid
down. These cases must also be disclosed.
19 The IBA Guidelines may also be of relevance in a challenge procedure before a German
court, as they can be considered as a transnational code of conduct which serves to define
the terms impartiality and independence.44 A breach of the IBA Guidelines has already been
brought forward by a party in a challenge procedure and the court has indeed reasoned on
this claim without even stating if and how the Guidelines would actually be applicable.45
3.
Sanctions in Case of Non-disclosure
20 An arbitrator is advised to carefully review whether he would need to disclose certain facts, as
he may be liable for damages if he breaches the duty to disclose.46 In the pre-contractual area,
damages are assessed according to the principles of 280 (1), 311 (2) and (3) BGB47 (culpa
in contrahendo) and otherwise 280(1)BGB.48 As the breach of the duty to disclose is not
an act of decision, the privilege and thus protection from liability49 granted to an arbitrator
in relation to the decision making does not apply and he is therefore liable for any form of
negligence.50
21 Damages cover the futile costs of the proceedings and the damage of delay.51 In addition,
damages may be incurred if an arbitral award is set aside as a consequence of the failure to
disclose.52
42
43
44
45
46
47
48
49
50
51
52
IBA Guidelines Guidelines on Conflicts of Interest in International Arbitration, Introduction, para. 6.

Voser, Interessenkonflikte in der internationalen Schiedsgerichtsbarkeit die Initiative der International
Bar Association (IBA), SchiedsVZ 2003, 59 et seq; IBA Committee D on Arbitration and ADR, SchiedsVZ
2003, 263; Stock/Wilske, Rule 3.3.7 of the IBA Guidelines on Conflicts of Interest in International Arbitration The Enlargement of the Usual Shortlist, (2005) 23 ASA Bulletin 45.
Raeschke-Kessler, ASA Bulletin 2008, 2 (13).
Raeschke-Kessler/Berger (1999), para.482; Lachmann (2008), para.1033; Lotz, Die Unparteilichkeit und
Unabhngigkeit des parteiernannten Schiedsrichters, AnwBl. 2002, 202 et seq.
Musielak-Voit (2013), 1036 para. 3; for a different view, namely adopting the principles of Art. 34
German Constitution (Grundgesetz GG): Zller-Geimer (2014), 1036 para.17.
839 (2) BGB.
Musielak-Voit (2013), 1036 para. 3; Raeschke-Kessler/Berger (1999), para. 534; Stein/Jonas-Schlosser
(2002), 1036 para.38.
MnchKommZPO-Mnch (2013), 1036 para.24; Musielak-Voit (2013), 1036 para. 3.
185
If, however, the parties were aware of the circumstances which needed to be disclosed anyway, 22
the necessary causality for the damage required for a compensation claim does not exist.53
A breach of the disclosure duty justifies the setting aside of an award only in rare cases of 23
obvious defects.54 The stricter opinion postulates that effective enforcement of the principle
of disclosure should in the case of a breach of disclosure of prejudicial grounds justify setting
aside the award in every case in order to prevent abuse in this area.55 Pursuant to such line
of thought, the introduction of the disclosure duty into the new German arbitration law in
1036(1) ZPO shows the great significance of challenge proceedings because of prejudice.
Foreign courts have also attributed such significance to lack of disclosure that they have
thereby justified the setting aside of the award.56
The idea of severely sanctioning non-disclosure serves the purpose of ensuring independ- 24
ence and impartiality, but in some cases it may lead to attributing a disproportionate weight
to relatively minor grounds. The less strict treatment of breaches of the disclosure obligation
in accordance with the wording of the provision is therefore preferable. A ground for setting
aside an award must be appropriately serious. A minor defect, which had no effect on the
arbitral proceedings, cannot justify the grave consequences associated with the setting aside
of an award, namely a new proceeding and all costs and time associated with this. It should
therefore be considered decisive whether the non-disclosed fact is so serious that the arbitral
tribunal cannot be seen as properly constituted. A restrictive practice is also supported by the
wording of 1059(2)sentence1(d) ZPO, which justifies setting aside only in the case of
causality (presumably affected the award).57 It is further in line with the IBA Guidelines on
Conflicts of Interest in International Arbitration II.5:
[] a later challenge based on the fact that an arbitrator did not disclose such facts
or circumstances should not result automatically in either non-appointment, later
disqualification or a successful challenge to any award.
D.
Grounds for Challenge ( 1036 (2) ZPO)
1.
General Principles
According to 1036 (2) sentence 1 ZPO, an arbitrator can be rejected on two grounds: 25
Firstly, if there are circumstances which give rise to justified doubt as to his impartiality or
independence58 and secondly, if the requirements for the arbitrator agreed between the parties are not satisfied.59
The wording of the provision admits only the two grounds mentioned. A restriction of the 26
grounds should only be considered admissible if grounds are excluded that do not go to
53
54
55
56
57
58
59

BGH 04.03.1999, NJW 1999, 2370; Musielak-Voit (2013), 1036 para. 3; MnchKommZPO-Mnch
(2013), 1036 para.24.
Ibid.
OLG Naumburg 19.12.2001, SchiedsVZ 2003, 134 (136) has stated on this issue that an over-extensive
concern of prejudice interferes with the rights of the parties in an inadmissible manner, with note by
Krll/Mallmann, SchiedsVZ 2003, 138 (139).
Mankowski, SchiedsVZ 2004, 304 (307) refers to the distinction to be made when considering the agreed
qualification between those which must be satisfied and those not absolutely required but which should
be satisfied; cf. also BayObLG 24.02.1999, NJW-RR 2000, 807.
186
the core of the principle of impartiality and independence.60 An extension of the grounds
should certainly be possible61 given the parties ability to remove an arbitrator from his office
without providing any grounds.
2.
Impartiality and Lack of Independence
27 The difference between the concept of impartiality and independence is not specified in
the statutes. However, it can be assumed that independence is understood as an objective
criterion for the connection of the arbitrator to the parties and impartiality as a subjective
criterion for the mental attitude of the arbitrator to the case to be decided.62
28 In general, the specific characteristics of arbitration are to be taken into account when considering impartiality and independence. The arbitrator is not nominated by the state, but
assuming an agreement to that effect by the parties themselves. The parties will propose
persons with whom they have worked in the past or who are otherwise known to them.63
The same degree of impartiality and independence as provided by a state judge can therefore
not exist when an arbitrator is nominated according to these criteria.64 This fact, however, is
precisely characteristic for arbitration, which is based on the principle that persons in whom
the parties have confidence decide the dispute.65
29 Nevertheless, the relationship to a party may not go beyond a certain degree because the
arbitrators are not representing the interests of the parties but are appointed as judges.66
Therefore, and in accordance with the rule of law, impartiality and independence extend not
only to the chairman but also to the arbitrators nominated by the parties.67
30 It should be borne in mind in this regard that 1036 (2) ZPO requires justified doubt as a
basis for a challenge application. An actual breach is not required but a challenge application
can be successful if the applicant, after reasonable assessment of the circumstances, has sufficient grounds to doubt the impartiality of the arbitrator.68 The expressed doubt must be
objectively verifiable, purely subjective concerns are therefore neither adequate nor sufficient
for a challenge.69 The perspective, though, should be that of the challenging party, not that of
the arbitrator; it needs to be decided whether objective grounds exist from the standpoint of
a calm and reasonable party.70
60
61
62
63
64
65
66
67
68
69
70
Cf. supra, para. 4.

Cf. also Zller-Geimer (2014), 1036 para.10.
So that previous contacts with the arbitrator are not unusual, see OLG Mnchen 05.07.2006, BauR 2006,
1799 = (2007) Int.A.L.R. N-48 with note by Krll.
Gearing, A Judge in his own cause? Actual or unconscious bias of arbitrators, (2000) Int.A.L.R. 46 et
seq.; Hberlein, Wie befangen darf ein Schiedsrichter sein?, Anmerkung zum Schiedsverfahren DIS-SV217/02, BB 2003, Beilage No. 8, p.7: Marriott, Conflicts of Interest A Way Forward?, BB 2003, Beilage
No. 8, pp.2 et seq.
BGH 03.07.1975, NJW 1976, 109; Raeschke-Kessler/Berger (1999), para.468.
Lionnet/Lionnet (2005), pp.246 seq.; Zller-Geimer (2014), 1036 para.2; Lachmann (2008), para.974;
Raeschke-Kessler/Berger (1999), paras477 seq.
OLG Kln 28.06.2011; OLG Koblenz 14.11.2005; Mankowski, SchiedsVZ 2004, 304 (308).
OLG Mnchen 17.08.2010, NJOZ 2011, 726 and KG Berlin 07.07.2010, SchiedsVZ 2010, 225 (226) who
both refer to objective grounds that may prompt a calm and reasonable party to doubt the impartiality of
the arbitrator.
187
Defining the terms impartiality and independence in a comprehensive or systematic manner 31

remains difficult. The legislator has left it to the courts to make a decision in each individual
case71 and the following groups of case law can be established.
a. Provisions on the Challenge of Judges Applied: The new version of 1036ZPO no longer 32
refers to the grounds for challenge of a judge of a state court as its predecessor 1032 ZPO
pre-1998 did. It is by now commonly accepted that the criteria for the exclusion of a judge in
a civil court, stated in 41 et seq. ZPO, can nonetheless serve as indications for doubt as to
the impartiality and independence of an arbitrator.72
However, caution is necessary as far as invoking the judgments on the challenge of judges 33
is concerned; as court proceedings and arbitral proceedings cannot simply be equated, the
criteria for challenge of judges cannot readily be applied to arbitration.73 For example, the
absence of appeal instances in arbitration and the usual association of a party with the arbitrator nominated by it, have to be taken into account.74 The parties often procure persons as
arbitrators because they have particular confidence in them. Such persons are likely to have
certain personal or business associations with the parties and therefore do not have the same
distance as a state judge.75
In order to allow the arbitration system to function, it would not be adequate to apply and 34
narrowly interpret the grounds for challenging a judge.76 Justification in each individual case
will rather be required, specifically showing how the connection between the arbitrator
and a party by its nature, scope or content actually justifies doubt about his impartiality or
independence.77
b. Established Partiality of an Arbitrator: i. Personal Connection to a Party or the Legal Counsel 35
of a Party: Grounds for challenge based on personal connection apply if the arbitrator has a
close connection to a party or to the partys legal counsel. Doubts as to the impartiality of an
arbitrator arise in all cases where a close relative is involved.78 Mere friendship of the arbitrator with a lawyer, however, is not an adequate ground for challenge79 and neither should be
the mere fact that counsel of one party and the arbitrator commonly use the informal Du
instead of the formal Sie when addressing each other, at least as long as this is merely an
expression of a normal relationship among two colleagues.80 It is further accepted that an
arbitrator can be challenged if one of the parties is his landlord; the same applies if counsel of
one of the parties is the arbitrators landlord, they appear to have a friendly relationship and
71
72
73
74
75
76
77
78
79
80

Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 40; OLG Mnchen 10.07.2013; OLG
Frankfurt 08.05.2013; OLG Hamm 05.10.2011, MedR 2012, 259; OLG Naumburg 19.12.2001,
SchiedsVZ 2003, 134 (136); Zller-Geimer (2014), 1036 para.10; Musielak-Voit (2013), 1036 para.
4; MnchKommZPO-Mnch (2013), 1036 para.30.
Ibid., Chap. 14 para.6.
Lachmann (2008), paras970 et seq.; Lrcher/Lrcher (2001), para.111.
Lrcher/Lrcher (2001), para.112; Zller-Geimer (2014), 1036 para.11.
OLG Frankfurt 27.04.2006, SchiedsVZ 2006, 330 et seq.; by contrast, the fact that one arbitrator was
the godparent of an attorney in the law firm representing one of the parties does not suffice, see OLG
Mnchen 05.07.2006, BauR 2006, 1700 = (2007) Int.A.L.R. N-48 with note by Krll.
OLG Frankfurt 10.01.2008, SchiedsVZ 2008, 199 (200); Schwab/Walter (2005), Chap. 14 para. 8;
partially different opinion Lachmann (2008), para.1004.
188
the arbitrator fails to disclose this fact.81 The KG Berlin saw sufficient grounds for a challenge
in a case in which the arbitrator had by himself introduced certain new facts into the proceedings and had asked the parties to comment; the court assumed that the arbitrator had thus
out of his own accord sought to fill the gaps in the claimants argumentation or insinuated
new grounds for a claim.82 It was also decided that an arbitrator may be challenged for concerns regarding his partiality if he has previously assaulted and injured counsel of one party.83
36 A professional connection which gives rise to doubts about the arbitrators impartiality can
be assumed if the arbitrator or his wife is a partner in the law firm in which one of the parties`
legal counsel is also a lawyer84 or an employee of the arbitrator.85 It does not constitute a
ground for justifiable doubt as to the arbitrators independence and impartiality, though, if
a former assistant attorney of counsel for one of the parties has joined the law firm of the
chairman as an associate.86 An arbitrator may further be challenged for doubts regarding his
impartiality if he is constantly appointed by one party.87 This reasoning would not apply if
the repeated appointment is not due to an arbitration clause which refers to a specific person
but a clause which appoints whoever is the chairman of a certain chamber at the regional
court of Frankfurt at the time; in this case the party cannot directly influence who will be
the arbitrator, as only the president of the court can decide on the staffing of the chambers.88
37 ii. Financial Connections to a Party or One of the Legal Counsel: (1) Self-interest in the outcome of the arbitration can be sufficient to establish partiality. The financial interest of the
arbitrator may be that he is, at the same time, a shareholder in one of the parties threatened
with financial loss in the event of losing the case.89 A financial interest cannot, however,
be assumed in the case of small shareholders and small interests, as decided by the OLG
Naumburg.90 In this case, an arbitrator had an interest in a limited partnership established
by the general partner of one of the parties. Ultimately, the OLG Naumburg rejected the
business connection between the arbitrator and the party as a ground for challenge because
the company in which the arbitrator and shareholder of the party participated was a public
limited partnership (Kommanditgesellschaft) with widely distributed capital. The court could
not find any personal close connection with the shareholder because the participation in the
company was exclusively directed at participating in tax advantages.
38 (2) Anticipated partiality was affirmed when the arbitrator was a member of an organ or legal
representative of one of the parties.91 The same result was arrived at in cases of arbitrators
81
82
83
84
85
86
87
88
89
90
91

LG Duisburg 06.10.1981, ZIP 1982, 229.
Raeschke-Kessler/Berger (1999), para.473; in Switzerland see BGE 92 1 271.
LG Dortmund 22.04.1968, WuW 1968, 691; Smid, Gewhrleistung eines fairen Schiedsgerichtsverfahrens
Zur Kritik der Reform des 10 Buches der ZPO, DZWiR 1995, 441; LG Mannheim 08.01.1998, BauR
1998, 403 (405).
Cf. OLG Naumburg 19.12.2001, SchiedsVZ 2003, 134 et seq., with note by Krll/Mallmann, SchiedsVZ
2003, 138 et seq.; Krll, (2002) 17 (6) Mealeys I.A.R. 27.
BGH 03.07.1975, NJW 1976, 109.
189
with rights in common (general partner) with one of the parties or arbitrators who had an
obligation (guarantor) or were entitled third party in relation to one of the parties.92
(3) A financial interest was also assumed where a sole arbitrator was, at the same time, nomi- 39
nated as legal counsel to one of the parties in another matter. The Federal Court of Justice
(Bundesgerichtshof BGH) and the OLG Dresden confirmed that concern as to partiality
is justified if a single arbitrator represents one of the parties in a case before a state court in
which the other party to the arbitration is the opponent.93 Furthermore, a financial link is
assumed if the arbitrator or his law firm represents a party or a subsidiary of a party in another
matter. In a judgment of the OLG Frankfurt, the concern of partiality arose not only as the
arbitrator himself was regular legal advisor to one of the parties, but also because the law firm
to which he belonged regularly advised and represented the parent company of that party.94
iii. Prejudice in Relation to the Subject Matter: The OLG Mnchen affirmed a ground for 40
challenge in a case in which the respondent in the arbitration based its challenge application on the fact that the arbitrator had authorized a publication in a magazine written by
his employee in which the arbitral proceedings were described in detail in anonymous form
and unfavourable comments were made about the respondent. The court decided that the
description of the case did not, as such, justify the concern of partiality; however, from individual comments in the article the respondent could nevertheless derive the impression
of personal disparagement, so that doubts as to the lack of prejudice of the arbitrator were
justified.95 Similarly, the OLG Frankfurt held that voicing a certain legal opinion in a publication in connection with a pending or forthcoming case could give rise to doubts about the
arbitrators impartiality, as it may seem that he has already formed his opinion and may not be
open to the partys arguments.96 Prejudice in relation to the subject matter of the proceedings
was also found when the arbitrator was heard as a witness in another matter on facts also
relevant to that arbitration or if the arbitrator advised a party in the same matter, provided a
report or undertook inspections of a site with only one party.97 The same applies where an
arbitrator has provided a written expert opinion on the question in dispute even if the expert
opinion was made in other proceedings.98 The OLG Hamburg has ruled that the challenge
of an arbitrator is well-founded if the arbitrator has provided an expert opinion to one of the
parties on the subject matter in dispute prior to the initiation of the arbitration and the expert
opinion goes beyond a general and abstract review and contains a legal evaluation in support
of the party which has mandated him.99
c. Cases Not Classified as Partiality of an Arbitrator: An arbitrator is not prejudiced if he has 41
suggested settlement negotiations to the parties. The OLG Kln decided that a party cannot
justify concerns of prejudice because of unfavourable comments of the arbitral tribunal in the
course of the necessary discussion of the matter or in the case of a settlement proposal.100 The
92
93
94
95
96
97
98
99
100

BGH 28.02.1972, NJW 1972, 827; cf. OLG Dresden 27.01.2005, SchiedsVZ 2005, 159 (161).
Cf. LG Mnchen II 27.06.2002.
OLG Frankfurt 04.10.2007, NJW-RR 2008, 801 (802).
Other examples listed in Musielak-Voit (2013), 1036 para.8 and Stein/Jonas-Schlosser (2002), 1036
paras16 et seq.
OLG Karlsruhe 04.07.2006 = (2007) Int.A.L.R. N-35, stating that otherwise the arbitrator would be in a
position to review evidence created by himself.
OLG Hamburg 28.06.2004.
OLG Kln 02.04.2004.
190
arbitrators are even entitled to propose settlement negotiations at any stage of the proceedings. The consent of both parties is, however, necessary and this is no longer present if one of
the parties has clearly expressed that it does not wish to conduct settlement discussions.101
42 The publication of abstract legal views by an arbitrator in relation to the dispute prior to the
beginning of the arbitration does not prejudice him unless the opinion concerns the case
itself.102 The OLG Hamburg did not see any prejudice regarding the subject matter where
the arbitrator had been arbitrator in another proceeding against the challenging party. Both
proceedings were based on allegedly terminated charter contracts and the two proceedings
related to two sister ships with identical charter contracts and the reasons for termination
were similar. The court held that as the arbitrator was under a duty to be neutral, even a
decision against the challenging party in a similar case could not give rise to doubts about
his impartiality.103 No ground for challenge is established if the arbitrator has argued a legal
position unfavourable to the challenging party in other proceedings as legal counsel of the
opponent.104
43 A person approached by one of the parties prior to its appointment as arbitrator may conduct
informal, general and abstract prior discussion (not related to the case).105 The OLG Kln has
found that a statement of the chairman of the arbitral tribunal during the oral hearing to the
effect that the conduct of the claimant bordered on giving false evidence in the course of the
proceedings was not an adequate ground to justify a challenge.106
44 The OLG Hamm acknowledged that it was a borderline case if a party named the same arbitrator in several arbitration clauses agreed by it. It did however reject this as a reason for a
challenge because the challenging party at least should have been aware of this fact when it
signed the contract that contained this arbitration clause.107
45 No ground for challenge was further found when the arbitrator had previously worked for
one of the parties and the matters on which he had worked had long been concluded. To
decide otherwise would mean that specialists would be excluded as arbitrators and the expertise of the arbitral tribunal would be reduced.108 For example, the OLG Hamburg ruled that
the provision of previous legal services to one of the parties does not constitute a ground for
challenge if such services have been finally terminated and there is no expectation of ongoing
connections between the lawyer and his previous client. This applies at least to cases where
the legal services rendered concerned isolated instances unrelated to the dispute in question
and have, moreover, been terminated some years ago.109 The OLG Frankfurt ruled that even
where the arbitrator had acted as an expert for clients of the law firm representing one party
in the proceedings 10 times over the last 10 years and had been appointed as arbitrator once,
there could be no doubts about his impartiality and independence. As an internationally
101
102
103
104
105
106
107
108
109
BGH 05.11.1970, NJW 1971, 139.

OLG Hamburg 11.03.2003, SchiedsVZ 2003, 191 et seq.
Raeschke-Kessler/Berger (1999), para.470; Schtze (1999), para.39.
Krll, Die schiedsrechtliche Rechtsprechung 2004, SchiedsVZ 2005, 139 (143); OLG Kln 02.04.2004.
OLG Hamm 22.07.2002; critical Krll, Schiedsrechtliche Rechtsprechung 2003, SchiedsVZ 2004, 113
(117).
Mankowski, SchiedsVZ 2004, 304 (310); Lachmann, FS-Geimer (2002), pp.513 et seq.
OLG Hamburg 12.07.2005, SchiedsVZ 2006, 55; Krll, (2002) 17 (6) Mealeys I.A.R. 27; similarly OLG
Frankfurt 28.03.2011, SchiedsVZ 2011, 342 (343 seq.).
191
renowned expert, the arbitrator acted as an expert and as an arbitrator so regularly that the
court denied even the appearance of any economic dependence on the law firm.110
A ground for challenge is generally negated if the arbitrator and a manager or director of one 46
of the parties or an affiliate of one of the parties have worked together as joint experts or in
another professional capacity, including as arbitrators, in the same case at least some years
ago.111 The fact that an arbitrator and a party are neighbours does not constitute a concern of
lacking independence or impartiality in itself either.112
Quite often, challenges are based on procedural decisions of the arbitrators. The OLG Ham- 47
burg decided that the arbitrators way to handle the proceedings and his legal opinion could
only give rise to doubts about the arbitrators impartiality if they lacked any legal grounds and
were so clearly unlawful that they appeared to be an act of arbitrariness.113 A challenge based
on a decision of an arbitral tribunal to reject a request for a postponement of a hearing and to
hold it if necessary, with only one of the parties was considered as unfounded by the OLG
Mnchen.114 The OLG Frankfurt saw no grounds for challenge when an arbitrator continued
the proceedings and rendered an award without waiting for the outcome of the state courts
decision on the challenge against him.115 In a later decision, it held that errors in findings of
fact and law can only justify concerns of partiality if they occur at a particular accumulation
and severity.116
Overall, it has to be noted that it should not be possible to challenge an arbitrator for failure 48
to advance the proceedings.117 This is argued because it would imply an arbitrary ground for
challenge by any party unsatisfied with the conduct of the proceedings by the arbitrator. The
threat of this sanction by a party could influence the decision of the arbitrator. If there are
grounds for complaint as to the conduct of the office and of the proceedings, 1038 ZPO
can be invoked.
3.
Challenge of an Arbitrator in the Absence of Qualifications
The parties are free to specify certain qualifications for the appointment of arbitrators, and 49
the original conditions can subsequently be explicitly or implicitly changed.118 As pure
procedural agreements, such conditions are not subject to the form requirements of 1031
ZPO.119 If an arbitrator does not fulfil the qualification requirements, this justifies challenge
under 1036 (2) sentence1 alternative 2 ZPO. It has, however, been held insufficient for a
challenge if the parties have agreed that an arbitrator needs to be knowledgeable and experienced in tax law and it turns out that the arbitrator has been penalised (Strafbefehl) for tax
evasion some years ago.120
110
111
112
113
114
115
116
117
118
119
120

OLG Naumburg 19.12.2001, SchiedsVZ 2003, 134 et seq.
OLG Oldenburg 30.05.2006.
Krll, Die schiedsrechtliche Rechtsprechung 2011 Teil 1, SchiedsVZ 2012, 136 (144).
Mankowski, SchiedsVZ 2004, 304 (307); Krll, ZZP 2003, 195 (205).
Mankowski, SchiedsVZ 2004, 304 (307).
192
50 If no provision as to certain characteristics of an arbitrator has been agreed and if a completely

unsuitable arbitrator who is unable to fulfil his function and is thereby unreasonable for the
other side is appointed by one of the parties, the opinion has been advanced that the opponent may have the right to terminate the arbitration agreement.121 This, however, would be
an excessive consequence and would provide the opportunity of frustrating the arbitration
on purpose. It is thus preferable to hold the parties to the challenge or termination procedure.
51 The language ability of the arbitrator should be dealt with in a similar manner: If the parties
come from different language backgrounds but the language of the arbitration has not been
determined, the language of the proceedings in itself may be a matter of dispute. In such a
case, appointing an arbitrator who only speaks one but not the other language used in the arbitration might provide the opposing side with a ground for challenge. That is because communication with the other arbitrators would require a translator and be subject to extreme
difficulties and costs. This would furthermore prejudice the decision as to the language of the
arbitration since one arbitrator would, from the outset, be limited to one specific language.
4.
Ground for Challenge as Ground for Setting Aside after Award Issued
52 In connection with challenges of arbitrators, the question arises whether, after the conclusion
of the arbitral proceedings, the award may be set aside on the basis of a ground for challenge.
The interest in upholding the award needs to be weighed against the right to an independent and impartial arbitral tribunal. According to both case law and commentators, challenge
grounds may be set forth in proceedings for the setting aside of awards only in exceptional
cases in the presence of a particular severe and obvious case of partiality.122
53 If the ground for challenge is known during the arbitral proceedings and if the party has not
invoked the same until the conclusion of the proceedings, the ground is usually precluded.
The opposite would be the case only if the ground for challenge became known after the
award was rendered or within the challenge period prior to the issuance of the award.123 Invoking the objection after an award was rendered should not give the applicant an advantage
compared to bringing a challenge during the proceeding.
54 Ultimately, the challenge belongs to the ongoing proceedings124 and the tactical manoeuvre
of withholding grounds for challenge until after the award in order to invoke them in the
event of an unfavourable outcome, should be prevented.125 In addition, the arbitrator should
be protected against the anticipation of challenge after the rendering of an award, because
this threat could influence his decision.126 Furthermore, unrestrictedly allowing objections
of that kind within setting aside proceedings would short-circuit the time limits for challenge
proceedings.127
121
122
123
124
125
126
127

BGH 04.03.1999, NJW 1999, 2370; OLG Mnchen 20.12.2006; Musielak-Voit (2013), 1036 para. 3; cf.
MnchKommZPO-Mnch (2013), 1036 para. 24. In a recent decision, when the tribunal had rendered
its award simultaneously with its decision in the challenge, the OLG Dresden did however reason on challenge grounds advanced in proceedings for setting aside the award without limiting this review in any
way, see OLG Dresden 26.07.2012 (3 Sch 03/12); see also infra, Nacimiento/Abt/Stein, 1037 paras 7 seq.
OLG Naumburg 11.07.2008; Krll, ZZP 2003, 195 (224).
BGH 26.10.1972, NJW 1973, 98 (99) = BGHZ 141, 90 (92).
Ibid.
Ibid.
5.
193
Limitation of the Challenge Possibilities
If the party applying for challenge has appointed the arbitrator or cooperated in his appoint- 55
ment, the right of challenge is restricted according to 1036 (2) sentence 2 ZPO.
There are two prerequisites: First, the party must have participated in the appointment and 56
second, it must have had knowledge of the challenge grounds. For cooperation in the appointment, it is sufficient if the party has expressed its agreement with a certain arbitrator.
However, as the norm requires some sort of activity, mere silence to an appointment by
the other party cannot constitute such cooperation.128 Knowledge of grounds for challenge
means positive knowledge, i.e. even if a party negligently failed to become aware of such
grounds, it will not be restricted in its right to challenge.129 The burden of proof to show that
it only gained knowledge of the grounds for challenge after the appointment, however, lies
with the party bringing the challenge.130
If both of these prerequisites are met, this party will be precluded from advancing the specific 57
circumstances of which it was aware as grounds for challenge. A certain exception should
however be allowed if the neutrality and impartiality of the decision making process are
seriously violated; in such cases, the party should either be admitted to bring a challenge
despite the wording of 1037(2)sentence2 or to make an application under 1038 (1)
sentence 2 ZPO for the termination of the appointment, because the arbitrator is legally not
in a position to fulfil his duties.131
128
129
130
131

Ibid.
BeckOK ZPO-Wolf/Eslami (2013), 1036 para. 31; Musielak-Voit (2013), 1036 para.10.
Ibid.
1037 Challenge Procedure

(1) The parties are free to agree on a procedure for challenging an arbitrator, subject to
the provisions of subsection 3 of this section.
(2) Failing such agreement, a party who intends to challenge an arbitrator shall, within
two weeks after becoming aware of the constitution of the arbitral tribunal or after
becoming aware of any circumstance referred to in 1036 (2), send a written statement of the reasons for the challenge to the arbitral tribunal. Unless the challenged
arbitrator withdraws from his office or the other party agrees to the challenge, the
arbitral tribunal shall decide on the challenge.
(3) If a challenge under any procedure agreed upon by the parties or under the procedure of subsection 2 of this section is not successful, the challenging party may
request, within one month after having received notice of the decision rejecting the
challenge, the court to decide on the challenge; the parties may agree on a different
time-limit. While such a request is pending, the arbitral tribunal, including the challenged arbitrator, may continue the arbitral proceedings and make an award.
Short Bibliography: Lionnet/Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit, Stuttgart Berlin 2005; Lrcher/Lrcher, Das Schiedsverfahren national/international nach deutschem Recht, Heidelberg 2001; Mankowski, Die Ablehnung von Schiedsrichtern,
SchiedsVZ 2004, 304; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005.
I.
II.
III.
IV.
I.
Para.
Content of the Provision in Detail . . . . . . . . 4
A. Challenge Procedure Agreed by
Parties (1037 (1) ZPO) . . . . . . . . . . . . 4
B. Statutory Challenge Procedure
(1037 (2) ZPO) . . . . . . . . . . . . . . . . . . . 5
1. General Principles . . . . . . . . . . . . . . . . 5
2. Time Limit . . . . . . . . . . . . . . . . . . . . . . . 6
3. Preclusion . . . . . . . . . . . . . . . . . . . . . . . . 7
4. Decision of the Arbitral Tribunal . 10
Para.
5. Challenge of All or a Number of
Arbitrators . . . . . . . . . . . . . . . . . . . . . . . 12
6. Legal Consequences . . . . . . . . . . . . . 13
C. Preliminary Procedure . . . . . . . . . . . . . . 14
D. Court Decision ( 1037 (3) ZPO). . . 16
2. Time Limit . . . . . . . . . . . . . . . . . . . . . . 20
3. Preclusion . . . . . . . . . . . . . . . . . . . . . . . 21
4. Continuance of Proceedings
( 1037 (3) sentence 2 ZPO) . . . . 23
5. Review of Decision of Arbitral
Tribunal by Court. . . . . . . . . . . . . . . . 27
6. Value in Dispute . . . . . . . . . . . . . . . . . 29
1 The provision enables the parties to establish custom-made challenge proceedings and, in
the absence of such agreement, provides a statutory challenge system, each of which are
subject to the ultimate control of state courts.2 The provision balances the principle of party
autonomy and the duty of the state to ensure objectivity vis--vis its citizens.3 It certainly does
not serve to rectify errors of law or procedure that the arbitral tribunal may have made, at
1
2
Schwab/Walter (2005), Chap. 14 para.11; Baumbach/Lauterbach (2014), 1037 para.3; Musielak-Voit
(2013), 1037 para. 2; Zller-Geimer (2014), 1037 para. 1.
195
least not unless they are indicative of a bias of the arbitrator towards one of the parties or of
an arbitrary nature.4
II.
Legislative History
1037 ZPO did not have any equivalent in the ZPO version prior to the German arbitration 2
law reform. It mostly corresponds to Article 13 of the UNCITRAL Model Law on International Commercial Arbitration (ML).5 In distinction from the Model Law, 1037 ZPO
grants the parties the right to deviate from the prescribed period of one month for the filing
of a challenge application.

According to 1037 (1) ZPO, the challenge procedure may be freely chosen by the parties. 3
Hence, the parties are entitled to agree on their own procedure for the challenge of arbitrators. Party autonomy, however, is limited by the control procedure before the state courts,
which cannot be dispensed with.6 A court decision is mandatory and therefore indispensable
according to 1037 (3) ZPO, if the agreed challenge procedure (subsection 1) or the statutory challenge procedure (subsection 2) has proven to be unsuccessful.7 It would therefore
be inadmissible to agree that arbitrators cannot be challenged or that any third party can
make a binding decision on the challenge in lieu of the court.

A.
Challenge Procedure Agreed by Parties ( 1037 (1) ZPO)
According to 1037 (1) ZPO, the parties can establish the challenge procedure for the 4
arbitrators according to their own needs. Such an agreement does not need to be made in
a certain form.8 However, this freedom only exists within the boundaries of subsection 3.
It follows from this subsection that it is inadmissible to exclude the right of challenge itself
and to agree that the challenge application would ultimately be decided by anyone but the
competent court. The parties are therefore free to agree on certain time limits or form requirements, stipulate that the challenged arbitrator my not decide on the challenge and (in
particular) to allow for a third party to decide on the challenge.9 Frequently, parties use this
opportunity by assigning jurisdiction to an arbitration institution, the rules of which provide
special provisions for challenging a previously selected arbitrator.10
4
5
7
8
9
10
OLG Hamm 18.06.2007.

Bill of the Arbitration Law Reform Act, BT-Drs.13/5274, p. 41; MnchKommZPO-Mnch (2013),
1037para.3.
But see problems in relation to ICC proceedings dealt with in Part IV, Khner, ICC Arbitration in Germany, paras27 et seq. and Hascher, ICC Practice in relation to the appointment, confirmation, challenge
and replacement of Arbitrators, (1995) 6 ICC ICArb. Bull. 4.
Cf. Zller-Geimer (2014), 1037 para.1; Stein/Jonas-Schlosser (2002), 1037 para.1.
Cf. MnchKommZPO-Mnch (2013), 1037 para. 6.
Lionnet/Lionnet (2005), p.250; cf. e.g. s.17.2 DIS Rules or Art.14 (3) ICC Rules.
196
B.
Statutory Challenge Procedure ( 1037 (2) ZPO)
1.
General Principles
5 The statutory challenge procedure laid down in 1037 (2) ZPO applies in cases where the
parties have refrained from stipulating any special terms for this situation in the agreement
in accordance with 1037 (1) ZPO. The party that intends to challenge an arbitrator must
send a written statement specifying the grounds for challenge to the arbitral tribunal within
two weeks after the composition of the arbitral tribunal or after becoming aware of any facts
referred to in 1036(2)ZPO. While it is not necessary to use the term challenge, both
the intention of the applicant to end the arbitrators office and the grounds on which the
challenge is based must be clearly expressed in the application.11
2.
Time Limit
6 The two-week period generally begins to run when the challenging party becomes aware
of the constitution of the arbitral tribunal. After that point, the time of becoming aware of
grounds for challenge is decisive.12 If a party becomes aware of the grounds for challenge
during a hearing, it will not lose its right to challenge, even if it continues to argue its case
without bringing the challenge (rgelose Einlassung). Due to the specific procedure stipulated in subsection 2, the party will not be deemed to have waived its right to challenge the
arbitrator; however, in any event it will have the opportunity to fully use the two weeks to
bring the challenge.13 The receipt of the challenge application by the chairman is decisive for
complying with the two-week fixed term.14
3.
Preclusion
7 Non-observance of the time limit, according to subsection 2, will lead to a preclusion of this
ground for challenge in proceedings before a state court on the basis of subsection 3.15 If the
time limit is not strictly observed, a party may choose to let the proceedings develop and only
bring the challenge once the proceedings take an unfavourable turn, thus rendering large
parts of the proceedings obsolete.16 In addition, a party could delay the review undertaken by
the state courts until the arbitration is completed and invoke it as a ground for setting aside in
the recognition and enforcement proceedings.17
8 In principle, challenge grounds are barred from being invoked in proceedings for the setting
aside or enforcement of an arbitral award. Deviation from such principle is justified only in
exceptional cases.18 Examples of such circumstances are cases of serious prejudice as mani11
12
13
14
15
16
17
18
VG Berlin 11.02.2010, SchiedsVZ 2010, 107, Stein/Jonas-Schlosser (2002), 1037 para. 2;

MnchKommZPO-Mnch (2013), 1037 para.7; Baumbach/Lauterbach (2014), 1037 para. 4.
OLG Mnchen 10.07.2013 34 SchH 8/12, MnchKommZPO-Mnch (2013), 1037 para.11; MusielakVoit (2013), 1037 para.3.
Zller-Geimer (2014), 1037 para.6; Musielak-Voit (2013), 1037 para. 3; further details infra, paras15
et seq.
OLG Frankfurt 29.10.2009, SchiedsVZ 2010, 52 (54); BayObLG 27.05.2003; OLG Naumburg
19.12.2001, SchiedsVZ 2003, 134 (138) with note by Krll/Mallmann; Musielak-Voit (2013), 1037
para.6; Zller-Geimer (2014), 1037 para.7; Lrcher/Lrcher (2001), para.121.
197
fested only in the award itself,19 acting as judge in ones own matter20 and if it has not been
possible or reasonable to conduct challenge proceedings.21 Such a situation also exists if the
arbitral tribunal renders its decision on the challenge simultaneously with the award. In this
situation, the tribunal is likely to fully consider the challenge grounds as reasons for setting
aside the award.22
Independent from preclusion, an arbitral tribunal that has been constituted in breach of 9
public policy (ordre public) is always subject to review by the state court in proceedings to set
aside and in enforcement proceedings.23
4.
Decision of the Arbitral Tribunal
Unless the challenged arbitrator withdraws from his office or the other party agrees to the 10
challenge (this would be a mutual termination of the arbitrators mandate, which is possible
at any time pursuant to 1039 ZPO), the arbitral tribunal has to decide on the challenge. It
is recognized that the challenged arbitrator participates in the decision.24 In view of the fundamental principle that no one may be a judge in his own matter (nemo iudex in causa sua),
this may seem problematic but the legislator consciously made this decision, explaining that
this principle does not fully apply in arbitral proceedings.25 Indeed, in the case of a tribunal
consisting of three arbitrators, excluding the challenged arbitrator from the decision making
on the challenge would lead to an unwarranted overrepresentation of the challenging party.26
In addition, a decision to the effect that the arbitrator in question can remain in office is still 11
subject to review by the state court under 1037 (3) sentence 1 ZPO.27
5.
Challenge of All or a Number of Arbitrators
An arbitral tribunal consisting of more than one arbitrator cannot be challenged as a whole; 12
instead, individual grounds of challenge for each member must be brought forward.28 Where
a sole arbitrator is challenged, the state court has jurisdiction if the arbitrator does not resign
on his own, since such a failure to resign implies the dismissal of the challenge application as
required by 1037(3) ZPO.29
19
20
21
22
23
24
25
26
27
28
29
BGH 04.03.1999, NJW 1999, 2370 (2371); OLG Frankfurt 29.10.2009, SchiedsVZ 2010, 52 (54).
BGH 03.07.1975, NJW 1976, 109.
BGH 10.10.1951, NJW 1952, 27.
OLG Dresden 26.7.2012 (3 Sch 03/12).
OLG Mnchen 10.01.2007; OLG Mnchen 06.02.2006, EWiR 2006, 479; OLG Mnchen 28.06.2006;
Mankowski, SchiedsVZ 2004, 304 (305); Baumbach/Lauterbach (2014), 1037 para. 4; Lachmann
(2008), para.1068; Thomas/Putzo-Reichold (2013), 1037 para.4; rejecting a chairman of a mediation
office in labour law Federal Labour Court (Bundesarbeitsgericht BAG) 11.09.2001, MDR 2002, 343.
Bill of the Arbitration Law Reform Act, BT-Drs.13/9124, p.46; see Mankowski, SchiedsVZ 2004, 304
(305); Lrcher/Lrcher (2001), para.119.
Musielak-Voit (2013), 1037 para.4; MnchKommZPO-Mnch (2013), 1037 para. 16.
OLG Mnchen 03.01.2008; Zller-Geimer (2014), 1037 para.2; different view Schwab/Walter (2005),
Chap. 14 para.22.
198
6.
Legal Consequences
13 If the arbitral tribunal decides to accept the challenge application as founded, such decision is not appealable.30 The replacement appointment is provided for in 1039 ZPO. The
challenged arbitrator is not entitled to remuneration for work done if the grounds for his
challenge arise through his fault and the new arbitrator claims full fees, because in this case
the challenged arbitrator is liable for damages.31
C.
Preliminary Procedure
14 In the context of party autonomy it is disputed whether, prior to court review under subsection 3, a party-based or statutory preliminary proceeding under subsections 1 and 2 is mandatory or whether the parties may agree to submit the challenge directly to the competent
court. Some wish to restrict party autonomy on this issue on the ground that it followed
from the wording of subsection 3 sentence 1, that a party autonomous or statutory preliminary proceeding could not be omitted.32 Others argue that a preliminary proceeding can be
dispensed with by agreement in favour of referring the application challenging an arbitrator
directly to the state court.33
15 Taking into account the purpose of 1037 ZPO, namely safeguarding the neutrality of the
arbitral tribunal, a direct assignment of the decision to the state court by agreement of the
parties appears to be a viable option. After all, it is an expression of party autonomy to allow
the parties to structure the proceedings in accordance with their needs and expectations,
as long as no mandatory statutory boundaries are breached. In this particular case, it would
be hard to argue that a review procedure that it is only preliminary in nature and subject to
court review should be mandatory. Furthermore, the direct assignment of the decision to the
court is in the interest of expediting the proceedings and it may serve to avoid undue delay of
the proceedings. Hence, the latter view presented seems consistent with the amendment of
the arbitration law which endeavoured to allow for more procedural flexibility, as well as to
prevent conduct which would delay the proceedings.
D.
Court Decision ( 1037 (3) ZPO)
1.
General Principles
16 If the challenge of an arbitrator under the procedure agreed upon by the parties or upon decision by the arbitral tribunal remains unsuccessful, the party seeking challenge can, within one
month, request the Higher Regional Court (Oberlandesgericht OLG) that has jurisdiction
for the termination of the arbitrators office (1037 (3) sentence 1, 1062 (1) No. 1 ZPO)
to decide on the challenge.34 Unless the parties have agreed otherwise,35 such a request is
only admissible where the arbitral tribunal has previously decided on the challenge. It is of
30
31
32
33
34
35

Ibid.
Stein/Jonas-Schlosser (2002), 1037 para. 2, MnchKommZPO-Mnch (2013), 1037 para. 5; OLG
Mnchen, 28.6.2006.
For a decision to that effect of the OLG Hamburg of 28.8.2012 see Krll, Die schiedsrechtliche Rechtsprechung 2012, SchiedsVZ 2013, 185 (192); OLG Dresden 08.11.2011; OLG Hamburg 12.07.2005,
SchiedsVZ 2006, 55 (56); OLG Hamburg 11.03.2003, SchiedsVZ 2003, 191 (192); Musielak-Voit
(2013), 1037 para.2; Mankowski, SchiedsVZ 2004, 304 (305); Zller-Geimer (2014), 1036 para.13.
See supra, para. 3.
199
no relevance if the arbitral tribunal has decided without the participation of the challenged
arbitrator since the state court does not decide about the decision of the arbitral tribunal on
the challenge but only on the alleged challenge grounds.36
In cases of inactiveness of the arbitral tribunal, the challenging party will need to follow the 17
procedure according to 1038 (1) for failure to act,37 unless the parties can agree to omit the
preliminary procedure.
In the interest of expediting proceedings,38 it should be sufficient to show probable cause 18
for the grounds for challenge and compliance with the time limit. The party opposing the
challenge must receive the opportunity to contest the credibility of the submissions.39 Since
the parties can, pursuant to 1039 ZPO, end the appointment of the arbitrator by mutual
agreement at any time, it is not necessary that the arbitrator himself is granted the right to be
heard.40
The state court does not decide on the challenge of experts. Although experts may be chal- 19
lenged under 1036 ZPO, a state court review of the arbitral tribunals decision is excluded
by 1049 (3) ZPO.41 Consequently, where the arbitral tribunal has not granted the requested
relief to the challenging party, the arbitral award may be challenged under 1059 (2) No.1
(d) ZPO.42
2.
Time Limit
The one month time limit begins to run for the party seeking challenge when it becomes 20
aware of the arbitral tribunals decision to deny the challenge application.43 According to
the statutory provision, the parties are free to agree on a different time limit. However, the
time limit agreed on by the parties may not be so short as to essentially render the control
mechanism ineffective.44
3.
Preclusion
After the expiration of the one month period, party submissions are, in principle, precluded. 21
The purpose here is to establish legal certainty and to avoid undermining the challenge
proceedings.45 As stated above, the parties may therefore only use challenge grounds in
proceedings for setting aside the award in very exceptional circumstances.46 Furthermore,
36
37
38
39
40
41
42
43
44
45
46
OLG Mnchen 06.02.2006, MDR 2006, 944 = OLGR Mnchen 2006, 271.
This is also in accordance with the concept of 44 (2) ZPO governing the challenges of state court
judges.
Stein/Jonas-Schlosser (2002), 1037 para.5; different view MnchKommZPO-Mnch (2013), 1037
para.29: the challenged arbitrator should be heard or at least issue a statement.
1049 (3) ZPO refers solely to 1037 (1) and (2) ZPO.
Musielak-Voit (2013), 1049, para.7.
Musielak-Voit (2013), 1037 para.5; OLG Naumburg 19.12.2001, SchiedsVZ 2003, 135 et seq. with note
by Krll/Mallmann, stating that the time period is also adhered to if the request to the state court is filed
with the wrong court.
Stein/Jonas-Schlosser (2002), 1037 para.5, MnchKommZPO-Mnch (2013), 1037 para.23.
BGH 04.03.1999, NJW 1999, 2370; Musielak-Voit (2013), 1037 para.5.
See supra, para. 8.
200
challenging an arbitrator is precluded if the parties have mutually agreed that the tribunal has
been properly constituted.47
22 The decision is binding where a state court has denied an application under subsection 3. The
same applies where the arbitral tribunal refused to replace an arbitrator and no application to
the OLG pursuant to subsection 3 has been made within the time limit. In such cases, due to
the binding effect of these decisions, challenge grounds may not be invoked in proceedings
for the setting aside and enforcement of arbitral awards.48
4.
Continuance of Proceedings ( 1037 (3) sentence 2 ZPO)
23 While a request for challenge of an arbitrator is pending, the arbitral tribunal (including the
challenged arbitrator) may continue the arbitral proceedings and issue an arbitral award.
During such an occurrence, certain scenarios may occur.
24 For example, if an arbitral tribunal renders an award instead of first deciding on the challenge
of an arbitrator, the challenge grounds will be addressed in the course of the proceedings for
setting aside the award. Since 1037 ZPO does not provide for the setting aside of an arbitral
award, it would be procedurally uneconomical to hold the parties to the challenge procedure,
as this would only serve to prepare the procedure for setting aside the award anyway.49 In this
particular case, a partys submissions are not precluded if the challenge grounds have been
timely filed with the arbitral tribunal (1037 (2) ZPO). If the arbitral tribunal renders its
award simultaneously with the decision on the challenge, it may even be considered inadmissible to pursue the challenge procedure.50
25 Challenge proceedings before a state court will continue where the arbitral tribunal issues
an arbitral award after an application to challenge an arbitrator has been filed with the state
court.51 Otherwise, it would be open to an arbitral tribunal seeking to evade scrutiny by the
state court to quickly render an award.52
26 Should the state court come to the conclusion that the challenge request was justified, an
arbitral award that may have been rendered in the meantime is voidable according to 1059
(2) No. 1 (d) and No. 2 (b) ZPO.53 The tribunal should therefore stay the proceedings in
order to avoid rendering a potentially voidable award, unless the challenge is obviously part
of a dilatory strategy or the necessity of a fast decision exceptionally outweighs the risk of a
potential annulment.54
47
48
49
50
51
52
53
54
OLG Frankfurt 12.07.2007 26 Sch 09/07.

Bill of the Arbitration Law Reform Act, BT-Drs.13/5274, p. 42; Lachmann (2008), paras 1119 seq.;
Zller-Geimer (2014), 1037 para.6; Lrcher/Lrcher (2001), para.122.
OLG Stuttgart 16.07.2002, SchiedsVZ 2003, 88 (90) with note by Nacimiento/Geimer.
Cf. OLG Dresden 26.07.2012.
Schwab/Walter (2005), Chap. 14 paras17 et seq.; Zller-Geimer (2014), 1037 para.4; Musielak-Voit
(2013), 1037 para.7; BGH 27.02.1957, NJW 1957, 791; OLG Frankfurt 04.10.2007, SchiedsVZ 2008,
96 (99) opposite view Krll, Die Ablehnung eines Schiedsrichters nach deutschem Recht, ZZP 2003,
195 (220); Krll/Mallmann, SchiedsVZ 2003, 138 (141).
5.
201
Review of Decision of Arbitral Tribunal by Court
The OLG reverses the decision of the arbitral tribunal and declares the challenge application 27
to be justified if the application is admissible and well-founded. Since court proceedings are
independent from the proceedings of the arbitral tribunal, the court makes an independent
decision according to its own conviction.55 The decision of the OLG is not subject to appeal
under 1065(1)sentence 2 ZPO.
The challenge decision takes effect when the challenged arbitrator receives the decision jus- 28
tifying the challenge rendered either by the arbitral tribunal (1037 (2) ZPO) or the state
court (1037 (3) ZPO). As a result, the arbitrator loses his mandate.56 Since this takes effect
ex nunc, it follows that all actions until that point in time remain valid.57
6.
Value in Dispute
The calculation of the court fees generally depends on the value of the matter in dispute. 29
In challenge proceedings, the amount in dispute is assessed and determined by the court
according to 3 ZPO. There is, however, no unified court practice in that regard.
Most courts make the decision on what value the challenge proceedings have in comparison 30
to the actual proceedings in accordance with the number of arbitrators who are challenged as
compared to the size of the arbitral tribunal. Hence, it has been held that the challenge of one
arbitrator sitting on a three member tribunal ought to amount to a fraction of the total value
in dispute. In this case, an increasing number of courts has considered one third of the total
value in dispute to be appropriate.58 Accordingly, challenging a sole arbitrator will incur the
full value in dispute as a basis for court costs.59
Other courts, however, have taken different approaches. For example, the jurisprudence of 31
the OLG Mnchen displays the wide variety of potential assumptions. Once the court argued
that the total value in dispute should always be the basis for calculating court costs,60 but
it has also considered one-third of the amount in dispute as reasonable.61 In two decisions
regarding the challenge of all three arbitrators, it once applied the total value in dispute,62
while once it applied only half of the value.63
It does indeed appear more adequate to only apply a fraction of the value in dispute. Chal- 32
lenge proceedings are preliminary to the decision of the dispute and it is not justified to burden the parties with the full value in dispute. Taking the full amount as a basis would boost
the costs of the proceedings considerably. Additionally, the full amount in dispute correlates
55
56
57
58
59
60
61
62
63
OLG Frankfurt 21.02.2007; OLG Mnchen 06.02.2006, EWiR 2006, 479; MnchKommZPO-Mnch
(2013), 1037 para.28.
Stein/Jonas-Schlosser (2002), 1037 para.10; Musielak-Voit (2013), 1037 para. 5.
OLG Frankfurt 08.05.2013; KG Berlin 19.01.2012; OLG Frankfurt 08.10.2003, SchiedsVZ 2004, 168;
OLG Dresden 20.02.2001; OLG Hamburg 28.06.2004; OLG Hamm 18.09.2003; OLG Kln 02.04.2004;
cf. Thomas/Putzo-Reichold (2013), 1063 para. 5; Musielak-Heinrich (2013), 3 para. 23. The OLG
Frankfurt has also held one fifth of the total value to be appropriate, OLG Frankfurt 04.10.2007, SchiedsVZ 2008, 96 (102).
OLG Dresden 20.02.2001, BB 2001, Beilage No. 6, p.18.
BayObLG 05.10.2004, SchiedsVZ 2004, 326.
202
only to the interest of the parties in the resolution of the dispute. As such, preliminary issues
should not be treated as equivalent to such interest.
1038 Failure or Impossibility to Act

(1) If an arbitrator becomes de jure or de facto unable to perform his functions or for
other reasons fails to act without undue delay, his mandate terminates if he withdraws from his office or if the parties agree on the termination. If the arbitrator does
not withdraw from his office or if the parties cannot agree on the termination, any
party may request the court to decide on the termination of the mandate.
(2) If, under subsection 1 of this section or 1037 (2), an arbitrator withdraws from
his office or a party agrees to the termination of the mandate of an arbitrator, this
does not imply acceptance of the validity of any ground for withdrawal referred to
in subsection 1 of this section or 1036 (2).
Short Bibliography: Lachmann, Handbuch fr die Schiedsgerichtspraxis, Kln 2008; Lionnet/Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit, Stuttgart Berlin 2005;
Schtze, Schiedsgericht und Schiedsverfahren, Mnchen 1999; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005.
Para.
A. General Principles . . . . . . . . . . . . . . . . . . . 1
B. Difference to the Challenge
Procedures under 1036, 1037 ZPO 2
III. Derogation from the Provision . . . . . . . . . . . 7
IV. Content of the Provision in Detail . . . . . . . . 8
I.
I.
A.
General Principles
Para.
A. Grounds for Terminating the
Appointment ( 1038 (1) ZPO) . . . . . 8
1. Reasons for Terminating
Arbitrators Mandate . . . . . . . . . . . . . 10
2. Legal Consequences . . . . . . . . . . . . . 14
B. No Judicial Precedent as to
Grounds for Challenge or
Termination (1038 (2) ZPO) . . . . . 19
This section provides grounds for terminating the appointment of an arbitrator in the event 1
of inability or failure by the arbitrator to properly fulfil his duties. When considered in connection with 1039 ZPO, it is clear that the arbitrator can withdraw from his office at any
time, that the parties can revoke the appointment by agreement and that the competent court
can relieve the arbitrator of his duties by application of one of the parties.2 An arbitration can
no longer be delayed or obstructed by reasons within the sphere of an arbitrator. In contrast
to the old law, the termination of the arbitrators office will always lead to the appointment
of a substitute arbitrator according to 1039ZPO irrespective of whether the termination is
consensual or made by application of one of the parties.3
1
2
3
MnchKommZPO-Mnch (2013), 1038 paras 1 seq.
204
B.
Difference to the Challenge Procedures under 1036, 1037 ZPO
2 Although there is much similarity between the termination of an arbitrators mandate under
1038 ZPO and the challenge procedure contained in 1036 and 1037 ZPO, the two legal
instruments must be distinguished from one another.
3 The two legal instruments differ in that the termination proceeding is primarily conducted
internally by the persons concerned, i.e. the parties and the respective arbitrator. Only in cases
where no consent can be achieved will a decision be made by the competent court upon
application of one of the parties. In contrast, the review of the challenge procedure will be
conducted by the entire arbitral tribunal and/or the state court as a neutral body to overcome
any blockade.4 In addition, unlike in the challenge procedure, 1038 ZPO does not expressly
provide that the arbitral proceedings may continue because 1038ZPO presumes situations
in which the arbitration is blocked due to the inability or failure of an arbitrator and it aims to
resolve this blockage.5 1038ZPO thus serves to allow the proceedings to continue.
4 The mere chronological sequence of the arbitration does not provide an adequate basis for
distinguishing the provisions.6 While a challenge is certainly more likely to be raised during
the constitution of the tribunal mainly because 1037 ZPO constitutes a narrow time frame
that might lead to a preclusion of the right to challenge, the challenge procedure can neither
be strictly tied to the constitution of the arbitral tribunal nor does the termination procedure
necessarily only come into play later in the proceedings. Rather, a ground for challenge may
also become known later in the proceedings just like an arbitrator may be unable to fulfil his
duties from the very beginning.7
5 As a general rule, the two provisions may be better differentiated by looking at their respective prerequisites. Subjective prerequisites for taking up the office as arbitrator are covered by
the challenge procedure (1036, 1037 ZPO), whereas the removal of objective procedural
impediments is dealt with by the replacement provisions (1038, 1039 ZPO).8
II.
Legislative History
6 There was no provision in the earlier version of the German Code of Civil Procedure that
corresponds to the current 1038 ZPO. With minor editorial changes, Article 14 of the UNCITRAL Model Law on International Commercial Arbitration (ML) was adopted in 1038
ZPO and thus introduced into the ZPO.9 The present provisions of 1038 and 1039 ZPO
fundamentally revise the situation under the former German law. By codifying the distinction between challenge and termination of the arbitrators mandate in the new law, the law
reform removes the uniform treatment of challenge and removal from office, as well as the
uniform jurisdiction of the state courts.10 At the same time, the new law introduced a uniform
treatment for the termination of an arbitrators office, irrespective of how he was appointed.11
4
5
6
7
8
9
10
11
Cf. Lachmann (2008), para.1068.

Ibid. para. 6.
Ibid. paras 6 seq.
Ibid. para. 7.
Stein/Jonas-Schlosser (2002), 1038 before para. 1; MnchKommZPO-Mnch (2013), 1038 para.1.
MnchKommZPO-Mnch (2013), 1038 para.1, cf. Zller-Geimer (2014), 1038 para.1.
205

Because 1038 ZPO does not contain an express provision permitting a deviation from this 7
section, it is disputed whether the parties may do so. The crucial question in this regard is
whether court review is mandatory.12 The argument in favour of the indispensability of the
provision is that derogation is not expressly permitted.13 This, however, appears to be too
formalistic and rigid. The government memorandum of reasons to 1038 ZPO assumes,
despite the missing indication in the text of the provision and unfortunately without any
explanation, the possibility of the parties to derogate from the provision.14 For the benefit
of more procedural freedom it would be justified to favour the possibility of dispensation
of the provision by the parties. This view underlines the intention of the legislator to create
a modern and flexible arbitration regime. It should be noted that even those opposing this
view agree that the parties can e.g. submit the decision to an arbitral institution as long as
recourse to the competent court is not ultimately barred.15

A.
Grounds for Terminating the Appointment ( 1038 (1) ZPO)
1038 (1) sentence 1 ZPO constitutes grounds on the basis of which an arbitrator can be 8
removed from his office. In general, the presence of fault is not a necessary prerequisite for
the following procedural grounds for terminating an arbitrators appointment.16
These grounds only come into play if the court or another institution chosen by the parties 9
is called upon to remove the arbitrator from his office.17 This is because 1039 (1) sentence
1 alternative 3 ZPO grants the parties to an arbitration the possibility of agreeing to terminate
the mandate at any time, without a specific reason.
1.
Reasons for Terminating Arbitrators Mandate
a. De jure Inability: Legal impediments such as, for example, legal incapacity,18 or lack or later 10
loss of a previously agreed qualification19 fall under this category. Procedural impediments
such as incapacity for public office (45 German Criminal Code (Strafgesetzbuch StGB))
are also relevant in this category. However, 1038 (1) ZPO may not be used as an instrument to challenge an arbitrator due to his legal assessment that may be disadvantageous to
one party to the arbitration.20 In cases of a wrongfully issued but unchallenged permission
for a civil servant to engage in a part time activity as arbitrator, the arbitrator may validly be
a member of an arbitral tribunal and participate in the rendering of an arbitral award since
12
13
14
15
16
17
18
19
20

Ibid.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.42; concurring Stein/Jonas-Schlosser (2002),
1038 para.3; Zller-Geimer (2014), 1038 para.4.
Schtze (1999), para. 45; Lachmann (2008), para. 1123; Musielak-Voit (2013), 1038 para. 6.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.42; BGH 05.05.1986, NJW 1986, 3079;
Lachmann (2008), para. 1122; Zller-Geimer (2014), 1038 para.2; Schwab/Walter (2005), Chap. 10
para.31.
Stein/Jonas-Schlosser (2002), 1038 para.4; Schwab/Walter (2005), Chap. 10 para.31; Musielak-Voit
(2013), 1038 para.5; Baumbach/Lauterbach (2014), 1038 para.4.
206
the system of German administrative law does not consider the permission as crucial in this
respect.21
11 b. De facto Inability: This category concerns sustained impossibility to further participate
in the arbitration.22 It is factually impossible for the arbitrator to fulfil his duties if (i.) he is
severely ill,23 (ii.) he is travelling abroad for a long period,24 (iii.) he is in custody for a long
period,25 (iv.) he is impeded by old age,26 (v.) he dies,27 or (vi.) the organization to which
the arbitrator belonged and which was decisive for the parties no longer exists.28 Alleged or
real mistakes of the arbitrator in the factual or legal review of the dispute do not constitute
a ground of inability. On the other hand, lack of agreement on the chairman to be chosen
or refusal of a third party to nominate an arbitrator do not come under this provision, but
rather under 1035 (3) and (4) ZPO.29
12 c. Delay in Fulfilling Duties: In addition to the aforementioned grounds for terminating the
arbitrators office, the third category comprises a ground for terminating the arbitrators office if he fails to perform within a reasonable time. Differentiation between delay and inability may be difficult, but such a differentiation will only need to be made if the delay would
be reasonable.30 Generally, undue delay in the performance of duties can only be assumed
if an arbitrator persistently fails to observe a time limit reasonably set by the chairman for
an opinion in writing or cannot within a reasonable time reserve a suitable appointment for
an oral hearing.31
13 Two recent court decisions further evidence a certain restraint with assuming undue delay.
Both the OLG Dsseldorf 32 and the OLG Mnchen,33 two courts which very often handle
arbitration issues, held that such a delay could only be assumed in cases in which the
arbitrator either acted in an abusive way or in cases that were otherwise exceptional. The
OLG Dsseldorf further held that it would only assume undue delay if the arbitrator had
failed to take a necessary measure and that this failure had led to a delay that is exceptional
in comparison to average proceedings before a state court in two instances (albeit with
a certain deduction, as parties assume that arbitral proceedings will be faster than court
proceedings).34 The OLG Mnchen also highlighted that the question of whether an
arbitrator fulfils his duties within reasonable time must be measured against the question
of whether the parties can reasonably be expected to accept a further waiting time; such a
21
22
23
24
25
26
27
28
29
30
31
32
33
34
OLG Hamm 18.09.2003; however, cf. dispute in this regard set forth supra, Nacimiento/Abt/Stein, 1035
paras13 et seq. and BGH 11.02.1971, BGHZ 55, 313 (319).
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 42; OLG Kln 11.04.2003; Lachmann
(2008), para.1126; Zller-Geimer (2014), 1038 para.2; Schwab/Walter (2005), Chap. 10 para.31.
BGH 20.01.1994, BGHZ 125, 7 et seq.; MnchKommZPO-Mnch (2013), 1038 para.16; Thomas/
Putzo-Reichold (2013), 1038 para.3.
Musielak-Voit (2013), 1038 para.6; Zller-Geimer (2014), 1038 para.2.
MnchKommZPO-Mnch (2013) 1038 para.17.
OLG Dsseldorf 08.07.2008.
OLG Mnchen 17.12.2010, SchiedsVZ 2011, 107 et seq.
OLG Dsseldorf 08.07.2008.
207
delay was only considered undue if the parties incurred disadvantages that they would not
have incurred in front of a state court. As the state courts are barred from exchanging the
procedural timeline of an arbitration with their own view, judicial control would need to be
limited to exceptional cases and such review would need to weigh the length of proceedings
as a whole and the complexity of the case against the delay.35
2. Legal Consequences
If the conditions are fulfilled, the legal relationship with the arbitrator is terminated and 14
he loses his office. This automatically results in the commencement of the procedure to
appoint a substitute arbitrator, pursuant to 1039 ZPO.
a. Withdrawal of an Arbitrator: The withdrawal from office of an arbitrator becomes effective 15
once both parties have received the letter of withdrawal; this usually also has to be considered the termination of the underlying arbitrator contract.36 The arbitrator is free to resign
from his office without good cause.37 However, in doing so he will be exposed to claims for
damages, as 627 German Civil Code (Brgerliches Gesetzbuch BGB) presupposes good
cause for the termination of the underlying arbitrator contract.38
b. Removal by the Parties: Removal of an arbitrator by agreement of the parties is possible 16
without any specific form requirements. The parties may also agree at the outset to certain
grounds which will lead to a termination of the arbitrators office.39 A termination of the
office by agreement of the parties must be regarded as an implied termination of the arbitrators contract.40 While the termination of the office rests on the procedural law of 1038
ZPO, the claims arising out of the arbitrators agreement must be settled according to the
substantive law of the German Civil Code.
c. Court Decision: A court decision to terminate the arbitrators office will be made on ap- 17
plication of at least one of the parties. The application to the competent Higher Regional
Court (Oberlandesgericht OLG) is not subject to time restraints.41 This prevents preclusion of the claim, although in cases of considerable delay in the filing of a claim the objection
of forfeiture can be sustained.42 An application for a court decision is inadmissible as long as
the party seeking the decision has not yet attempted to bring about the termination of the
arbitrators voluntarily, i.e. by asking the other party to agree on a termination and by asking
the arbitrator to step down from his office.43 According to 1062 ZPO, the OLG specified
by the parties in their arbitration agreement or, in absence of such agreement, the OLG
responsible for the district in which the arbitration has its seat has jurisdiction to decide on
the termination of the arbitrators office. The time of making the application is crucial for
the evaluation of the deficient performance of the arbitrator.44 The decision of the court is
35
36
37
38
39
40
41
42
43
44

KG Berlin 15.03.2010, IBR 2010, 726.
Baumbach/Lauterbach (2014), Anhang 1035 para.15; Musielak-Voit (2013), 1038 para.3.
Musielak-Voit (2013), 1038 para. 4; Baumbach/Lauterbach (2014), 1038 para. 3 in connection with
Anh 1035 para. 14.
Stein/Jonas-Schlosser (2002), 1038 para.5; Musielak-Voit (2013), 1038 para.7.
Lachmann (2008), para.1135; Musielak-Voit (2013), 1038 para.7.
Musielak-Voit (2013), 1038 para. 7; MnchKommZPO-Mnch (2013), 1038 para. 25; dissenting:
KGBerlin 17.01.2013, <www.juris.de>.
208
rendered by a non-appealable order pursuant to 1063 (1), 1065 (1) sentence 2 ZPO.
The office of the arbitrator only ends with the decision of the court. Until this decision, the
arbitrator may fully participate in the arbitral proceedings.45
18 Regarding the value in dispute, fees and costs, reference is made to 1037 ZPO.
B.
No Judicial Precedent as to Grounds for Challenge or Termination (1038 (2) ZPO)
19 The provision of 1038 (2) ZPO applies both to 1038 (1) ZPO and 1037 (2) ZPO,
i.e. both for the procedure for challenge and for replacement of an arbitrator. In accordance
with Article 14 (2) ML, 1038 (2) ZPO is intended to facilitate the process of deciding
to end the arbitrators appointment by leaving it open as to whether the termination of the
arbitrators mandate is due to a ground for challenge or for replacement.46 This simplified
withdrawal of an arbitrator avoids an automatic admission of a breach of duty in case of
termination. The arbitrator is enabled to leave the proceedings without public loss of face.
It is therefore referred to as a provision of honour.47 The arbitration is spared the burden of
litigation on the specific reasons, but instead can carry on with the replacement procedure
under 1039 ZPO. The former will be decided in a separate claim on the remuneration,
independent of the latter procedure.
45
46
47
OLG Mnchen, 20.12.2006, <www.juris.de>.

Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.42; Lrcher/Lrcher (2001), para.125.
BeckOK ZPO/Wolf/Eslami (2013), 1038 para. 8; MnchKommZPO-Mnch (2013), 1038 para.27.
1039 Appointment of Substitute Arbitrator

(1) Where the mandate of an arbitrator terminates under 1037 or 1038 or because
of his withdrawal from office for any other reason or because of the revocation of
his mandate by agreement of the parties, a substitute arbitrator shall be appointed.
The appointment shall be made according to the rules that were applicable to the
appointment of the arbitrator being replaced.
(2) The parties are free to agree on another procedure.
Commercial Arbitration, Deventer 1989; Lachmann, Handbuch fr die Schiedsgerichtspraxis,
Kln 2008; Lionnet/Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit,
Stuttgart Berlin 2005; Schlosser, Das Recht der internationalen privaten Schiedsgerichtsbarkeit, Tbingen 1989; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005; Wagner, in: Weigand (Hrsg.),
Practitioners Handbook on International Arbitration, Mnchen/Copenhagen 2002.
I.
II.
III.
IV.
I.
Para.
Content of the Provision in Detail
(1039 (1) ZPO) . . . . . . . . . . . . . . . . . . . . . . . 7
A. Termination under 1037 and
1038 ZPO . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
B. Withdrawal from Office . . . . . . . . . . . . . 10
2. Claim for Damages. . . . . . . . . . . . . . . 12
Para.
C. Revocation of Arbitrators Mandate . . 13
2. Claim for Damages. . . . . . . . . . . . . . . 14
D. Substitute Appointment. . . . . . . . . . . . . 15
2. Special Cases . . . . . . . . . . . . . . . . . . . . 17
3. Right to be Heard . . . . . . . . . . . . . . . . 20
V. Application and Jurisdiction . . . . . . . . . . . . 22
VI. Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
The provision grants the arbitrator the right to resign and the parties the right to revoke 1
their previous appointment, both at any time and without specific reasons.2 Furthermore,
1039 Code of Civil Procedure (Zivilprozessordnung ZPO) declares the substitution of an
arbitrator as the general rule if the appointment of an arbitrator has to be cancelled.3 Hence,
1039 ZPO is a key provision in the legislators endeavour to ensure the continuation of
the proceedings.4 Not only is a gap in the tribunal quickly filled by a substitution appointment, but the arbitration proceeding is also safeguarded. This is because the procedure laid
down in 1039 ZPO implies that the ending of an arbitrators office has, in principle, no
impact on the validity of the arbitration agreement.5 The impact of a procedural problem
on the arbitration agreement is minimized. In contrast to the pre-1998 rules, 1039 ZPO
stipulates that irrespective of the grounds for the premature termination of the arbitrators
mandate (i.e. whether it is due to a challenge or to a failure/impossibility of the arbitrator to
1
2
3
4
5
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.43; Baumbach/Lauterbach (2014), 1039
para.1.
MnchKommZPO-Mnch (2013), 1039 para. 1; Musielak-Voit (2013), 1039 para. 1.
OLG Karlsruhe 05.06.2007; MnchKommZPO-Mnch (2013), 1039 para.1.
210
act), it no longer has to be differentiated between the consequences of replacement (former

1031 ZPO pre-1998) or termination of the arbitral proceedings (former 1033No. 1 ZPO
pre-1998).6
II.
Legislative History
2 Despite some editorial changes, the provision corresponds to Article 15 UNCITRAL Model
Law on International Commercial Arbitration (ML). However, there are two differences to
be pointed out. One is that the German legislator has extended the scope of the provision of
the Model Law by inserting subsection 2, a clause expressly giving the parties full power to
prepare individual agreements.7 The second is that 1039 ZPO does not include the catchall element from the Model Law (or in any other case), since the comprehensive listing
of grounds for terminating the appointment of an arbitrator in 1039 ZPO comprises all
thinkable cases.8
3 Furthermore, compared to the former provision (1031 ZPO pre-1998), 1039ZPO puts
forward a new structure. Now, there is no difference in the legal consequences of the termination of an arbitrators appointment depending on whether the arbitrator is named in the
arbitration agreement or not, because the arbitration agreement will be upheld in any case.9
In addition, to support a workable arbitration agreement and to establish the possibility to
appoint a substitute arbitrator, the German legislator extended the grounds for termination
in 1039ZPO. Therefore, the arbitrator may resign for any given reason and the parties may
revoke their mandate previously given at any time.10

4 The statutory case in 1039 ZPO does not apply absolutely, but it is at the disposition of the
parties, according to 1039 (2) ZPO.11 The possible derogation which is implicit in the
Model Law is expressly provided for in the German ZPO for reasons of clarity.12
5 It has even been argued that the parties have discretion to structure the appointment procedure in such a way that the arbitrators position is cancelled without replacement and the remaining arbitrators are to decide on the case.13 However, this suggestion is questionable since
a fundamental principle of German arbitration law suggests that impartiality and equality in
the tribunal are vital standards which are not subject to the disposition of the parties. These
might be frustrated in cases where a party-appointed arbitrator loses his mandate without a
replacement. It is thus preferable to restrict 1039 (2) ZPO insofar as parties may only agree
on procedures that preserve the balance within the tribunal.14
6
7
9
10
11
12
13
14
MnchKommZPO-Mnch (2013), 1039 para.2; Zller-Geimer (2014), 1039 para.1.

Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 43; MnchKommZPO-Mnch (2013),
1039 para.3.
1039 para.4.
para.1.
Lachmann (2008), para.1143; MnchKommZPO-Mnch (2013), 1039 para.19.
Musielak-Voit (2013), 1039 para. 3; cf. also 1034 (2) ZPO.
211
An agreement of the parties according to 1039 (2) ZPO does not need to adhere to the 6
form requirements of 1031 ZPO.15
IV. Content of the Provision in Detail (1039 (1) ZPO)

Basically, 1039 ZPO regulates what happens if the mandate of an arbitrator terminates. The 7
provision is triggered if one of three cases of termination exists (infra A.-C.), which cover all
the possibilities provided for in the ZPO.16 As a legal consequence, the provision stipulates
that a substitute arbitrator must be appointed (infra D.).
The appointment of a substitute arbitrator is only possible after the arbitrator has officially 8
been inaugurated but before the mandate has terminated due to the conclusion of the
proceedings ( 1056 (3) ZPO).17 However, 1039ZPO applies if the arbitrators mandate
terminates before the arbitration proceedings have been initiated.18
A.
Termination under 1037 and 1038 ZPO
The first possibility to trigger 1039 ZPO is the termination of an arbitrators mandate under 9
1037 or 1038 ZPO.19
B.
Withdrawal from Office
1.
General Principles
The termination of an arbitrators appointment by his resignation under 1039 (1) sentence 10
1 alternative 2 ZPO has been facilitated by the adoption of the Model Law. 1039 (1) ZPO
now grants the arbitrator the right to resign on grounds other than those listed in the provisions 1036-1038ZPO. It is understood to include the arbitrators unrestricted right to
resign at any time, without giving any grounds.20
The arbitrators right to withdraw from office, however, gives rise to the problem that the 11
arbitrator is given the opportunity to revoke his expressed readiness to take up his office. This
may create an opportunity to delay the proceedings.21 Despite this argument, there are more
compelling grounds in favour of granting this right to the arbitrator22 Poor relations among
the arbitrators or between arbitrators and counsel are not conducive to conduct good arbitral
proceedings or render a solid award.
2.
Claim for Damages
The arbitrators contract which is to be separated from the arbitral proceedings is subject 12
to the substantive provisions of German law included in the Civil Code (Brgerliches Gesetzbuch BGB), which may not apply directly but may nonetheless be applied by analogy.23
According to the relevant provisions, the arbitrator, has in principle a right to resign only for
15
16
17
18
19
20
21
22
23
Musielak-Voit (2013), 1039 para.3; different view Thomas/Putzo-Reichold (2013), 1039 para.4.
OLG Stuttgart 05.10.2009.
Lionnet/Lionnet (2005), p.289; MnchKommZPO-Mnch (2013), 1039 para.3.
Schlosser (1989), para.481.
See Holtzmann/Neuhaus (1989), p.464; Lionnet/Lionnet (2005), p.289.
MnchKommZPO-Mnch (2013), Vor 1034 para. 4.
212
good cause, although it is disputed whether 627BGB which provides for termination
in case another arbitrator is available at any time applies.24 In principle, if the arbitrator
terminates his office in the absence of a breach of contract by the other parties, he loses the
right to remuneration (628(1)sentence 2 BGB). This provision excludes the right to remuneration in cases where a termination that is made without apparent purpose and not for
grounds attributable to the other party. Additionally, when the parties have appointed a new
arbitrator, the parties are no longer interested in the work of the former arbitrator as his work
has become useless for them.25 Therefore, the arbitrator not only forfeits his remuneration
but may also be liable for damages if he terminates without good cause.26
C.
Revocation of Arbitrators Mandate
1.
General Principles
13 1039 (1) sentence 1 alternative 3 ZPO provides the parties with a right to revoke the arbitrators mandate by party agreement without requiring them to provide a specific ground
for the revocation.27 A list of individual cases in this respect is not necessary due to the broad
terms used in the provision. This leads to the central importance of this provision for the
removal of an arbitrator.28
2.
Claim for Damages
14 As far as a claim for damages is concerned, substantive German law applies. The procedural
right of removal of the parties under 1039 ZPO is subject to the provisions of the service
agreement that apply to the arbitrators contract.29 According to 627 (1) BGB (even though
it may not be applied directly), the arbitrators agreement can be terminated at any time and
without good cause by both parties. This is because confidence in the arbitrators is the only
basis for maintaining the agreement. The revocation of the arbitrator by the parties is at the
same time an implicit termination of the arbitrators contract. If the termination is performed
in the absence of a breach of contract by the arbitrator, the arbitrator retains his right to be
remunerated for the services already provided on the basis of 628 BGB.30 After all, he has
not culpably contributed to his revocation in this case.
D.
Substitute Appointment
1.
General Principles
15 If 1039 (1) ZPO is triggered, a substitute arbitrator must be appointed. Such a substitute
appointment avoids the premature termination of the proceedings and upholds the arbitration agreement.31 As long as the arbitral tribunal is not fully constituted, the proceedings are
suspended and will resume after the successful appointment of a substitute arbitrator.32
24
25
26
27
28
29
30
31
32
See Stein/Jonas-Schlosser (2002), 1039 para.1; Schwab/Walter (2005), Chap. 13 para.10.

Schwab/Walter (2005), Chap. 13 paras14 et seq.
Thomas/Putzo-Reichold (2013), 1039 para.3; Schwab/Walter (2005), Chap. 13 para.13.
See supra, Nacimiento/Abt/Stein, Introduction to 1034-1039 ZPO paras 23 et seq.
Zller-Geimer (2014), 1039 para. 1; MnchKommZPO-Mnch (2013), 1039 para. 10.
213
The substitute appointment is made according to the rules which were applicable to the ap- 16
pointment of the initial arbitrator who had to be replaced. This also applies in cases where the
arbitrator to be replaced was already a substitute arbitrator.33 Consequently, if the arbitrator
was appointed by the court due to non-cooperation of a party according to 1035 (3) ZPO,
the right of appointment does not return to the court but rather to the parties.34 However,
if the party obliged to appoint a substitute arbitrator does not comply with its obligation
for such appointment, a substitute arbitrator can be appointed by the court in accordance
with 1039(1)sentence 2 ZPO.35 An agreement of the parties to the contrary according
to 1039 (2) ZPO does not require the form of 1031 ZPO.36 A substitute arbitrator is a
normal arbitrator, so that the respective provisions apply to him as well. The parties may also
terminate the substitute arbitrators mandate by agreement pursuant to 1039 (1) sentence
1 alternative 3 ZPO.
2.
Special Cases
a. Arbitrators Nominated by Name: The appointment of a substitute arbitrator in the event 17

an arbitrator nominated by name resigns has changed since the adoption of the new German arbitration law. The concept of upholding the arbitration agreement, which underlies
Germanys new arbitration law, is different from the former legal position. The former 1031
ZPO pre-1998 provided for the replacement of an arbitrator only in the case of arbitrators
who were not named in advance, while the resignation of an explicitly named arbitrator resulted in the arbitration agreement becoming void. By repealing this provision, the legislator
intended to take into account that the arbitrator named in the agreement is not regarded as
so crucial as to justify the invalidity of the entire arbitration agreement in the case of the loss
of that specific person. Ultimately, the readiness of the parties to resolve the dispute by way
of arbitration does not usually depend on a person against whom no objective grounds for
refusal arise.37 Therefore, the arbitration agreement no longer becomes void if the mandate
of a named arbitrator terminates; instead, a substitute arbitrator is appointed in these cases.38
The arbitration agreement only becomes void if the parties have expressly agreed that it
should become void if the mandate of the arbitrator nominated in the agreement by name
is terminated (1039 (2) ZPO); there may also be cases in which this was the implied wish
of the parties and the arbitration agreement therefore needs to be interpreted accordingly.39
b. Substitute Appointment by Third Parties: Furthermore, difficulties can arise in cases where 18
the parties have derogated from the statutory provisions by stipulating that a third party shall
appoint a substitute arbitrator and this third party ceases to exist (e.g. an arbitration institution or a person who dies).
Under the former German law, this was considered to lead to the invalidity of the arbitration 19
agreement.40 Now that the new German arbitration law favours the principle of upholding
the arbitration agreement, it is argued that the arbitration agreement does not expire but
33
34
35
36
37
38
39
40

Weigand-Wagner (2002), Germany, para.135; cf. MnchKommZPO-Mnch (2013), 1039 para. 11.
Musielak-Voit (2013), 1039 para. 3; different view Thomas/Putzo-Reichold (2013), 1039 para. 4.
Zller-Geimer (2014), 1039 para.1; MnchKommZPO-Mnch (2013), 1039 para.14; LG Karlsruhe
05.06.2007.
214
continues to apply.41 However, it is questionable which procedure should replace the originally intended appointment by a third party. This is a question of interpretation; if the parties
intended that only a neutral entity should have the power to nominate, then it could be argued that recourse to the statutory mechanism of 1035 (3) ZPO would not be appropriate.
In this case, the state court would be called upon to make the substitute appointment under
1035 (4) alternative 3 ZPO.42
3.
Right to be Heard
20 In this respect, granting the right to be heard (1042 (1) sentence 2 ZPO) after the reconstitution of the arbitral tribunal with a substitute arbitrator can lead to difficulties. In regard to
the proceedings that have taken place prior to the substitution of the arbitrator, parties might
deem their right to be heard infringed because the new arbitrator did not participate in the
earlier proceedings. A remedy would require repeating the proceedings. On the other hand,
such repetition would contravene the intent of the German legislator to expedite proceedings.
21 This conflict of interests, however, does not necessarily lead to an either-or-solution; the right
to be heard is only affected insofar as the new arbitrator cannot become aware of a partys
pleading. Thus, reliable indirect information is sufficient.43 Consequently, a repetition of
proceedings is not necessary when it comes to information from the record, written memoranda, written witness statements or in some cases even hearings.44 However, a repetition
should be essential for oral testimonies, as the personal impression of a witness is always
vital. In such cases, the arbitral tribunal can repeat certain parts of the proceedings in order to
prevent the setting aside of the award on the ground of a violation of the right to be heard.45
V.
Application and Jurisdiction
22 The substitute appointment follows the rules determined for the appointment of the initial
arbitrator (in this regard see explanations supra 1035 paras. 9 et seq.). If pursuant to those
rules the appointment of the arbitrator passes to the court, the party must make an application to the Higher Regional Court (Oberlandesgericht OLG) that has jurisdiction under
1062(1)No.1ZPO.
VI. Costs
23 Court costs vary depending on the amount in dispute. The determination of the amount
in dispute applicable to court proceedings for the substitute appointment corresponds to
that of the appointment of initial arbitrators and challenge proceedings. In this regard, see
supra, Nacimiento/Abt/Stein, 1035 paras46 et seq. and supra, Nacimiento/Abt/Stein, 1037
paras28 et seq.
41
42
43
44
45

Ibid.
MnchKommZPO-Mnch (2013), 1039 para. 15; Stein/Jonas-Schlosser (2002), 1039 para.3.
Chapter IV
Jurisdiction of Arbitral Tribunal
1040 Competence of Arbitral Tribunal to Rule on its Jurisdiction1
(1) The arbitral tribunal may rule on its own jurisdiction and in this connection on the
existence or validity of the arbitration agreement. For that purpose, an arbitration
clause which forms part of a contract shall be treated as an agreement independent
of the other terms of the contract.
(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later
than the submission of the statement of defence. A party is not precluded from
raising such a plea by the fact that he has appointed, or participated in the appointment of, an arbitrator. A plea that the arbitral tribunal is exceeding the scope of its
authority shall be raised as soon as the matter alleged to be beyond the scope of
its authority is raised during the arbitral proceedings. The arbitral tribunal may, in
either case, admit a later plea if it considers that the party has justified the delay.
(3) If the arbitral tribunal considers that it has jurisdiction, it rules on a plea referred
to in subsection 2 of this section in general by means of a preliminary ruling. In this
case, any party may request, within one month after having received written notice
of that ruling, the court to decide the matter. While such a request is pending, the
arbitral tribunal may continue the arbitral proceedings and make an award.
Short Bibliography: Haas, Die gerichtliche Kontrolle der schiedsgerichtlichen Entscheidungszustndigkeit, in: Bittner/Klicka/Kodek/Oberhammer (eds), FS-Rechberger, 2005, p.187; Huber, Das
Verhltnis von Schiedsgericht und staatlichen Gerichten bei der Entscheidung ber die Zustndigkeit, SchiedsVZ 2003, 73; Huber/Bach, Anmerkung zu BGH 13.01.2005, SchiedsVZ 2005, 98; Krll,
Recourse Against Negative Decisions on Jurisdiction, Arb.Int. 2004, 55; Lachmann, Handbuch fr
die Schiedsgerichtspraxis, Kln 2008; Lew/Mistelis/Krll, Comparative International Commercial
Arbitration, Hague/London/New York 2003; Schtze, Die gerichtliche berprfung von Entscheidungen des Schiedsgerichts, SchiedsVZ 2009, 241; Triebel/Hafner, Prklusion und Heilung der
Unzustndigkeit bei GmbH-Beschlussmngelstreitigkeiten im Schiedsverfahren, SchiedsVZ 2009,
313; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005.
Para.
I. Purpose and History of the Provision. . . . . 1
II. Mandatory Character . . . . . . . . . . . . . . . . . . . . 3
III. The Principle of Separability (1040
(1)Sentence 2 ZPO) . . . . . . . . . . . . . . . . . . . . 4
IV. Objection to the Jurisdiction of the
Arbitral Tribunal (1040 (2) ZPO) . . . . . . 8
A. The Requirement of Raising an
Objection. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
B. Time Limit . . . . . . . . . . . . . . . . . . . . . . . . . 11
1
V.
Para.
C. Good Faith Counter-Defence. . . . . . . . 18
D. Preclusionary Effects of Failure to
Object in Time. . . . . . . . . . . . . . . . . . . . . . 20
E. The Tribunals Power to Rule on its
Own Jurisdiction in the Absence of an
Objection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Decision of the Arbitral Tribunal . . . . . . . . 25
A. Assuming Jurisdiction (1040 (3)
ZPO). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
The text of this second edition was written by Ivo Bach on the basis of the first edition text by Peter Huber.
216
Para.
B. Denying Jurisdiction . . . . . . . . . . . . . . . . 30
VI. State Court Review . . . . . . . . . . . . . . . . . . . . . 32
A. Review of a Preliminary Ruling
Assuming Jurisdiction . . . . . . . . . . . . . . . 32
1. Application to the State Court . . . . 32
2. Preclusionary Effect of a Failure
to Apply for State Court Review . . 34
3. Decision of the State Court . . . . . . . 35
I.
Para.
4. State Court Procedure When
the Final Award is Rendered
before State Court Judgment . . . . . 40
B. Control of a Final Award Assuming
Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . 42
C. Control of a Final Award Denying
Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . 43
Purpose and History of the Provision2
1 The provision, which is in large parts based on Article16 UNCITRAL Model Law (ML),3
deals with four issues. First, 1040 (1) sentence 2 ZPO adopts the principle of separability: the arbitration agreements validity does not depend on the validity of the underlying
contract. Second, a party contesting the tribunals jurisdiction must raise a formal plea within
certain time limits failure to do so will preclude that party from contesting the tribunals
jurisdiction in future proceedings. Third, 1040 (1) sentence 1 ZPO grants the tribunal the
competence to decide on its own jurisdiction and in this connection on the existence or
validity of the arbitration agreement (so called Kompetenz-Kompetenz).4 It should generally
do so by way of an interim award ( 1040 (3) sentence 1 ZPO). Fourth, 1040 (3) sentence
2 ZPO limits the tribunals Kompetenz-Kompetenz to a preliminary one, in that it provides
that the tribunals interim award on jurisdiction can immediately be challenged before a state
court.
2 Before the reform of 1998, German law did not contain any rules resembling 1040
ZPO. The BGH instead followed a different approach: parties were allowed to agree on a
Kompetenz-Kompetenz clause. If they did, state court review was restricted to the validity
of this Kompetenz-Kompetenz clause. As long as it was validly concluded, state courts were
not allowed to overrule the tribunals decision on its own jurisdiction.5 Old case law should
therefore be used with caution when interpreting 1040 ZPO, and even then only after a
thorough analysis of whether the relevant rules still exist in the new law.
II.
Mandatory Character
3 The question of whether the parties can derogate from the provisions of 1040ZPO will
primarily arise with regard to the court control provided for in 1040(3) sentence 2 ZPO.
This provision should be regarded as mandatory. This means in particular, that it is under
the present law no longer possible for the parties to confer on the arbitral tribunal the final
(and binding for the state court) Kompetenz-Kompetenz with regard to the decision on the
validity of the arbitration agreement.6
2
3
There are, however, some differences with regard to the preliminary ruling of the arbitral tribunal on its
jurisdiction and to the relevant court control provided for in 1040 (3) ZPO.
As for the validity and the existence of the arbitration agreement, see supra, Trittmann/Hanefeld, 1029
paras10 et seq.; as for the applicable law see infra, Schmaltz, 1051 paras 1 et seq.
See Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274 p.44; BGH 26.05.1988, NJW-RR 1988,
1526 (1527); Huber/Bach, SchiedsVZ 2005, 98.
BGH 13.01.2005, SchiedsVZ 2005, 95 (96 seq.); Bill of the Arbitration Law Reform Act, BT-Drs.
13/5274 p. 44; Musielak-Voit (2013), 1040 para. 2; Huber/Bach, SchiedsVZ 2005, 98 (99); Haas,
1040 Huber/Bach
217
III. The Principle of Separability (1040(1)sentence 2 ZPO)

Pursuant to 1040 (1) sentence 2 ZPO, an arbitration clause which forms part of a contract 4
shall be treated as an agreement independent of the other terms of the contract. This provision confirms the principle of separability which is internationally accepted7 and had also
been part of the old law before the 1998 reform.8
The main effect of the principle of separability is that the arbitration agreement will not 5
be automatically affected by an invalidity (or inexistence or termination, etc.) of the main
contract. 1040 (1) sentence 2 ZPO excludes the application of those general rules in the
applicable law (to the arbitration agreement) which provide for a presumption of invalidity
for the entire transaction in those cases, such as in German law the provision of 139 Civil
Code (Brgerliches Gesetzbuch BGB).9
As a consequence, the arbitration agreement must be examined separately with regard to its 6
validity. If the result of such examination is that the arbitration agreement is valid, the arbitral
tribunal may decide on the merits of the case, i.e. also on the question of whether the main
contract is valid. If the arbitral tribunal regards the contract as invalid, it will have (and be
entitled) to decide on the consequences of the invalidity (for instance restitutionary issues,
liability, etc.).10
On the other hand, the principle of separability does not entirely exclude the possibility that 7
the arbitration agreement is tainted with the same defects as the main contract, and therefore
also invalid.11 The principle of separability simply means that the arbitration agreement
should be regarded as a separate agreement and examined for its existence, validity, etc. as
such.
IV. Objection to the Jurisdiction of the Arbitral Tribunal (1040 (2) ZPO)
A.
The Requirement of Raising an Objection
1040 (2) ZPO stipulates that a party that doubts the tribunals jurisdiction or finds that 8
the tribunal exceeds its powers must raise an objection within certain time limits. 1042
(2) must be regarded as lex specialis that derogates from the general rule contained in 1027
ZPO.12
Unfortunately, 1042 (2) ZPO does not specifically address the important question of 9
what the consequences will be if the respondent fails to raise his objection in time (see infra,
paras20 et seq.).
1040 (2) ZPO does not apply where the inadmissibility of the arbitral proceedings is 10
mandatory, i.e. where the parties may not agree on arbitration. The arbitral tribunal will
10
11
12
FS-Rechberger (2005), pp.187 (203 seq.); MnchKommZPO-Mnch (2013), 1040 para.51; Schtze,
SchiedsVZ 2009, 241 (243).
para.3; Lew/Mistelis/Krll (2003), paras6-16 seq.; Schwab/Walter (2005), Chap. 4 para.16.
See for instance BGH 27.02.1970, NJW 1970, 1046 seq.; id. 28.05.1979, NJW 1979, 2567 (2568 seq.); id.
06.06.1991, NJW 1991, 2215 (2216).
OLG Hamm 22.07.2002; MnchKommZPO-Mnch (2013), 1040 paras 8 et seq.; Thomas/PutzoReichold, 1040 para. 1.
Lew/Mistelis/Krll (2003), para.6-14; Schwab/Walter (2005), Chap. 4 paras17 et seq.
218
therefore have to examine ex officio if a dispute or individual issues therein are inarbitrable
(1030 ZPO).13
B.
Time Limit
11 Pursuant to 1040 (2) sentence 1 ZPO, the respondent must object to the tribunals jurisdiction either before or simultaneous to the submission of the statement of defence (cf. 1046
ZPO). This time limit differs from the period in which a defendant must object to a state
courts jurisdiction under 1032(1).14
12 If the tribunals jurisdiction to decide the claim is uncontested in general but one party finds
that the tribunal is exceeding the scope of its authority in a particular matter, the time limit
for an objection is set by 1040 (2) sentence 3 ZPO: the party must object as soon as the
matter alleged to be beyond the scope of the tribunals authority is raised during the arbitral
proceedings. This rule aims at situations where one party, e.g., introduces a counterclaim that
is arguably not covered by the arbitration clause or declares a right of set-off. The wording
of 1040 (2) sentence 2 ZPO has given rise to some debate, in particular with regard to two
issues. First, there is the question of when a matter is raised during arbitral proceedings.
Some scholars argue that a matter is raised when one party merely presents the matter in
the course of proceedings.15 Others require some additional act of the arbitral tribunal, for
instance a request that the other party respond to that issue.16 Secondly, it is not quite clear
what the phrase as soon as requires. It seems reasonable to assume that the objecting party
may and must raise its objection within its next filing with the tribunal.17
13 Pursuant to 1040 (2) sentence 4 ZPO, the arbitral tribunal may, in either case, admit a later
objection if it considers that the party has justified the delay. The provision uses the same
term (justified, gengend entschuldigt) as the provision which deals with belated objections
against a state courts jurisdiction (296 (3) ZPO). In that context, courts will excuse a
failure to object to jurisdiction on time so long as the delay is not due to the objecting partys
negligence.18 According to the predominant opinion amongst scholars, this standard should
also govern objections under 1040 (2) sentence 4 ZPO.
14 Some scholars take the view that the tribunal should excuse delay if it did not alert the parties to its doubts concerning the validity of the arbitration agreement (or that it should at
least take its failure to alert the parties into account).19 However, in the authors opinion it is
doubtful whether the arbitral tribunal is actually obliged to give such notice.20
15 According to the predominant opinion, the reasons that may justify the delay need not be
submitted together with the objection, but should at the latest be submitted when (or soon
after) the arbitral tribunal has informed the party that the objection may be rejected as being
13
14
15
16
17
18
19
20
See supra, Trittmann/Hanefeld, 1030 paras 7 et seq.; Lachmann (2008), para.707.

Prior to the beginning of the oral hearing on the substance, see supra, Huber/Bach, 1032 para. 47.
See in that direction MnchKommZPO-Mnch (2013), 1040 para.24; Stein/Jonas-Schlosser (2002),
1040 para.8; Lachmann (2008), para.699.
BeckOKBGB-Wolf/Eslami (2013), 1040 para. 16.
See OLG Hamm, 15.02.1991, NJW-RR 1992, 122 MnchKommZPO-Prtting (2013), 296 para. 163;
Musielak-Huber (2013), 296 para. 31.
Thomas/Putzo-Reichold (2013), 1040 para. 5; MnchKommZPO-Mnch (2013), 1040 para. 45;
contra Lachmann (2008), para.704.
See for instance Lachmann (2008), para.701, opposing such an obligation.
1040 Huber/Bach
219
belated. Again, however, it seems to be doubtful whether the tribunal is actually obliged to
inform the parties in that manner.21
The use of the term may (kann) raises the question of whether the tribunal does have discre- 16
tion when deciding this matter. The predominant opinion amongst scholars seems to be that
the tribunal is actually obliged to grant the excuse if the delay was justified. 22 The term may
would then simply confirm that the tribunal has the ability to accept a belated objection.23
If the tribunal excuses the delay, this decision will not be subject to review by the state court, 17
as the parties are not impaired in their procedural rights by that decision.24 If, on the other
hand, the tribunal does not excuse the delay, the predominant opinion seems to be that this
decision will be subject to control by the state court, either in proceedings under 1040 (3)
ZPO or at the challenge or enforcement stage (1059 (2) No. 1 (d) ZPO).25
C.
Good Faith Counter-Defence
The objection to the jurisdiction of the arbitral tribunal may be ineffective if it is made in 18
violation of good faith. The paradigmatic example of a bad-faith objection occurs when the
defendant uses the arbitration agreement to dismiss state court proceedings ( 1032 (1)
ZPO), then turns around and objects to the arbitral tribunals jurisdiction under 1040
ZPO.26
However, 1040 (2) sentence 2 makes clear that a party is not precluded from objecting to 19
the tribunals competence merely because he has appointed, or participated in the appointment of, an arbitrator. The fact that a party has cooperated in appointing an arbitral panel
does not imply that he has accepted the tribunals jurisdiction over all matters raised before
it.27
D.
Preclusionary Effects of Failure to Object in Time
The party who has participated in the arbitration without raising the objection in accordance 20
with 1040 (2) ZPO should in principle be regarded as having lost its right to rely on the
invalidity of the arbitration clause or on the tribunals excess of the competences in future
proceedings, in particular in challenge to proceedings under 1059 ZPO or in proceedings
at the enforcement stage. As a general principle, this seems to find widespread support.28
21
22
23
24
25
26
27
28
See Stein/Jonas-Schlosser (2002), 1040 para.9 (no such obligation). But see also Zller-Geimer (2014),
1040 para. 7; MnchKommZPO-Mnch (2013), 1040 para. 45, who seem to think that such an
obligation may exist (although it is not explicitly said).
Lachmann (2008), paras705 seq.; Stein/Jonas-Schlosser (2002), 1040 para.9. Contra MnchKommZPOMnch (2013), 1040 para.45.
A so-called Kompetenz-Kann.
Lachmann (2008), para.706; MnchKommZPO-Mnch (2013), 1040 para.45.
Lachmann (2008), para. 706; Musielak-Voit (2013), 1040 paras 9; Thomas/Putzo-Reichold (2013),
1040 para.5. Contra MnchKommZPO-Mnch (2013), 1040 para.45.
BGH 02.04.1987, NJW-RR 1987, 1194 (1195); Arbitral Award Chamber of Commerce and Industry
Kassel 15.12.2004, SchiedsVZ 2006, 167; Lachmann (2008), para.700. See also (for the inverse situation) supra, Huber/Bach, 1032 para.18.
See OLG Koblenz 17.03.2011, VersR 2011, 1329; OLG Celle 04.09.2003, SchiedsVZ 2003, 165 (168);
OLG Stuttgart 20.12.2001; Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274 p.44; Lachmann
(2008), paras717; Stein/Jonas-Schlosser (2002), 1040 para.9; Musielak/Voit (2013), 1040 para.13;
220
21 However, it is subject to some debate whether or not the preclusionary effect is restricted
to cases in which a party intentionally refused to object. The predominant opinion rightfully opposes an intent requirement:29 the preclusionary effect is procedural in nature, not
requiring an implied agreement to terminate the original arbitration agreement, which would
of course require some awareness of the parties with regard to what they declare.
22 In contrast, it is widely accepted that the preclusionary effect should not apply when the party
who would otherwise object does not participate in arbitral proceedings at all; no one should
be forced to participate in proceedings only in order to be able to object to the admissibility of
these proceedings.30 Further, the preclusion should not cover those cases where the arbitral
tribunal has wrongfully treated the partys delay in making the objection as not justified (see
supra, para.17) or in cases where the arbitral tribunals decision should be subject to state
court review.
23 1040 (2) ZPO and the preclusion principle are limited to the issues of jurisdiction and of
an excess of the authority of the arbitral tribunal. These terms primarily aim at the validity
and the scope of the arbitration agreement. In cases where the invalidity of the arbitration
agreement may derive from a violation of form requirements, however, one should, in the
authors view, first examine whether the defect was cured under 1031 (6) ZPO before applying 1040 (2) ZPO.31
E.
The Tribunals Power to Rule on its Own Jurisdiction in the Absence of an Objection
24 The preclusion principle has considerable practical consequences for the arbitral tribunal. In
fact, the logical conclusion from these principles seems to be that if neither party objects to
its jurisdiction, the arbitral tribunal must treat the arbitration agreement as valid, even if it has
doubts concerning its validity (or existence). It would then have to decide on the merits and
assume that 1040 (2) ZPOs preclusion principle will prevent the parties from disputing
the validity of the arbitration agreement at the challenge or enforcement stage. If the arbitral
tribunal would instead rather simply decline its own jurisdiction, the question arises whether
1040 (2) bars it from doing so when neither party has objected under 1040 (2) ZPO.32
However, the question seems to be rather theoretical in nature; the tribunal may simply alert
the parties to its doubts concerning the arbitration agreement, thereby paving the way for an
objection to be made and for a preliminary ruling under 1040 (3) ZPO.33 If the time limit
for an objection under 1040 (2) ZPO has already expired, the tribunal might think about
regarding the delay as justified under 1040 (2) sentence 4 ZPO.34
29
30
31
32
33
34
Zller-Geimer (2014), 1040 para.12; MnchKommZPO-Mnch (2013), 1040 paras33 seq.; Triebel/
Hafner, SchiedsVZ 2009, 313 (316).
BeckOKBGB-Wolf/Eslami (2013), 1040 para. 18; Lachmann (2008), para. 711 et seq. Contra
MnchKommZPO-Mnch (2013), 1040 paras35 et seq.; Triebel/Hafner, SchiedsVZ 2009, 313 (316).
OLG Bremen, 30.10.2008, IPRspr 2008, Nr. 204 para. 23; Zller-Geimer (2014), 1040 para. 12;
Musielak-Voit (2013), 1040 para.13; BeckOKBGB-Wolf/Eslami (2013), 1040 para. 12.
See Zller-Geimer (2014), 1031 para. 43; Lachmann (2008), para. 710. See also supra, Trittmann/
Hanefeld, 1031 paras 29 et seq.
Affirming a tribunals right to deny its jurisdiction when neither party has raised an objection MusielakVoit, 1040 para. 5.
Regarding the tribunals right to alert the parties Triebel/Hafner, SchiedsVZ 2009, 313 (317).
Cf. supra, paras 13 et seq.
1040 Huber/Bach
V.
Decision of the Arbitral Tribunal
A.
Assuming Jurisdiction (1040 (3) ZPO)
221
If the arbitral tribunal is of the opinion that it has jurisdiction, 1040 (3) ZPO will apply. 25
Pursuant to 1040 (3) sentence 1 ZPO, the tribunal shall in general decide on the objection to its competence by means of a preliminary ruling.35 This term may give rise to
misunderstandings. The ruling is only preliminary in the sense that it may later be set aside
by the state court. As far as the position of the arbitral tribunal is concerned, however, the
preliminary ruling more or less amounts to its last word on the issue of jurisdiction. If,
therefore, the arbitral tribunal simply gives a preliminary estimation as to the jurisdiction
issue, indicating that this is not intended to be its final position, this will not be a preliminary
ruling in the sense of 1040 (3) sentence 1 ZPO (and therefore cannot be subjected to
court control under 1040 (3) sentence 2 ZPO).36
By using the term in general (in der Regel), 1040 (3) sentence 1 ZPO expresses the legisla- 26
tors preference for a preliminary ruling (rather than a decision on the jurisdiction issue in
the final award on the merits). This preference stems from a desire to enable courts to decide
on the admissibility of arbitral proceedings as soon as possible. In providing for a reviewable preliminary award at an early stage, 1040 (3) ZPO hopes to minimise the instances in
which a tribunal renders a final award on the merits that is later set aside at the challenge or
enforcement stage.37
Nevertheless, the arbitral tribunal may decide to take a different approach and decide on 27
the jurisdiction issue only in its final award on the merits. An example where the legislator
regarded this option as preferable is the case where the arbitral tribunal considers the objection to its competence as a mere tactical device aimed at delaying the arbitral proceedings.38
However, even in such a case a preliminary ruling may be advisable, since 1040 (3) sentence
3 ZPO allows the tribunal to continue the arbitral proceedings and issue its award while state
court review of its ruling is pending.39
With regard to the preference for the preliminary ruling, the provision seems to deviate from 28
the text of Article16 ML which takes a more neutral position by providing that the arbitral
tribunal may rule on the objection either as a preliminary question or in an award on the
merits. However, the practical results of both provisions will probably not differ considerably,
as the criteria suggested for the choice of the arbitral tribunal under Article16 ML are similar
to those advanced in 1040 (3) ZPO.40
It should be noted that in both alternatives the state court will have the final word on the 29
jurisdiction issue if (one of) the parties so wish. Both decisions can be challenged the
preliminary ruling under 1040 (3) sentence 2 ZPO (see infra, paras 32 et seq.), and the final
35
36
37
38
39
40
For an example of a preliminary ruling under 1040 (3) ZPO see Preliminary Award DIS 11.08.2003,
SchiedsVZ 2004, 46. See also Preliminary Award ICC 10617, SchiedsVZ 2003, 45 and Preliminary
Award ICC 11339/DK 20.10.2003, SchiedsVZ 2005, 103.
See for instance LG Stuttgart 25.07.2005. For further examples which do not amount to such a preliminary ruling see OLG Mnchen 28.06.2006.
See Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.44.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.44. Cf. OLG Kln 16.10.2000.
See for instance UNCITRAL Digest Art. 16 note 14 (p. 79).
222
award under 1059 ZPO. However, the arbitral tribunals discretion to rule on its jurisdiction in a preliminary ruling or in a final award is as such not subject to court control.41
B.
Denying Jurisdiction
30 There is no specific provision for instances where the arbitral tribunal is of the opinion that it
does not have jurisdiction (for example, because the respondent has objected under 1040
(2) ZPO and the tribunal regards the arbitration clause as invalid). The predominant opinion
is that the arbitral tribunal should in these cases decide by way of an arbitral award rejecting
the claimants claim as inadmissible for lack of jurisdiction;42 as a consequence the tribunal
should also award costs against the claimant.43
31 The award will be treated as a normal arbitral award; it will have the effects mentioned in
1055 ZPO44 and be subject to challenge procedures under 1059ZPO (see infra, para.
42).45
VI. State Court Review

A.
Review of a Preliminary Ruling Assuming Jurisdiction
1.
Application to the State Court
32 The wording of the provision (any party, jede Partei) seems to suggest that the right to request the courts decision is not limited to the party who wants to challenge the jurisdiction
of the arbitral tribunal, but that any other party may request a court decision affirming the
arbitral tribunals decision that it has jurisdiction. Prima vista the advantage of doing so would
be that the claimant could then rely on a binding state court judgment affirming the arbitral
tribunals competence. As, however, the preliminary award will become binding after the
time limit of 1040 (3) sentence 2 ZPO has passed, one may have doubts whether there still
is a legitimate interest of the claimant to bring that request before the court.46
33 1040 (3) sentence 2 is mandatory.47
41
42
43
44
45
46
47
OLG Kln 20.07.2000; BeckOKBGB-Wolf/Eslami (2013) 1040 para. 22; Zller-Geimer (2014), 1040
para.16; Lachmann (2008), para.725; Krll, Schiedsrechtliche Rechtsprechung 2003, SchiedsVZ 2004,
113 (117); Schtze, SchiedsVZ 2009, 241 (245). Contra Musielak-Voit, 1040 para. 10, arguing that
under certain circumstances 1032 (2) ZPO should apply by way of analogy.
BGH 06.06.2002, NJW 2002, 3031 (3032) = SchiedsVZ 2003, 39 approving note Mnch, SchiedsVZ
2003, 41; (in parts) critical note by Krll, Arb.Int. 2004, 55 seq.; Bill of the Arbitration Law Reform Act,
BT-Drs. 13/5274, p.44; Lachmann (2008), para.719; Huber, SchiedsVZ 2003, 73 (75); MnchKomm
ZPO-Mnch (2013), 1040 para.29; Zller-Geimer (2014), 1040 para.10. But see for a different view
(decision to end the arbitral proceedings pursuant to 1056 (2) ZPO which would make the arbitration
agreement incapable of being performed thus paving the way for proceedings before the state court):
Lachmann (2008), para.719. See also BGH 06.06.2002, SchiedsVZ 2003, 39 (40).
Cf. Haas, FS-Rechberger (2005), p.187 (201).
BGH 06.06.2002, SchiedsVZ 2003, 39, Haas, FS-Rechberger, 2005, p.187 (205).
Cf. BeckOKBGB-Wolf/Eslami (2013), 1040 para. 23; Lachmann (2008), para. 740.
See supra, para. 3.
1040 Huber/Bach
2.
223
Preclusionary Effect of a Failure to Apply for State Court Review
If no application is made under 1040 (3) sentence 2 ZPO (within the time limit set 34
there), the parties will not be able to rely on the incompetence of the arbitral tribunal at the
challenge or enforcement stage.48 Failure to apply to the court in time will therefore have a
preclusionary effect which is similar to the preclusionary effect of the failure to object to the
competence of the arbitral tribunal under 1040 (2) ZPO.
3.
Decision of the State Court
The decision of the OLG must be made in accordance with 1062 seq. ZPO.49 The OLG 35
should not be bound by the arbitral tribunals findings of fact.50
The decision of the OLG has the effect of res iudicata for later state-court proceedings ir- 36
respective of whether the decision affirms or denies the jurisdiction. Therefore a state court
that will have to decide on the jurisdiction issue later (for instance at the challenge or enforcement stage) must not render an inconsistent decision.51
Further, the decision of the OLG will also be binding for the arbitral tribunal.52 The fact that 37
the arbitral proceedings may go on while a request for court control is pending does not
mean that the arbitral proceedings will remain unaffected by the courts decision. Therefore,
it may often be advisable for the arbitral tribunal to stay the arbitration until the OLG has
decided on the application of 1040 (3) ZPO in order to avoid unnecessary expenses.53
As a consequence, if the OLG has set aside the jurisdictional ruling of the arbitral tribunal 38
(and if the OLGs decision has become final and binding), the arbitral tribunal must not
make an award on the merits. If the arbitral tribunal nonetheless ignores the OLGs decision
and renders an award on the merits, the respondent will be successful in challenging the
award under 1059 ZPO as the 1040 (3) decision has the effect of res iudicata for 1059
challenge procedures (see supra, para. 35)
procedure is in fact necessary. Some scholars argue that an award made in spite of a 1040
(3) decision is void ipso iure, i.e. without the need for any further challenge.54 However, the
BGH seems to oppose this doctrine of ipso iure-voidness: in a recent decision, it faced an
award that was rendered before a 1040 (3) decision had become final. The BGH argued
that the ZPO rules do not treat such awards as ipso iure void. On the contrary, the BGH saw
48
49
50
51
52
53
54
BGH 27.03.2003, SchiedsVZ 2003, 133; OLG Bremen 10.11.2005; OLG Oldenburg 15.11.2002; Bill
of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 44; Musielak-Voit (2013), 1040 para. 13;
MnchKommZPO-Mnch (2013), 1040 para.41 seq.; Zller-Geimer (2014), 1040 para.12; Huber,
SchiedsVZ 2003, 73 (75); Haas, FS-Rechberger (2005), p.187 (200); see also OLG Stuttgart 14.10.2003.
For a different view under the old law see BGH 02.07.1992, NJW-RR 1993, 444 (445).
See infra, Schroeder/Wortmann, 1062 et seq.
See Lachmann (2008), para. 746; Stein/Jonas-Schlosser (2002), 1040 para.13; Zller-Geimer (2014),
1040 para.8.
Zller-Geimer (2014), 1040 para. 11; Musielak-Voit (2013), 1040 para. 12; Haas, FS-Rechberger
(2005), p.187 (197).
See Musielak-Voit (2013), 1040 para.12; Huber, SchiedsVZ 2003, 73 (75); see also supra, Huber/Bach,
1032 para. 33.
224
the existence of a challenge procedure under 1059 ZPO as evidence that the ZPO did not
intend to establish a rule of ipso iure voidness (see infra, para. 39).55
4.
State Court Procedure When the Final Award is Rendered before State Court Judgment
40 Pursuant to 1040 (3) sentence 3 ZPO, the fact that a 1040 (3) request is pending before
a state court neither prevents the arbitral tribunal from continuing with arbitral proceedings
nor from rendering an award. This gives rise to the question of what effect an award has on
ongoing state court proceedings. The BGH recently held that an intervening arbitral award
eliminates any legitimate interest in 1040 (3) proceedings. It reasoned that a 1040 (3)
decision rendered after the final award will not render the award void ipso iure,56 because the
ZPO does not provide for ipso iure voidness. Rather, the ZPO challenge system and considerations of legal certainty require that the award be set aside exclusively through a 1059
ZPO challenge procedure. The BGHs reasoning relied heavily on the preclusionary effect of
the time limits for challenges set forth in 1059 (3) ZPO, which promotes legal certainty by
making arbitral awards unchallengeable after a certain period has passed. The legal certainty
and legal clarity provided by 1059 (3)s time-preclusion rule would be undermined, so the
BGH, by an ipso iure voidness doctrine.57
41 Because an intervening final award eliminates any legitimate interest in 1040 (3) ZPO
proceedings, a state court must generally dismiss the 1040 (3) action as inadmissible.
However, courts should generally allow the applicant to amend its application as permitted
under 263 ZPO. In essence, the court would permit the applicant to switch from a 1040
(3) application to a 1059 ZPO challenge. The possibility of such a modification, however,
is only available when the 1040 (3) proceeding is still pending before the OLG. It is barred
once the proceedings reach the BGH.58
B.
Control of a Final Award Assuming Jurisdiction
42 As described above (paras 26 seq.) the arbitral tribunal may choose to decide on its jurisdiction only in the final award (and not by way of a preliminary ruling under 1040 (3) ZPO).
In that case, the court control proceedings under 1040 (3) sentence 2 ZPO will not be
available to the parties. The arbitral tribunals decision on its competence will then be subject
to court control at the challenge or enforcement stage (1059, 1060 ZPO).59 It should be
noted that the failure to object in time to the jurisdiction of the arbitral tribunal (1040 (2)
ZPO) will in principle preclude the concerned party from raising objections to the jurisdiction at the challenge or enforcement stage (cf. supra, para.20).
55
56
57
58
59
BGH 19.09.2013 para. 9.

This question had been subject to some debate amongst German scholars before: Approving an ipso iurevoidness: Musielak-Voit (2013), 1040 para.12; HKZPO/Saenger 1032 para. 11; in tendency Huber,
SchiedsVZ 2003, 73 (75); opposing: Lachmann (2008), para. 749; Zller-Geimer (2014), 1040 para.
15; Haas, FS Rechberger (2005), 187 (202).
BGH 19.09.2013 para. 10.
See BGH 19.09.2013 para. 12.
OLG Frankfurt 30.06.2003; Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 44; ZllerGeimer (2014), 1040 para.8; Huber, SchiedsVZ 2003, 73 (75); Musielak-Voit (2013), 1032 para.9.
1040 Huber/Bach
C.
225
Control of a Final Award Denying Jurisdiction
According to the BGH,60 the fact that the arbitral tribunal has incorrectly regarded the arbi- 43
tration agreement as invalid will not as such lead to a ground for challenging the award. In
fact, 1059 (1) Nos 1 (a) and (c) ZPO only cover the reverse situation, where the arbitral
tribunal has incorrectly regarded the arbitration agreement as valid. The BGH has explicitly
refused to apply the provision by analogy to the present situation.61 As a consequence, unless
the award can be challenged on one of the other grounds mentioned in 1059 ZPO, the
incorrect refusal to accept jurisdiction will not be corrected by the state courts. It is submitted
that this position of the BGH is correct. There is no urgent need for creating a special ground
for challenge in the present situation; the parties will be free to pursue their claim before
the state court as there is a binding decision (by the arbitral tribunal) that the arbitration
agreement is invalid, and as such there will be no defence under 1032 (1) ZPO against the
court proceedings.62
60
61
62
BGH 06.06.2002, SchiedsVZ 2003, 39.

BGH 06.06.2002, SchiedsVZ 2003, 39; OLG Hamburg 30.08.2002; for a different opinion see note by
Mnch on BGH 06.06.2002, SchiedsVZ 2003, 39 (41); Krll, Arb.Int. 2004, 55; cf. infra, Krll/Kraft,
But see for a more critical position towards the BGH: Krll, Arb.Int. 2004, 55.
1041 Interim Measures of Protection

(1) Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of
a party, order such interim measures of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute. The arbitral tribunal
may require any party to provide appropriate security in connection with such
measure.
(2) The court may, at the request of a party, permit enforcement of a measure referred
to in subsection 1, unless application for a corresponding interim measure has already been made to a court. It may recast such an order if necessary for the purpose
of enforcing the measure.
(3) The court may, upon request, repeal or amend the decision referred to in subsection
2.
(4) If a measure ordered under subsection 1 proves to have been unjustified from the
outset, the party who obtained its enforcement is obliged to compensate the other
party for damage resulting from the enforcement of such measure or from his providing security in order to avoid enforcement. This claim may be put forward in the
pending arbitral proceedings.
Short Bibliography: Bandel, Einstweiliger Rechtsschutz im Schiedsverfahren, Mnchen 2000;
Berger, Das neue Recht der Schiedsgerichtsbarkeit, / The New German Arbitration Law, Kln 1998;
Kreindler/Schfer/Wolff, Schiedsgerichtsbarkeit Kompendium fr die Praxis, Frankfurt 2006;
Kronke, Internationale Schiedsverfahren nach der Reform, RIW 1998, 257; Lachmann, Handbuch
fr die Schiedsgerichtspraxis, Kln 2008; Schfer, New Solutions for Interim Measures of Protection in International Commercial Arbitration, Electronic Journal of Comparative Law 1998, 1;
Schroth, Einstweiliger Rechtsschutz im deutschen Schiedsverfahren, SchiedsVZ 2003, 102; Schtze,
Einstweiliger Rechtsschutz im Schiedsverfahren, BB 1998, 1650; Schumacher, Das neue 10. Buch
der Zivilprozessordnung im Vergleich zum UNCITRAL-Modellgesetz ber die internationale
Handelsschiedsgerichtsbarkeit, BB 1998, Beilage No. 2, p. 6; Schtze, Schiedsgericht und Schiedsverfahren, Munich 2012; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005; Zekoll/Giessen,
Das ex parte-Eilverfahren und das Exequaturverfahren fr schiedsgerichtliche Eilmanahmen im
UNCITRAL Model Law Anspruch und Wirklichkeit einer Reform, SchiedsVZ 2007, 137.
I.
II.
III.
IV.
Para.
Relevance of 1041 ZPO . . . . . . . . . . . . . . . . 1
Opting Out of 1041 ZPO . . . . . . . . . . . . . . 6
Detailed Commentary on 1041 ZPO . . . 7
A. The Arbitral Tribunals Power
to Order Interim Measures of
Protection (1041 (1) sentence 1
ZPO). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1. Preconditions and Boundaries
of the Arbitral Tribunals Power . . . . 8
2. Procedure for Obtaining
Arbitral Interim Relief . . . . . . . . . . . . 15
Para.
3. Measures Available from an
Arbitral Tribunal . . . . . . . . . . . . . . . . . 20
B. The Arbitral Tribunals Power to
Request the Furnishing of Security
(1041 (1) sentence 2 ZPO). . . . . . . . 25
C. Leave of the Court to Enforce the
Arbitral Interim Measure (1041
(2) sentence 1 ZPO) . . . . . . . . . . . . . . . . 26
1. Competent Court for Application for Leave of Enforcement . . . . 26
2. Admissibility of an Application
to the Competent Court for
Leave of Enforcement . . . . . . . . . . . . 28
1041 Schfer
Para.
3. Scope of the Courts Review of
the Arbitral Interim Measure of
Protection . . . . . . . . . . . . . . . . . . . . . . . 31
4. Courts Discretion to Grant
Leave of Enforcement . . . . . . . . . . . . 34
D. Right of the Court to Recast the
Arbitral Interim Measure (1041
(2) sentence 2 ZPO) . . . . . . . . . . . . . . . . 36
E. Application to Court to Withdraw
or Change the Order to Enforce
the Arbitral Interim Measure
(1041 (3) ZPO) . . . . . . . . . . . . . . . . . . 38
I.
227
Para.
F. Liability of the Applicant for
Unjustified Arbitral Interim
Measure of Protection (1041 (4)
sentence 1 ZPO) . . . . . . . . . . . . . . . . . . . . 39
G. Liability Claim Can be Brought in
Pending Arbitration Procedure
(1041 (4) sentence 2 ZPO). . . . . . . . 40
H. Costs for Bringing an Application
for Leave of Enforcement. . . . . . . . . . . . 41
I. Emergency Arbitrator . . . . . . . . . . . . . . . 42
1041 Code of Civil Procedure (Zivilprozessordnung ZPO) addresses the subject of 1

interim relief by the arbitral tribunal. This provision spells out the arbitral tribunals power to
grant interim measures of protection in conformity with Article17 UNCITRAL Model Law
(ML).2 Furthermore, it provides the statutory basis for an elaborate mechanism for compulsory enforcement of such measures in the event they are not voluntarily heeded.3 Since the
arbitral tribunal lacks the imperium, or police power, to enforce its own orders if and when
they are not heeded, it may be necessary in such cases for a court of appropriate jurisdiction,
whether at the seat of arbitration or elsewhere, to apply compulsory enforcement.
Under 1041 ZPO, an arbitral tribunal is not limited to German-style interim measures of 2
protection. Furthermore, under German arbitration law an arbitral tribunal has the power
to order ex parte measures, which in turn can also be granted leave of enforcement on an ex
parte basis.
When granting leave of enforcement, the German court can, if necessary, recast the interim 3
measure of protection ordered by the arbitral tribunal to comply with the requirements
for enforcement under German civil procedure law (Zwangsvollstreckungsrecht). Leave of
enforcement is available to arbitral interim measures of protection emanating from arbitral
tribunals having their seat in Germany. Moreover, it is also available in the case of arbitral
interim measures rendered by tribunals with their seat outside of Germany.
At the time of enacting 1041 ZPO, commentators had doubts as to whether establishing 4
an express statutory entitlement to arbitral tribunals to render interim measures would meet
with acceptance in practice.4 In fact, in the years since the entry into force of the reformed
10th Book, 1041 of the ZPO appears to have proved to be an efficient mechanism in appropriate cases as an alternative to the seeking and obtaining of interim relief from state courts.
1
2
Cf. Schumacher, BB 1998, Beilage No. 2, p.6 (11); Zekoll/Giessen, SchiedsVZ 2007, 137; MnchKommZPOMnch (2013), 1041 paras1, 5.
Cf. Report of UNCITRALs Working Group II on Arbitration and Conciliation on the proposed revision
of Art.17 ML with respect to introducing a mechanism for the enforcement of arbitral interim measures
of protection, UN-Doc A/CN.9/592, 27.02.2006.
Schtze, BB 1998, 1650.
228
II.
Legislative History
5 The arbitral tribunals statutory power to order interim measures of protection is a novelty
in German law.5 Under the pre-1998 reform regime, the arbitral tribunals power to grant
interim measures of protection was disputed.6 Under the now prevailing regime, parallel powers to grant interim relief are bestowed on the arbitral tribunal and the courts. The
travaux prparatoires to the new ZPO provision make clear that the scope of interim relief
available from the arbitral tribunal should not be any less broad in nature or extent than the
scope for such relief available from the courts.7 Parties are at liberty to apply either to a court
of appropriate jurisdiction or to the arbitral tribunal for such relief; the decision in this regard
will of course depend upon an array of legal, factual and pragmatic considerations.8
III. Opting out of 1041 ZPO

6 1041 ZPO is a non-mandatory provision. Parties are therefore free to opt out of arbitral
interim measures of protection. They can do so by express agreement or by reference to arbitration rules that do not permit such a power (cf. 1041 (3)ZPO). Whether such an opt-out
is advisable will of course depend upon the particular circumstances and is to be considered
with the utmost of care.
IV. Detailed Commentary on 1041 ZPO

A.
The Arbitral Tribunals Power to Order Interim Measures of Protection (1041 (1)
sentence 1 ZPO)
7 German arbitration law provides certain parameters within which the arbitral tribunals
power to grant interim relief operates. These parameters set forth preconditions and boundaries of the arbitral tribunals power (under 1.), the procedure for obtaining arbitral interim
relief (under 2.) and the measures available from the arbitral tribunal (under 3.).
1.
Preconditions and Boundaries of the Arbitral Tribunals Power
8 a. Prima Facie Valid Arbitration Agreement: In terms of the threshold of competence, the
arbitral tribunal needs to ensure on a prima facie basis that a valid arbitration agreement exists
as basis for its jurisdiction to render an interim measure.9
9 b. No Reach to Third Parties: An arbitral tribunal has the power to grant interim relief only to
or against parties which are bound by the underlying arbitration agreement. Accordingly, the
arbitral tribunal is not empowered to render an order of interim relief against a third party,
such as a bank, which is not otherwise a party to the arbitration agreement.10
10 c. Discretionary Power Bestowed on the Arbitral Tribunal: The arbitral tribunal is to decide
whether or not to grant an interim measure of protection in the exercise of its otherwise
5
6
7
8
9
10
Under the pre-reform arbitration law, there was no express statutory provision respecting the power
of the arbitral tribunal to grant interim relief. As a result, the issue of whether an arbitral tribunal was
competent to order such measures was disputed, cf. Schtze, BB 1998, 1650 with further references.
Schtze, BB 1998, 1650 with further references.
Berger, (1998), p.224; cf. Zller-Geimer (2014), 1041 para.1.
Cf. Kreindler/Schfer/Wolff (2006), paras905 et seq.
Cf. Stein/Jonas-Schlosser (2002), 1041 para.1; Kreindler/Schfer/Wolff (2006), para.917.
Cf. Lachmann (2008), para. 2897; Kronke, RIW 1998, 257 (264); Kreindler/Schfer/Wolff (2006),
para.928; cf. OLG Saarbrcken 27.02.2007, OLGR 2007, 426 (429).
1041 Schfer
229
available procedural discretion. Accordingly, the basis for the arbitral tribunals power and
discretion in this regard stands somewhat in contrast with the basis applicable to the procedure for assessing and granting petitions for interim measures by the German state courts.11
Under the procedure applicable in the German courts, it is incumbent upon the judge to
order an interim measure of protection once the prescribed preconditions for such measures
are fulfilled by the petitioning party.
It has been observed that this difference in approach could encourage a tactical preference 11
by the petitioner for petitioning the state court rather than the arbitral tribunal for interim
relief.12 In practice, this may or may not be the case depending upon the circumstances and
the participants involved. Other considerations could propel a party to avoid an impression
of circumventing the arbitral tribunal in favour of the state courts. In any event, a party can
still apply to court for an interim measure of protection if the arbitral tribunal has declined
to grant the requested relief.13 Alternatively, the otherwise existing jurisdiction of the courts
might not suffice to ensure the interim relief sought as a practical matter, especially where a
foreign element is present.
d. Necessity of Interim Measure of Protection: 1041 (1) sentence 1 ZPO bestows on the arbitral 12
tribunal the power to grant such interim measures of protection with respect to the subject
matter in dispute as it considers necessary. Besides the necessity requirement, 1041 ZPO
does not stipulate any other statutory preconditions that an arbitral tribunal would need to
consider when granting an application for interim relief.14 In practice, an interim measure
of protection is often already regarded as necessary if there is a risk that an applicants right
might be infringed.15
e. Relation to the Subject Matter in Dispute: 1041 (1) sentence 1 ZPO requires the interim 13
measures of protection to be linked to the subject matter in dispute.16 Such qualification is
understood to exclude anti-suit injunctions from the scope of arbitral interim relief, as these
measures serve to protect the arbitral process rather than the subject matter in dispute.17
f. No Pre-emption of the Dispute: The provisional nature of interim relief requires under Ger- 14
man law that the remedy ordered by the arbitral tribunal not pre-empt the dispute.18 Only in
exceptional circumstances is a pre-emption of the dispute permissible, as is also the case with
respect to interim measures granted by state courts if the applicant would otherwise suffer
irreparable harm.19
11
12
13
14
15
16
17
18
19
Cf. Zller-Geimer (2014), 1041 para.1; Stein/Jonas-Schlosser (2002), 1041 para.2; Thomas/PutzoReichold (2013), 1041 ZPO para.2.
Kronke, RIW 1998, 257 (264) with further reference; cf. Zller-Geimer (2014), 1041 ZPO para.1.
Cf. Zller-Geimer (2014), 1041 para.1.
Cf. Bandel (2000), p.102; Kreindler/Schfer/Wolff (2006), para.921.
Cf. MnchKommZPO-Mnch (2013), 1041 para.20; Baumbach/Lauterbach/Abers/Hartmann (2014),
1041 para.3.
Cf. Bandel (2000), pp.185 et seq.; Kreindler/Schfer/Wolff (2006), para.893; contra Schlosser, Anti-suit
injunctions zur Untersttzung von internationalen Schiedsverfahren, RIW 2006, 486 (491 et seq.).
Cf. OLG Frankfurt 05.04.2001, NJW-RR 2001, 1078; Schroth, SchiedsVZ 2003, 102 (103); Kreindler/
Schfer/Wolff (2006), para.930.
230
2.
Procedure for Obtaining Arbitral Interim Relief
15 a. Partys Application Required: The arbitral tribunal can grant an interim measure of protection solely at the request of a party.20 1041 ZPO does not foresee that the arbitral tribunal
may act sua sponte. The application does not necessarily need to specify the relief sought. It
is sufficient that the arbitral tribunal be able to identify the scope of protection requested.21
16 b. Party Autonomy and the Arbitral Tribunals Procedural Discretion: Unless the parties have
provided for specific rules governing the interlocutory proceedings to obtain an interim
measure, the arbitral tribunal is free to structure such proceedings as it sees fit within the
otherwise applicable parameters of its discretion and mandatory provisions respecting, e.g.
due process and equal treatment, 1042 (3) ZPO.22 In practice, an arbitral tribunal will expedite any decision on an interim relief application. Depending on whether it considers an ex
parte procedure appropriate, the arbitral tribunal will give the opposing party an opportunity
to present its case prior to making any decision. In an inter partes procedure, the parties will
generally submit briefs on the pertinent issues relating to the interim relief application and
the arbitral tribunal will arrange for an oral exchange of arguments, possibly by way of conference call.
17 c. Proving Allegations in the Interim Proceedings: In interim relief proceedings before German
courts, a lower standard of proof applies than in state court litigation. It is sufficient that the
applicant make a prima facie showing (glaubhaft machen) pursuant to 920, 936ZPO.23
A typical means of making ones case plausible is by furnishing an affidavit (Versicherung an
Eides statt).24 Any false statement in an affidavit furnished before a German court although
not before an arbitral tribunal triggers criminal liability pursuant to 156 Criminal Code
(Strafgesetzbuch StGB). The lower standard of proof also applies to arbitral interim relief
proceedings.25 However, the arbitral tribunal is not entitled to accept affidavits.26
18 d. Ex parte Orders: 1042 (1) ZPO, on its face, would appear to provide solely for the granting of inter partes measures by arbitral tribunals. It provides for the mandatory audiatur et
altera pars principle, stressing the need to have the full opportunity to present ones case.
Quite apart from the fact that this full opportunity is not necessarily fully reflected in certain
commonly stipulated institutional arbitration rules, which may talk rather of reasonable or
equal opportunity, this principle is only a general rule of procedure. Indeed, there are also
exceptions in court proceedings for interim relief.27
20
21
22
23
24
25
26
27
Cf. Stein/Jonas-Schlosser (2002), 1041 para. 11; MnchKommZPO-Mnch (2013), 1041 para. 7;
Cf. Bandel (2000), pp.82 et seq.; MnchKommZPO-Mnch (2013), 1041 para.7; Kreindler/Schfer/
Wolff (2006), para.915 with further references.
Cf. Baumbauch/Lauterbach/Albers/Hartmann (2014), 1041 para.3; Kreindler/Schfer/Wolff (2006),
para.919.
MnchKommZPO-Mnch (2013), 1041 para.24; cf. Zller-Vollkommer (2014), 920 paras8 et seq.;
MnchKommZPO-Drescher (2012), 920 paras12 et seq.; Musielak-Huber (2013), 920 paras9 et seq.
Cf. Zller-Vollkommer (2014), 920 para. 10; MnchKommZPO-Drescher (2012), 920 para. 19;
Musielak-Huber (2013), 920 para.10.
Cf. Stein/Jonas-Schlosser (2002), 1041 para.11; MnchKommZPO-Mnch (2013), 1041 para.24.
Cf. Stein/Jonas-Schlosser (2002), 1041 para. 11; MnchKommZPO-Mnch (2013), 1041 para. 24;
Cf. Zller-Vollkommer (2014), vor 916 para.1a.
1041 Schfer
231
Commentators are divided as to whether arbitral relief on an ex parte basis is in fact permissi- 19
ble under German arbitration law.28 Statutory support for such power has been derived from
1063 (3) sentence 1 ZPO.29 Under this rule, a German state court judge can grant leave of
enforcement of an interim measure of protection without a prior hearing of the party opposing the application. The imposition of any requirement to hold a hearing would render any
argument in favour of the permissibility of arbitral tribunal-granted ex parte orders senseless.
It is noteworthy in any event that, similar to court-ordered ex parte interim relief, the arbitral
tribunal must give the opposing party ex post an effective opportunity to present its case.30
3.
Measures Available from an Arbitral Tribunal
a. No Statutory Reference to Specific Interim Measures of Protection: 1041 (1) sentence 1 ZPO 20
bestows on the arbitral tribunal the power to grant such interim measures of protection with
respect to the subject matter in dispute as it considers necessary. It does not refer to any specific interim measure of protection known in German litigation proceedings.31 It speaks only
of interim measures of protection as a category of remedies.32 As such, 1041 ZPO neither
limits the scope of interim measures available from an arbitral tribunal to specific measures,
nor requires the arbitral tribunal to apply the statutory preconditions of such measures as
spelled out in the German Code of Civil Procedure.33 At the same time, 1041 (1) sentence
1 ZPO provides no guidance for the applicant on the measures available and their preconditions. In practice, it is quite common to take the local standards at the seat of the arbitration
or the standards applicable in the home jurisdictions of the arbitrators into account when
formulating a request for interim relief.34
b. No Limitation to German-style Interim Measures of Protection: Interestingly, as stated, the sole 21
requirement stipulated by 1041 (1) sentence1ZPO is that the arbitral tribunal considers
the interim measure sought to be necessary. Thus, the arbitral tribunal is not limited, in terms
of scope or nature of the measure, to German-style interim measures of protection.35
28
29
30
31
32
33
34
35
Pro: Bandel (2000), p. 99; Zller-Geimer (2014), 1041 para. 1; Schwab/Walter (2005), Chap. 17a
para.20; Stein/Jonas-Schlosser (2002), 1041 para.11; Kreindler/Schfer/Wolff (2006), para.920; contra:
MnchKommZPO-Mnch (2013), 1041 para.25; Schtze (2012), para.483; Baumbauch/Lauterbach/
Albers/Hartmann (2014), 1041 para.3.
Cf. Musielak-Voit (2013), 1041 para. 3; Stein/Jonas-Schlosser (2002), 1041 para. 14; Schfer, New
Solutions for Interim Measures of Protection in International Commercial Arbitration: English, German
and Hong Kong Law Compared, Electronic Journal of Comparative Law 1998, 1 (18 seq.) at <www.ejcl.
org/22/art22-2.html>.
Cf. Bandel (2000), p.99; Stein/Jonas-Schlosser (2002), 1041 para.11; Musielak-Voit (2013), 1041
para.3; Zller-Geimer (2014), 1041 para.1.
Cf. Stein/Jonas-Schlosser (2002), 1041 para. 2; Kreindler/Schfer/Wolff (2006), para. 923; Schwab/
Walter (2005), Chap. 17a para.5.
Cf. Stein/Jonas-Schlosser (2002), 1041 para. 12; Baumbach/Lauterbach/Albers/Hartmann (2014),
1041 para.3; Schwab/Walter (2005), Chap. 17a para.5.
Cf. Kreindler/Schfer/Wolff (2006), paras922, 924; see Mouawad/Silbert, A Guide to Interim Measures in
Investor-State Arbitration, Arbitration International, Vol. 29, No. 3, 2013, p. 381 for an exposition of the
proliferation of interim relief in international investment arbitration.
Cf. Bandel (2000), p. 99; Stein/Jonas-Schlosser (2002), 1041 para. 2; Musielak-Voit (2013), 1041
para.4; Schwab/Walter (2005), Chap. 17a para.5; contra: Schtze (2012) para.482, 915 et seq. ZPO
apply by analogy to arbitral interim relief.
232
22 That this notable distinction is the case can be inferred from 1041 (2) sentence2 ZPO.
This provision sets forth that the court may recast an arbitral tribunal order, if necessary, for
the purpose of enforcing the measure. The provision to recast is in place to ensure that orders
issued by arbitral tribunals can be translated into orders which homologate into the enforcement system prevailing in German civil procedure law, with its strict so-called principle of
certainty (Bestimmtheitsgrundsatz).36
23 If the arbitral tribunal were in principle obligated to render interim orders in accordance
with the enforcement system prevailing in German civil procedure law, then there would
hardly be a need for recasting in the event of a need for compulsory enforcement through
the courts. The issue is not solely one of academic significance and can arise in particular if an
arbitral tribunal having its seat in Germany takes it upon itself to order a foreign-style interim
measure of protection which does not per se exist in German civil procedure, but may exist
elsewhere.
24 c. Examples: In practice, interim measures of protection serve various purposes, inter alia,
to maintain or restore the status quo, to provide means of preserving assets out of which a
subsequent award may be satisfied and to preserve evidence.37 By way of example, an arbitral
tribunal may be approached to order the other party to refrain from invoking a bank guarantee. Equally, a party might seek to request that the arbitral tribunal preserve certain goods
by ordering their proper storage. The arbitral tribunal may also order a party to refrain from
certain conduct that aggravates the conflict.
B.
The Arbitral Tribunals Power to Request the Furnishing of Security ( 1041 (1)
sentence 2 ZPO)
25 Subsection 1 empowers the arbitral tribunal to order sua sponte, or upon application, that
the applicant or other party provide appropriate security in connection with the measure
sought.38 The arbitral tribunal has the discretion to decide whether and in what amount
security needs to be furnished.39 The furnishing of security aims to secure a damages claim
to which the party against whom the interim measure is directed might be entitled pursuant
to 1041(4)ZPO. Alternatively, the arbitral tribunal may allow a party against whom the
order is directed to furnish security to prevent the effectuation of the interim order (Abwendungsbefugnis).40
C.
Leave of the Court to Enforce the Arbitral Interim Measure (1041 (2) sentence 1
ZPO)
1.
Competent Court for Application for Leave of Enforcement
26 a. German Situs: Pursuant to 1062 (1) No. 3 ZPO, the Higher Regional Court (Oberlandesgericht OLG) designated in the arbitration agreement or, more commonly, located in
the district where the arbitration has its seat, is competent to decide on a petition for leave
of enforcement.
36
37
38
39
40
Berger (1998), p.224.

Cf. Stein/Jonas-Schlosser (2002), 1041 paras3 et seq.; Schwab/Walter (2005), Chap. 17a paras4 et seq.
Cf. Schwab/Walter (2005), Chap. 17a para. 32; MnchKommZPO-Mnch (2013), 1041 para. 27;
Kreindler/Schfer/Wolff (2006), para.932.
Cf. Bandel (2000), p.112; Musielak-Voit (2013), 1041 para.4.
1041 Schfer
233
b. Non-German Situs: It should be noted that even where the arbitration has its seat outside 27
Germany, German courts are to grant leave of enforcement of foreign arbitral interim measures of protection.41 1062 (2) ZPO contains a jurisdictional rule for the case of a nonGerman seat of arbitration. Thus, in such cases competence lies with the OLG in the district
where the party opposing the application has its place of business or habitual residence, or
where the assets of that party or the property in dispute, or affected by the measure, are located. In any event, the Kammergericht Berlin (which is a special term for the OLG in Berlin)
is a competent default court, i.e. the court is competent to hear applications if no jurisdiction
of another OLG could otherwise be established.
2.
Admissibility of an Application to the Competent Court for Leave of Enforcement
In order for the application for leave of enforcement to the state court to be granted, the 28
opposing party need not already have failed or refused to comply with the order.42
1041 (2) ZPO provides that a court may permit enforcement of an interim measure of 29
protection granted by an arbitral tribunal unless an application for a corresponding interim
measure of protection has already been made to a court. The court has discretion.43 The
provision intends to forestall a situation whereby two different state courts are petitioned
to entertain a request for interim measures as to the same matter, with the attendant risk of
contradictory or inconsistent outcomes.44
At the same time, it should be noted that it is possible to apply simultaneously to a court on 30
the one hand and to the arbitral tribunal on the other. In such case, however, it would not be
possible to obtain leave of enforcement by that court for the interim measure of protection
requested and granted by the arbitral tribunal.45 Again, whether and when simultaneous or
successive petitions for interim relief to the state court and to the arbitral tribunal are advisable will depend upon the legal, factual and pragmatic circumstances attending the specific
dispute.
3.
Scope of the Courts Review of the Arbitral Interim Measure of Protection
The travaux prparatoires refer in this context to the ability of the court to review the validity 31
of the arbitration agreement or to refuse the granting of leave of enforcement should the
arbitral measure lack appropriate proportionality (Verhltnismigkeitskontrolle).46
41
42
43
44
45
46
Bandel (2000), p.369; Stein/Jonas-Schlosser (2002), 1041 para.20; Schwab/Walter (2005), Chap. 30
para.12; MnchKommZPO-Mnch (2013), 1041 para.29; contra Gottwald/Adolphsen, Das neue deutsche Schiedsverfahrensrecht, DStR 1998, 1017 (1020); Musielak-Voit (2013), 1041 para.6; 1025,
1026 ZPO do not provide for such support.
Cf. Lachmann (2008), para. 2914; Musielak-Voit (2013), 1041 para. 6; MnchKommZPO-Mnch
(2013), 1041 para.31; Kreindler/Schfer/Wolff (2006), para.941; contra Schwab/Walter (2005), Chap.
17a para.28.
Cf. Stein/Jonas-Schlosser (2002), 1041 para. 14; Zller-Geimer (2014), 1041 para. 3; Thomas/Putzo-Reichold (2013), 1041 para.2.
Schumacher, BB 1998, Beilage No. 2, pp.6 (11-12).
Schroth, SchiedsVZ 2003, 102 (105); Musielak-Voit (2013), 1033 para.5.
Berger (1998), p.224.
234
32 It is sensible to allow the Court to review the validity of the arbitration agreement.47 In this
context, 1040 (2) sentence 1 ZPO is relevant.48 The provision requires the respondent to
raise any jurisdictional objections at the latest when submitting its statement of defence. Any
failure to do so precludes jurisdictional objections at later stages of the arbitration or in the
post-award phase. The same applies if the arbitral tribunal has rejected respondents timely
jurisdictional objections and respondent has either failed to appeal against the arbitral tribunals decision before the state courts or the state courts have rejected an appeal.49
33 Since the arbitral tribunal has the discretion to order interim relief, German courts abstain
from reviewing the measures ordered by the arbitral tribunal au fond, i.e. the court will not
answer the question of whether it would have granted the same measure had an application
been made to court.50 However, the court is entitled to review the order with a view to its
conformity with the ordre public.51
4.
Courts Discretion to Grant Leave of Enforcement
34 The court has the discretion to decide whether to grant permission to enforce an arbitral
tribunal-granted interim measure.52
35 By way of example, the OLG Frankfurt granted leave of enforcement of an arbitral interim
measure of protection which effectively pre-empted the underlying merits of the matter in
dispute.53 The OLG Saarbrcken denied leave of enforcement in a case where the interim
measure of the arbitral tribunal was evidently illegal (greifbar Gesetzeswidrig) and the
arbitral tribunal had made evident mistakes in exercising its discretion (offensichtliche
Ermessensfehler).54 It cannot be expected by a court to grant leave of enforcement of such
evidently illegal measures and take responsibility for them.55
D.
Right of the Court to Recast the Arbitral Interim Measure (1041 (2) sentence 2 ZPO)
36 1041 (2) sentence 2 ZPO bestows upon the German courts the power to recast an
arbitral tribunals order if necessary for the purpose of effecting enforcement of that measure. German enforcement law sets forth strict requirements of certainty in this regard
(Bestimmtheitsgrundsatz).56 Accordingly, to the extent an arbitral tribunal grants an interim
47
48
49
50
51
52
53
54
55
56
Cf. Musielak-Voit (2013), 1041 para.7; MnchKommZPO-Mnch (2013), 1041 paras37 et seq.; ZllerGeimer (2014), 1041 para.3; Kreindler/Schfer/Wolff (2006), para.942.
Cf. Baumbach/Lauterbach/Albers/Hartmann (2014), 1041 para.4; contra Musielak-Voit (2013), 1041
para.7.
Cf. Kreindler/Schfer/Wolff (2006), para.942; cf. supra, Musielak-Voit (2013), 1040 paras 6 et seq.
Cf. OLG Frankfurt 05.04.2001, NJW-RR 2001, 1078, English abstract (2003) Int.A.L.R. N-61; OLG
Saarbrcken 27.02.2007, OLGR 2007, 426 (427); MnchKommZPO-Mnch (2013), 1041 para.40;
Stein/Jonas-Schlosser (2002), 1041 para.14; Kreindler/Schfer/Wolff (2006), para.943.
OLG Saarbrcken 27.02.2007, OLGR 2007, 426 (427); Cf. Kreindler/Schfer/Wolff (2006), para.943.
OLG Saarbrcken 27.02.2007, OLGR 2007, 426 (427); Cf. Zller-Geimer (2014), 1041 para.3; see also
Schwab/Walter (2005), Chap. 17a para.30.
OLG Frankfurt 05.04.2001, NJW-RR 2001, 1078, English abstract (2003) Int.A.L.R. N-61; cf. Kreindler/
Schfer, Rev.Arb. 2003, 495 (519).
OLG Saarbrcken 27.02.2007, OLGR 2007, 426 (427).
OLG Saarbrcken 27.02.2007, OLGR 2007, 426 (427).
Cf. Zller-Geimer (2014), 1041 para.3; Berger (1998), p.224.
1041 Schfer
235
measure of protection which does not meet these requirements, the court of appropriate
jurisdiction can recast the order to bring it into compliance.57
By way of example, the OLG Karlsruhe had before it a case under the then Brussels Conven- 37
tion for the enforcement of an English Mareva injunction.58 The court enforced the Mareva
injunction under 890 ZPO, which bears an injunctive title, instead of translating it into a
functionally equivalent pre-judgement attachment (Arrest). A similar approach would likely
be taken by a German court faced with the issue of enforcement of other arbitral interim
orders, particularly those rendered at a non-German seat that did not clearly homologate
into a form of interim relief which was consistent with German-style procedural practice in
this respect.
E.
Application to Court to Withdraw or Change the Order to Enforce the Arbitral Interim
Measure (1041 (3) ZPO)
It is noteworthy that pursuant to 1041 (3) ZPO, the state court may, upon request, repeal 38
or amend its prior decision to grant leave to enforce the arbitral tribunals order of an interim
measure. Such application requires an appropriate reason, e.g. change of circumstances since
granting leave of enforcement.59 Any party to the arbitration may make such a request. Thus
the OLG Jena had before it an application to repeal an order to enforce the arbitral interim
measure of protection on the grounds that it allegedly lacked foundation.60 The court rejected
the application, reasoning that the arbitral tribunal had not modified its order and that the
application failed to fulfil the preconditions of 1041 (3) ZPO. A precondition for success
under 1041 (3) ZPO would have been a change of circumstances, but not the alleged lack
of foundation. Consequently, the court refused to review the arbitral interim measure of
protection au fond.
F.
Liability of the Applicant for Unjustified Arbitral Interim Measure of Protection

(1041 (4) sentence 1 ZPO)
1041 (4) sentence 1 ZPO establishes a statutory duty on the part of the applicant to 39
indemnify the target of the interim measure in the event the provisional measure enforced
against the opposing party subsequently proves to have been unjustified from the outset.
This provision thereby restates a principle which already applies in the case of other court
ordered interim relief, 945ZPO.61
57
58
59
60
61
Cf. Baumbach/Lauterbach/Albers/Hartmann (2014), 1041 para.4.

OLG Karlsruhe 19.12.1994, ZZPInt 1996, 91 (93-94), with note by Zuckerman/Grunert, ZZPInt 1996,
96 (102); so-called Mareva injunctions have, according to Rule 25.1 (1)(f) English Civil Procedure
Rules, now been given the term freezing injunctions.
Cf. Zller-Geimer (2014), 1041 para.4; see also Musielak-Voit (2013), 1041 para.11.
OLG Jena 24.11.1999, BB 2000, Beilage No. 12, p. 22; cf. Krll, Das neue deutsche Schiedsrecht vor
staatlichen Gerichten: Entwicklungslinien und Tendenzen 1998-2000, NJW 2001, 1173 (1179); Kreindler/Schfer, Rev.Arb. 2003, 495 (522).
236
G.
Liability Claim Can be Brought in Pending Arbitration Procedure (1041 (4) sentence
2 ZPO)
40 1041 (4) sentence 2 ZPO sets forth that a claim for indemnification under 1041 (4)
sentence 1 ZPO can be brought in the pending arbitration irrespective of the scope of the
arbitration agreement.62
H.
Costs for Bringing an Application for Leave of Enforcement
41 A separate court fee is due for an application for leave of enforcement of an arbitral interim
measure of protection as well as an application to court to withdraw or amend an order to
enforce the arbitral interim measure pursuant to No. 1626 of the Cost Schedule, annex 1 to
the Court Fees Act (Gerichtskostengesetz GKG). The statutory attorneys fee schedule considers the application for leave of enforcement, as well as the later application for withdrawal
or amendment of said order, as one single cause for triggering fees pursuant to 17 No. 6
Lawyers Fees Act (Rechtsanwaltvergtungsgesetz RVG).
I.
Emergency Arbitrator
42 Recently, some non-German arbitration institutions have devised rules for an emergency
arbitrator to address the problem that until the constitution of the arbitral tribunal, there is
no arbitrator in place to handle an interim measure application.63
43 The lack of an arbitral decision-maker in the time span until the constitution of an arbitral
tribunal, which often lasts at least two months, forces a party to apply to the competent court
or to forgo effective interim protection in this time span. Some arbitral institutions saw the
need to close this gap by providing emergency arbitrator services. Often, these services need
not be agreed upon in addition to the arbitration clause, but are automatically included when
parties refer to the arbitration rules of the pertinent institution.64
44 Under these rules, a party can apply either before or after the initiation of arbitration for
interim measures to be decided by an emergency arbitrator, solely appointed at short notice
for taking such a decision in a short time frame, as prescribed in the rules. Any measure
ordered by the emergency arbitrator could be rendered in the form of an interim award or
procedural order, depending on the applicable provisions and requirements of the forum in
which compulsory enforcement by the courts might be applied for.
45 The decision of an emergency arbitrator should be treated as arbitral interim relief covered
by 1041 and should therefore be considered permissible under German arbitration law. If
enforcement in Germany of an emergency arbitrator decision rendered at a non-German
seat is at stake, an arbitrator should couch its decision in a form which complies with 1041.
62
63
64
Cf. Zller-Geimer (2014), 1041 para.5; MnchKommZPO-Mnch (2013), 1041 para.58.

Cf. Art. 23 HKIAC Rules and Schedule 4 (Emergency Arbitrator Procedures); Art. 29 ICC Rules
(Emergency Arbitrator); Art. 37 ICDR Rules (Emergency Measures of Protection); Art. 43 Swiss
Rules (Emergency Relief ); Appendix II SCC Rules (Emergency Arbitrator); Art. 26.2 and Schedule
1 SIAC Rules (Emergency Arbitrator). The current version of the DIS Rules does not provide for an
emergency arbitrator.
For example the SIAC Rules and Swiss Rules. The rules of many arbitral institutions, however, provide
that the provisions on emergency arbitrators only apply if the arbitration agreement was concluded after
the respective provisions came into force, cf. Art. 1.4 HKIAC Rules; Art. 6 ICC Rules or Art. 37(1) ICDR
Rules (arbitration clauses or agreements entered on or after May 1, 2006).
1041 Schfer
237
While German courts support interim measures issued by a foreign-seated arbitrator (cf.
supra, para. 27), note should be taken that ex parte measures available at a foreign seat might
not be considered enforceable by German courts (cf. supra, para. 18).
There is already some positive experience with emergency arbitrator decisions which have 46
been voluntarily complied with. However, it remains to be seen whether emergency arbitrator rules will have a broad impact on arbitration proceedings and eventually be considered
for inclusion in their rules by the DIS. Certainly, the existence of this mechanism will trigger
interest.
Chapter V
Conduct of the Arbitral Proceeding
Introduction to 10421050 ZPO1
Short Bibliography: Lachmann, Handbuch fr die Schiedsgerichtspraxis, Kln 2008; Lionnet/
Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit, Stuttgart Berlin
2005; Raeschke-Kessler/Berger, Recht und Praxis des Schiedsverfahrens, Kln 1999.
One of the perceived defects of the former German arbitration law contained in the old 1
book, 10251048 of the German Code of Civil Procedure (Zivilprozessordnung ZPO),
was that its provisions offered little guidance as to the conduct of the arbitral proceedings. It
merely contained a blanket clause regarding the rules of procedure in 1034 (2) ZPO, which
provided: Failing agreement of the parties on the procedural rules, the arbitral tribunal shall
conduct the arbitration in such a manner as it considers appropriate. Compared to the former law, the new German arbitration law in 10421050 ZPO lays down considerably
more detailed and elaborate rules of procedure.2 The new provisions are almost identical to
the corresponding provisions of the UNCITRAL Model Law (ML) (Articles 1827 ML
of Chapter V).3 As a result, the legal theories as well as materials on the drafting history of
the Model Law can be used as guidelines for interpreting the new provisions in the German
law, at least as regards its major characteristics.4 Even though the former law lacked explicit
provisions regarding the procedure, the respective case law provided a procedural framework
for the conduct of arbitral proceedings, which is similar to the new provisions. Hence, jurisprudence relating to the former German arbitration law remains relevant with respect to the
new provisions. 10421050ZPO are intended to provide basic guidelines for the conduct
of proceedings and the application of procedural discretion by the tribunal. They ensure that
the procedure is fair and reasonable and based on internationally accepted standards.5
As arbitral proceedings are different from proceedings before state courts, the former are 2
only governed by 1025 et seq. ZPO, while the provisions contained in 11024 ZPO,
which govern state court proceedings, are generally not applicable, even if such rules do not
contradict the provisions of 1025 et seq.ZPO.6 The rationale behind this principle is that
the German arbitration law is intended to provide an appropriate framework not only for
domestic but also for international arbitral proceedings involving parties from jurisdictions
which are not familiar with German procedural law. As a consequence, the detailed procedural rules governing state court proceedings do not apply to arbitral proceedings under
1
2
3
4
5
6
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, pp.24, 26; Baumbach/Lauterbach (2014),
1042 para.1.
See in more detail the comments on the individual provisions infra.
Cf. DIS Materialien, The New German Arbitration Law 1998, p.5; Raeschke-Kessler/Berger (1999), paras147 et seq.; Berger (1998), p.33.
Cf. Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.46.
Cf. Stein/Jonas-Schlosser (2002), 1042 para.1; Lionnet/Lionnet (2005), p.116; Lachmann (2008), para.
1277; an opposing view is taken by Musielak-Voit (2013), 1042 paras8 et seq.
240
German law. However, these procedural rules may, particularly in domestic arbitrations,
provide guidance on how to solve certain procedural issues.7 In setting aside proceedings
namely regarding domestic cases, state courts will make reference to and seek guidance from
such rules.8
7
8

With respect to 139 ZPO cf. infra, Sachs/Lrcher, 1042, paras 15 et seq.
1042 General Rules of Procedure

(1) The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case.
(2) Counsel may not be excluded from acting as authorised representative.
(3) Otherwise, subject to the mandatory provisions of this Book, the parties are free to
determine the procedure themselves or by reference to a set of arbitration rules.
(4) Failing an agreement by the parties, and in the absence of provisions in this Book,
the arbitral tribunal shall conduct the arbitration in such manner as it considers
appropriate. The arbitral tribunal is empowered to determine the admissibility of
taking evidence, take evidence and assess freely such evidence.
Short Bibliography: Baum, Reconciling Anglo-Saxon and Civil Law Procedure: The Path to a Procedural Lex Arbitrationis, in: Briner/Fortier/Berger/Bredow (eds), FS-Bckstiegel, 2001, p.21; Berger,
Evidentiary privileges, in: Wirth (ed.), Best practices in International Arbitration, Zrich 2006,
p.19; Berger, Das neue Schiedsverfahrensrecht in der Praxis Analyse und aktuelle Entwicklungen,
RIW 2001,7; Berger, The German Arbitration Law of 1998 First Experiences, in: Briner/Fortier/
Berger/Bredow (eds), FS-Bckstiegel, 2001, p.31; Berger, Die Ergnzenden Regeln fr Beschleunigte
Verfahren der Deutschen Institution fr Schiedsgerichtsbarkeit, SchiedsVZ 2008, 105; Borges, Die
Anerkennung und Vollstreckung von Schiedssprchen nach dem neuen Schiedsverfahrensrecht,
ZZP 2000, 487; Borris, Common Law and Civil Law: Fundamental Differences and their Impact on
Arbitration, Arbitration 1994, 78; Demeyere, The Search for the Truth: Rendering Evidence under
Common Law and Civil Law, SchiedsVZ 2003, 247; Elsing, Streitverkndung und Schiedsverfahren,
SchiedsVZ 2004, 88; Elsing/Townsend, Bridging the common law civil law divide in arbitration,
Arb.Int. 2002, 59; Geimer, Internationales Zivilprozessrecht, Mnchen 2009; Glossner/Bredow/
Bhler, Das Schiedsgericht in der Praxis, Heidelberg 1990; Hanefeld, Country Report Germany, in:
Weigand (ed.), Practitioners Handbook on International Commercial Arbitration, Oxford 2010;
Henn, Schiedsverfahrensrecht, Heidelberg 2000; Hilger, Zur Geltung des beschrnkten Untersuchungsgrundsatzes im neuen Schiedsverfahrensrecht, BB 2000, Beilage No. 8, p.2; Horn, Zwingendes Recht in der internationalen Schiedsgerichtsbarkeit, SchiedsVZ 2008, 209; Karrer (ed.), Arbitral
Tribunals or State Courts Who must defer to whom?, Basel 2001; Karrer, Naives Sparen birgt
Gefahren Kostenfragen aus Sicht der Parteien und des Schiedsgerichts, SchiedsVZ 2006, 113;
Karrer/Desax, Security for Costs in International Arbitration. Why, when, and what if, in: Briner/
Fortier/Berger/Bredow (eds), FS-Bckstiegel, 2001, p. 339; Kaufmann-Kohler/Brtsch, Discovery in
international arbitration: How much is too much?, SchiedsVZ 2004, 13; Kreindler/Schfer/Wolff,
Schiedsgerichtsbarkeit Kompendium fr die Praxis, Frankfurt 2006; see overview over arbitrationrelated jurisprudence by Krll in SchiedsVZ 2006, 203; 2007, 145; 2008, 62, 112; 2009, 161, 217;
2010, 144, 213; 2011, 131, 210; 2012, 136, 201; 2013, 185; Kronke, Internationale Schiedsverfahren
nach der Reform, RIW 1998, 257; Lachmann, Handbuch fr die Schiedsgerichtspraxis, Kln 2008;
Lew/Mistelis/Krll, Comparative International Commercial Arbitration, Hague/London/New York
2003; Lionnet/Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit, Stuttgart Berlin 2005; Lrcher/Lrcher, Das Schiedsverfahren national/international nach deutschem
Recht, Heidelberg 2001; Raeschke-Kessler/Berger, Recht und Praxis des Schiedsverfahrens, Kln
1999; Risse, Undurchfhrbarkeit der Schiedsvereinbarung bei Mittellosigkeit des Klgers, BB 2001,
Beilage No. 6, p.11; Rtzel/Wegen/Wilske, Commercial Dispute Resolution in Germany, Mnchen
2005; Sachs, Use of documents and document discovery: Fishing expeditions versus transparency
and burden of proof, SchiedsVZ 2003, 193; Sandrock, Internationale Schiedsgerichtsbarkeit und
242
Verjhrung nach deutschem Recht, in: Briner/Fortier/Berger/Bredow (eds), FS-Bckstiegel, 2001,

p. 671; Schtze, Deutsches Internationales Zivilprozessrecht unter Einschluss des Europischen
Zivilprozessrechts, Berlin 2005; Schtze, Die Ermessensgrenzen des Schiedsgerichts bei der Bestimmung der Beweisregeln, SchiedsVZ 2006, 1; United Nations Commission on International Trade
Law, Analytical commentary on draft text of a model law on international commercial arbitration:
report of the Secretary-General (A/CN.9/264), Yearbook XVI (1985), New York 1988, p. 104;
Schtze/Tscherning/Wais, Handbuch des Schiedsverfahrens Praxis der deutschen und internationalen Schiedsgerichtsbarkeit, Berlin 1990; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005;
Wagner, Poor Parties and German Forums: Placing Arbitration under the Sword of Damocles?, in:
DIS (ed.), Financial Capacity of the Parties, Frankfurt am Main 2004, p.9; Wagner/Blau, Procedural Orders by Arbitral Tribunals: In the Stays of Party Agreements?, SchiedsVZ 2013, 6; Wagner,
in: Weigand (ed.), Practitioners Handbook on International Arbitration, Mnchen/Copenhagen
2002; Weigand, Discovery in der internationalen Schiedsgerichtsbarkeit, RIW 1992, 361; Wirth, Ihr
Zeuge, Herr Rechtsanwalt, SchiedsVZ 2003, 9; Zekoll/Bolt, Die Pflicht zur Vorlage von Urkunden
im Zivilprozess Amerikanische Verhltnisse in Deutschland?, NJW 2002, 3129.
Para.
I. Purpose and Relevance . . . . . . . . . . . . . . . . . . 1
III. Equal Treatment and Right To Be
Heard (1042 (1) ZPO) . . . . . . . . . . . . . . . . 6
A. Principle of Equal Treatment
(1042 (1) ZPO) . . . . . . . . . . . . . . . . . . . 6
B. Right To Be Heard (1042 (1) ZPO) 7
1. Importance of the Right To Be
Heard . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2. Aspects of the Right To Be Heard . 10
3. Limitations of the Right To Be
Heard . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4. Legal Consequences of a
Violation of the Right To Be
Heard and Curing of Defects . . . . . 21
IV. Lawyers in Arbitral Proceedings . . . . . . . . . 23
V. Sources of Law (1042 (3) and (4)
ZPO) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
A. Agreement of the Parties (Within
the Limits of Mandatory Provisions). 26
I.
B.
Para.
Discretion of the Arbitral Tribunal
(1042 (4) sentence 1 ZPO) . . . . . . . . . . . 30
1. Discretion with Respect to
Procedural Issues . . . . . . . . . . . . . . . . 32
2. Role of the Arbitral Tribunal in
Settlement Discussions. . . . . . . . . . . 34
C. The Taking of Evidence (1042
(4) sentence 2 ZPO) . . . . . . . . . . . . . . . . 36
1. Powers of the Arbitral Tribunal . . . 36
2. Conduct of the Taking of
Evidence . . . . . . . . . . . . . . . . . . . . . . . . 37
3. Evaluation of Evidence . . . . . . . . . . . 44
D. Other Procedural Issues . . . . . . . . . . . . . 46
1. Multi-party Proceedings. . . . . . . . . . 46
2. Counterclaims . . . . . . . . . . . . . . . . . . . 48
3. Legal Aid and Security for Costs . . 49
4. Suspension and Stay of
Proceedings. . . . . . . . . . . . . . . . . . . . . . 51
5. Insolvency . . . . . . . . . . . . . . . . . . . . . . . 53
6. Appeal against Awards . . . . . . . . . . . 54
1 1042 Code of Civil Procedure (Zivilprozessordnung ZPO) sets out the fundamental
principles for the conduct of arbitral proceedings. It establishes wide procedural autonomy
of the parties by recognizing their freedom to stipulate the rules of procedure (1042 (3)
ZPO) and by granting the arbitral tribunal a wide discretion as to how to conduct the proceedings within the framework provided by the agreement of the parties and the provisions
of German arbitration law (1042 (3) ZPO).2 These principles are subject only to a limited
number of mandatory rules, which are laid down in 1042 (1) and (2) ZPO: (i.) equal
1
2
Cf. Henn (2000), para.300; DIS Materialien, The New German Arbitration Law 1998, p.7; cf. also UNCommentary A/CN.9/264, UNCITRAL Yearbook XVI (1985), p.104 (124) with regard to the corresponding provisions of the Model Law.
1042 Sachs/Lrcher
243
treatment of the parties, (ii.) the parties right to be heard and (iii.) the principle that counsel
may not be excluded from representing the parties in the proceedings.
Both the right to be heard and the right to equal treatment are indispensable principles 2
guaranteed by the German constitution.3 They ensure that arbitration is considered a means
of granting legal protection on a similar level as state court proceedings.4 Because of the
mandatory character of these principles, the parties may not renounce these rights prior to
the proceedings.5 This means that even in case of a waiver the arbitral tribunal has to apply
these fundamental principles.6 Because of their importance, their application by an arbitral
tribunal is subject to state court review at the enforcement stage (1059 et seq. ZPO).7
The possibility of legal representation is considered to be a basic principle of a fair trial.8
II.
Legislative History
1042 (1) ZPO embodies Article 18UNCITRAL Model Law (ML), while 1042 (3) and 4
(4) ZPO are based on Article 19 ML. 1042 ZPO, taken together with the other provisions
on procedure before the arbitral tribunal, establishes a liberal procedural framework to suit
a great variety of needs and circumstances, which is particularly necessary in international
disputes.9 1042 (1) ZPO corresponds word-for-word to Article 18 ML and establishes
the two most important procedural principles governing arbitration: that the parties be
treated equally (sentence 1) and that each party be given a full opportunity to present its case
(sentence 2). Although the equal treatment principle was not expressly stated in the former
German arbitration law, it was considered an indispensable rule, following from the principle
of procedural fairness.10 The second principle was already contained in 1034 (1) sentence
1 ZPO of the former German arbitration law. Accordingly, theory and case law relating to the
former German arbitration law remain applicable for interpretation purposes.11 The right to
fully present ones case is also a standard rule under foreign arbitration laws: it represents an
area of common ground amongst the worlds legal community.12
In contrast to the UNCITRAL Arbitration Rules, the Model Law does not deal with the issue 5
of legal representation. Rather, this issue was left to be determined by the relevant national
legislator.13 The German legislator perpetuated the indispensability of legal representation
under former 1034 (1) sentence 2 ZPO.
4
5
6
7
8
9
10
11
12
13
Cf. further on this issue Weigand-Wagner (2002), Germany, para. 165; Zller-Geimer (2014), 1042
para.2; Schwab/Walter (2005), Chap. 15 para.1.
Cf. for more detail infra, para.22.
Cf. further on this issue infra, Krll/Kraft, 1059 paras 62 et seq.
Cf. UN-Commentary A/CN.9/264, UNCITRAL Yearbook XVI (1985), p.104 (124).
Cf. MnchKommZPO-Mnch (2013), 1042 para. 19; Thomas/Putzo-Reichold (2013), 1042 para. 2.
Cf. Raeschke-Kessler/Berger (1999), para. 152.
Cf. MnchKommZPO-Mnch (2013), 1042 para.27 with further references; Lew/Mistelis/Krll (2003),
paras21-14 et seq.
Cf. Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.46; see also Lionnet/Lionnet (2005),
p.142.
244
III. Equal Treatment and Right to be heard (1042 (1) ZPO)

A.
Principle of Equal Treatment (1042 (1) ZPO)
6 The equal treatment principle requires that the proceedings are conducted in an even-handed
and impartial manner. It means that no party may be given an advantage over the other. Its
aim is, however, not to equate facts and circumstances which are not similar.14 It also only
pertains to the formal conduct of the proceedings and not to the material outcome of the
dispute.15 The principle of equal treatment is implemented by provisions such as 1043 (1)
sentence 3ZPO16 or 1047 (3) ZPO, pursuant to which the arbitral tribunal has to keep
both parties equally informed on any issue regarding the proceedings.17 The principle becomes particularly important for the tribunal when determining time periods for the parties
submissions and the extent and manner of taking evidence.18 However, equal treatment of
the parties does not require that the time periods for claims and counterclaims are set exactly
the same or that each party is allowed to present (only) the same number of witnesses.19
Moreover, the principle is only violated if the different treatment of the parties results in an
unequal chance to present their case.20
B.
Right To Be Heard (1042 (1) ZPO)
1.
Importance of the Right To Be Heard
7 The old arbitration law incorporated this principle in 1034 (1) sentence 1 ZPO pre-1998,
specifying that the right to be heard had to be granted before rendering the award. This wording was not included in the new German arbitration law because it was considered to be selfevident.21 In granting the right to be heard, arbitral tribunals have to fulfil the same standards
as the state courts.22
8 As mentioned, the right to be heard is also mandatory,23 and a waiver of this right prior to
the proceedings is void.24 However, if a party fails to participate in the arbitral proceedings
even though it was duly informed about each stage and was given an adequate opportunity
to present its case, or if it otherwise renounces its right to be heard, this does not constitute a
violation of such principle.25
9 Under the previous arbitration law, it was common ground that the arbitral tribunal had
to observe the principles of the right to be heard even before ordering interim measures.26
14
15
16
17
18
19
20
21
22
23
24
25
26

Cf. Stein/Jonas-Schlosser (2002), 1042 para.7a.
Determining the place of arbitration taking into account inter alia the convenience of the parties; cf.
Stein/Jonas-Schlosser (2002), 1042 para.7a; MnchKommZPO-Mnch (2013), 1042 para.22.
OLG Mnchen 07.05.2008 = NJOZ 2008, 4808; BGH 11.11.1982, BGHZ 85, 288 (291) = NJW 1983,
867; Stein/Jonas-Schlosser (2002), 1042 para.7, Musielak-Voit (2013), 1042 para.3.
BGH 11.11.1982, BGHZ 85, 288 (291) = NJW 1983, 867.
MnchKommZPO-Mnch (2013), 1042 para. 46; Stein/Jonas-Schlosser (2002), Anhang 1061
para.100.
Zller-Geimer (2014), 1042 para.3 with further references.
1042 Sachs/Lrcher
245
As the rationale of the reform was to place arbitral proceedings on a par with proceedings
before state courts,27 the majority, however not undisputed, view of the German theory is
that arbitral tribunals under the new German arbitration law, just as state courts, may order
interim measures without having heard the respondent if this is essential to provide effective
legal protection.28
2.
Aspects of the Right To Be Heard
The arbitral tribunal has to ensure at each stage of the proceedings that the parties are given 10
the opportunity to present their case.29 This right is an important means to protect the parties
from arbitrariness.30 It requires that the parties are allowed to present everything they deem
relevant for the tribunals decision.31 The parties right to be heard is not violated if the proceedings are conducted only in the language spoken at the place of the arbitral proceedings,
even when the underlying contract was drafted in two languages. In such cases, it is for the
respective party to obtain assistance from an interpreter in order to be able to fully participate
in the proceedings.32
a. Right to be duly informed: In order to effectively protect this right, it is necessary that the 11
parties are not only informed in a timely and due manner about the beginning and continuation of the proceedings;33 they also have to be given sufficient notice of all their opponents
pleadings and submissions.34 The parties must be able to respond adequately to such pleadings and submissions in a way which ensures that such response can be considered when the
tribunal forms its opinion.35 The parties are entitled to be present at oral hearings and during
the taking of evidence.36 If a party does not attend or participate in the taking of evidence,
the tribunal may nevertheless proceed, provided that it had informed the parties in advance
about its intention to take such evidence and that it subsequently communicates the results
to the non-participating party.37
The parties irrespective of whether they participate actively in the proceedings have to 12
be kept informed during the entire proceedings about the claims raised and the subject matter in dispute. If, for example, the respondent has not been informed about the claimants
27
28
29
30
31
32
33
34
35
36
37

Lrcher/Lrcher (2001), para. 79; Zller-Geimer (2014), 1042 para. 3; for an opposing view cf.
With regard to the question of a right to a full presentation of the case cf. Weigand-Wagner (2002), Germany, para.166.
BVerfG 08.01.1959, BVerfGE 7, 53 (57); id. 18.01.2000, NJW 2000, 1709; Schwab/Walter (2005), Chap.
15 paras1 et seq.; MnchKommZPO-Mnch (2013), 1042 para.26.
BGH 10.10.1951, BGHZ 3, 215 (218); id. 11.11.1982, BGHZ 85, 288 (291 et seq.) = NJW 1983, 867; id.
26.09.1985, BGHZ 96, 40 (46) = NJW 1986, 1436.
Cf. OLG Celle 02.10.2001, affirmed by BGH 30.01.2003, (2003) Int.A.L.R. N-59, CLOUT Case No.
559.
BayObLG 16.03.2000, NJW-RR 2001, 431, English version in Yearbook XXVII (2002), 445 (Case No.
53) and CLOUT Case No. 402.
Cf. Musielak-Voit (2013), 1042 para.3; the right to be duly informed is an indispensable prerequisite of
the right to be heard cf. BVerfG 08.06.1993, NJW 1993, 2229.
Cf. Schwab/Walter (2005), Chap. 15 para.2; MnchKommZPO-Mnch (2013), 1042 para.53.
Cf. BGH 10.10.1951, BGHZ 3, 215 (218 et seq); cf. also Schwab/Walter (2005), Chap. 24 para.50.
246
demand for interest, then any decision awarding interest to the claimant would violate the
respondents right to due process.38
13 b. Opportunity to comment on the relevant facts and points of law: The parties also have to be
given the opportunity to comment on all facts and evidence on which the arbitral tribunal
wants to rely in its decision.39 The parties right to comment applies not only with regard to
the factual circumstances of the case; it also includes the parties right to present and state
their respective legal points of view40 and it presupposes that the parties are given sufficient
time to exercise this right.41
14 However, while in German state court proceedings, the opposing party will be granted, at
its request, the right to respond in writing. It may be sufficient in arbitral proceedings to
grant the opposing party the right to react to new or additional submissions during the oral
hearing. This is, however, not the case if the new albeit not precluded allegations deviate
significantly from the previous ones. In this case, the other party will be granted a reasonable
period of time for responding.42
15 In German state court proceedings, the courts have to adhere to elaborate standards on giving explanations and information (Aufklrungs- and Hinweispflichten, cf. in particular 139
ZPO43). However, in the view of the BGH, which is shared by numerous German scholars,
139 ZPO does not apply in arbitral proceedings, unless the parties have expressly agreed
otherwise.44 While some scholars oppose this view by arguing that arbitral tribunals, whose
members are chosen by the parties and whom they trust, have to observe the standards set in
38
39
40
41
42
43
44
OLG Hamburg 14.05.1964, MDR 1965, 55.

BGH 11.11.1982, BGHZ 85, 288 (291 et seq.) = NJW 1983, 867; id. 26.09.1985, BGHZ 96, 40 (48)
= NJW 1986, 1436; Zller-Geimer (2014), 1042 para.9; for more detail cf. MnchKommZPO-Mnch
(2013), 1042 paras40 et seq.
Cf. OLG Mnchen 22.01.2007 (so far unpublished); Stein/Jonas-Schlosser (2002), Anhang 1061
para.96.
Cf. MnchKommZPO-Mnch (2013), 1042 para.53; Lachmann (2008), para.1306.
139 ZPO reads as follows: (1) The court shall discuss the facts and law relating to the dispute with the
parties as far as necessary and ask questions. It shall take measures to achieve that the parties provide full
submissions on all material facts in a timely manner, in particular supplement inadequate information
on the facts claimed, describe the means of evidence and make the appropriate applications. (2) A court
may only base its decision on a point which a party has evidently overlooked or considered as immaterial,
as far as not only a secondary claim is affected, if it has referred thereto and provided opportunity for a
response. The same applies for a point which the court considers differently than both parties. (3) The
court shall indicate the concerns which exist regarding the points to be taken into consideration on the
courts own motion. (4) Indications according to this provision shall be provided as early as possible and
recorded in the file. The making of such references can only be proven through the content of the files.
Only evidence proving forgery is admissible to contradict the content of the file. (5) If an immediate
response by a party to an indication by the court is not possible, upon the application of the party the
court shall set a date by which it may provide a response in a pleading..
Cf. BGH 11.11.1982, BGHZ 85, 288 (292) = NJW 1983, 867; OLG Hamburg 08.06.2001, CLOUT
Case No. 569; OLG Mnchen 22.01.2007 (so far unpublished); Baumbach/Lauterbach (2014), 1042
para.5; Raeschke-Kessler/Berger (1999), para.653; Lachmann (2008), paras1300 et seq.; Lrcher/Lrcher
(2001), para.247; Kreindler/Schfer/Wolff (2006), para.859 (only applicable to a limited extent).
1042 Sachs/Lrcher
247
particular by 139 ZPO45 even without an agreement as to this, it is generally accepted that
the disregard of this provision does not per se violate the right to be heard.46
Further, in principle, the tribunal is neither obliged to communicate its legal opinion and 16
interpretation of the law to the parties nor to enter into a legal discussion with them.47
However, if the tribunal intends to base its decision on aspects which were obviously not
taken into account by both parties, the right to be heard demands that the tribunal raises
these issues with the parties and grants them the opportunity to present their views thereon
Verbot der berraschungsentscheidung (prohibition of a surprising decision).48 Pursuant to a
decision by the OLG Stuttgart, it also constitutes a surprising decision if the arbitral tribunal
bases its decision on an aspect or argument which was raised by one party to the proceedings
and the arbitral tribunal had created the impression that it did not consider this aspect to be
decisive for the outcome of the dispute.49 The same is true if the arbitral tribunal intends to
depart from its view on legal issues which it had previously expressed to the parties.50
c. Taking into account the parties arguments: In order to satisfy the right to be heard, it is not 17
sufficient to simply grant the parties the opportunity to present everything they deem relevant. Rather, the arbitral tribunal itself has to take into account all of the arguments made
by the parties in their submissions and pleadings,51 unless the respective submissions must
be deemed inadmissible due to procedural rules and principles, e.g. if a partys submission is
precluded.52
However, the above-mentioned principles do not require the arbitral tribunal to expressly 18
deal with each detail of the parties submissions and arguments in the reasons of its award.53
A violation of the right to be heard can only be inferred if the arbitral tribunals failure to take
notice of the parties arguments or the failure to take them into consideration is sufficiently
clear.54 The tribunal is not entitled to ignore motions for the taking of evidence without
giving any reasons, unless the claim is obviously non-conclusive in the respective point as a
matter of law or fact. The arbitral tribunals inference of non-conclusiveness is generally not
45
46
47
48
49
50
51
52
53
54
Cf. Schwab/Walter (2005), Chap. 15 para.5; Stein/Jonas-Schlosser (2002), Anhang 1061 para.96.
BGH 10.10.1951, BGHZ 85, 288 (292) = NJW 1983, 867; Raeschke-Kessler/Berger (1999), para.654;
OLG Mnchen 29.10.2009; Glossner/Bredow/Bhler (1994), para. 279; Musielak-Voit (2013), 1042
para.4; Lachmann (2008), para.1300, MnchKommZPO-Mnch (2013), 1042 para.38; Baumbach/
Lauterbach (2013), 1042 para.5; for an opposing view cf. Zller-Geimer (2014), para.12.
Cf. OLG Stuttgart 18.08.2006, OLGR 2006, 945 = BauR 2006, 1950; OLG Mnchen, 12.04.2011 =
SchiedsVZ 2011, 230; Stein/Jonas-Schlosser (2002), Anhang 1061 para. 96; Lachmann (2008), paras1320 et seq.; Glossner/Bredow/Bhler (1994), para.279; Musielak-Voit (2013), 1042 paras4 and 13.
OLG Stuttgart 18.08.2006, OLGR 2006, 945 = BauR 2006, 1950.
Cf. Lachmann (2008), para.1325; MnchKommZPO-Mnch (2013), 1042 para.38.
Cf. BGH 26.09.1985, BGHZ 96, 40 (48) = NJW 1986, 1436; OLG Hamburg 31.07.2003, OLGR Hamburg 2004, 97; OLG Mnchen 07.05.2008 = NJOZ 2008, 4808; Zller-Geimer (2014), 1042 para.11.
For more detail cf. Lachmann (2008), paras 1335 et seq.; regarding the default of a party cf. infra, Sachs/
Lrcher, 1048 paras3 et seq.
Cf. OLG Hamburg 14.05.1964, MDR 1965, 54; id. 14.05.1999, OLGR Hamburg 2000, 19 and CLOUT
Case No. 457; id. 31.07.2003, OLGR Hamburg 2004, 97; Lrcher/Lrcher (2001), para.146; Schwab/
Walter (2005), Chap. 15 para.2 with further references; cf. also infra, von Schlabrendorff/Sessler, 1054
para. 10.
Cf. OLG Frankfurt 06.05.2010.
248
reviewable by state courts.55 The Federal Court of Justice (Bundesgerichtshof BGH) and
the Bavarian Highest Regional Court (Bayerisches Oberstes Landesgericht BayObLG)56
have further ruled that in the absence of particular grounds suggesting the contrary, it has to
be assumed that the tribunal did take into account the parties respective submissions and
motions for the taking of evidence, even though it did not expressly deal with them.57 The
Higher Regional Court Bremen (Oberlandesgericht OLG) subscribed to this view and expressly confirmed that the parties cannot challenge the tribunals right to freely evaluate the
evidence (freie Beweiswrdigung).58 The OLG Stuttgart presupposed that a stricter standard of
review was applicable to the preliminary question on the relevance of evidence offered than
the evaluation of the evidence.59
3.
Limitations of the Right To Be Heard
19 It is not necessary to grant the parties the right to be heard before each decision on procedural matters.60 This is certainly so for the ICC Courts decision on the extension of the six
month deadline to render the award pursuant to Article 24 (2) ICC Rules.61 The same may,
e.g., apply in cases where a party makes a well-reasoned request for an extension of time.
20 Moreover, the right to enjoy the full opportunity of presenting ones case is to be exercised
in good faith. It does, therefore, not entitle a party to obstruct the proceedings by dilatory
practices and tactics, e.g. by presenting objections, amendments or evidence only on the eve
of the award even though they could have been presented earlier.62 In order to guarantee the
efficiency of arbitral proceedings, the German arbitration law provides certain limitations
of the right to be heard. These rules mainly concern the setting of deadlines and a partys
failure to meet them. If a party chooses not to make timely use of its right to be heard, certain
foreclosure rules (in particular 1027 sentence 1, 1040 (2) sentences 1- 3 and, in particular,
1046 (2)) apply.63
55
56
57
58
59
60
61
62
63
OLG Mnchen 29.10.2009; OLG Mnchen 12.04.2011 = SchiedsVZ 2011, 230; OLG Mnchen
14.11.2011 = SchiedsVZ 2012, 43, XXXVII (2012), 231; cf. also. Zller-Geimer (2014), 1042 para.11a.
BGH 14.05.1992, NJW 92, 2299 and BayObLG 15.12.1999, EWiR 2000, 199 with note by Berger, English version in (2000) Int.A.L.R. N-69.
In favour of these decisions Musielak-Voit (2013), 1042 para.21; MnchKommZPO-Mnch (2013),
1042 para.49, for a critical view cf. Zller-Geimer (2014), 1042 para.11a; Schwab/Walter (2005),
Chap. 15 para.9.
Cf. OLG Bremen 10.11.2005, cited according to Krll, SchiedsVZ 2006, 203 (211), see also [2007]
Int.A.L.R. N-18.
Cf. OLG Stuttgart 30.07.2010 = SchiedsVZ 2011, 49 et seq.; also see Krll, SchiedsVZ 2011, 210 (212)
who suggests that the refusal of evidence offered poses a more serious threat to the right to be heard.
Glossner/Bredow/Bhler (1994), para.282.
Cf. BGH 14.04.1988, ZIP 1988, 943 = EWiR 1988, 1122 with note by Bhler/Raeschke-Kessler; ZllerGeimer (2014), 1042 para.8; Schwab/Walter (2005), Chap. 15 para.2; for a critical view cf. Schtze,
WM 1986, 345(348); see Part IV, Khner/Flecke-Giammarco, ICC Arbitration in Germany, paras 69 et
seq.
Cf. UN-Commentary A/CN.9/264, UNCITRAL Yearbook XVI (1985), p.104 (125) with regard to the
right to be heard granted by the Model Law.
1042 Sachs/Lrcher
4.
249
Legal Consequences of a Violation of the Right To Be Heard and Curing of Defects
A violation of the parties right to be heard is a ground for setting aside the award pursuant to 21
1059 (2) ZPO, if it is to be presumed that this violation affected the tribunals decision.64 To
this end, the party has to state the facts it would have stated but for the alleged violation of its
right to be heard.65 There may also be a breach of 1059 (2) No. 2 (b) ZPO, since the right
to be heard forms part of public policy.66 Where an award deals with several claims which are
distinct from each other and the right of a party to be heard was violated only with respect
to one or at least not all of these claims, there are grounds to set aside the award only with
respect to those claims which are affected by the violation.67
The affected party may waive its rights arising out of a violation of the right to be heard only 22
after the violation has occurred.68 Even if, however, the party concerned does not expressly
declare a waiver, an award will only be set aside because of a failure to hear the parties, so long
as the party relying on such a violation raised it with the arbitral tribunal without delay after
it occurred;69 the failure to raise a violation thus constitutes an implied waiver. It is possible
for the arbitral tribunal to cure a violation in the course of the arbitral proceedings. If a further
arbitral tribunal has been appointed to hear the appeal, it is even still possible before such
appeal tribunal.70 However, it is no longer possible during any setting aside or enforcement
proceedings before state courts.71
IV. Lawyers in Arbitral Proceedings

Under the new German arbitration law, the parties do not have to be represented by counsel 23
before the arbitral tribunal.72 The parties may, however, agree that such representation is
obligatory.73 Pursuant to 1042 (2) ZPO, an agreement to the contrary, i.e. excluding representation by counsel, is not permissible.74 As 1042 (2) ZPO is mandatory, such agreement
by the parties would be void. If a party is, nevertheless, prevented by the arbitral tribunal
from being represented by counsel in the course of the arbitral proceedings, this may lead to
the setting aside of the award.
However, the parties are allowed to agree on generic criteria, such as specialized counsel 24
or resident counsel, which restrict the parties free choice of counsel provided that these
64
65
66
67
68
69
70
71
72
73
74
Cf. OLG Celle 19.02.2004, OLGR Celle 2004, 396; Stein/Jonas-Schlosser (2002), Anhang 1061 para.82;
Musielak-Voit (2013), 1042 para.6; Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.46;
Lachmann (2008), para.1358; 1059 (2) No. 1 (b) ZPO prevails over No. 1 (d), MnchKommZPOMnch (2013), 1042 para.58; cf. infra, Kraft/Krll, 1059 paras62 et seq.
Cf. OLG Kln 22.06.2012.
MnchKommZPO-Mnch (2013), 1042 para.58; Rtzel/Wegen/Wilske (2005), p.152.
1027 ZPO; cf. Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 46; OLG Stuttgart
16.07.2002, SchiedsVZ 2003, 84 with note by Nacimiento/Geimer, English summary also on <www.disarb.de>; Stein/Jonas-Schlosser (2002), Anhang 1061 para.104; for a critical view cf. MnchKommZPOMnch (2013), 1042 paras61 seq.
OLG Hamburg 26.01.1989, RIW 1991, 154.
The term counsel used in 1042 (2) ZPO includes German lawyers and lawyers from other jurisdictions;
cf. Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.46.
250
restrictions are non-discriminatory, based on objective standards and do not establish

predominance in favour of one party.75 The parties may also restrict the obligation to compensate lawyers fees and costs incurred by the respective other party.76 In the absence of
an agreement, however, the parties are free to choose as counsel whomever they consider
appropriate; the parties freedom also includes the choice of foreign counsel.
25 The tribunals refusal to adjourn a hearing in the event of a change of counsel may constitute
a violation of a partys right to be heard.77 At the same time, however, the right to change
counsel may not be abused by a party in order to delay or obstruct the arbitral proceedings.78
V.
Sources of Law (1042 (3) and (4) ZPO)
A.
Agreement of the Parties (Within the Limits of Mandatory Provisions)
26 Under the old German arbitration law, the freedom of the parties to determine the procedural
rules was inferred simply from the blanket clause in 1034 (2) ZPO (failing an agreement
of the parties). Now, 1042 (3) ZPO provides that the parties are free within the limits
provided for by the mandatory provisions of the German arbitration law to determine the
procedure to be followed by the tribunal. They may either agree on specific procedural rules
or make reference to a set of arbitration rules, such as the arbitration rules of the German
Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) or the rules
of the International Chamber of Commerce (ICC). In contrast thereto, Article 19 (1) ML
states only that the parties are free to agree on the procedure to be followed by the tribunal
without making reference to a set of arbitration rules. However, Article 19 (1) ML has to be
seen in conjunction with Article 2 (d) and (e) ML, which provide that the freedom of the
parties to determine the proceedings includes the right to authorize a third party (including
an institution) to make that determination and to make any reference to arbitration rules
agreed upon between the parties. Even though the Model Law may be considered to be
wider than 1042 (3) ZPO,79 it seems unlikely that the different wording of these provisions
will lead to different results.
27 While the parties determination of the procedural rules may already be contained in the
arbitration agreement, the parties may also agree on procedural points at a later stage of the
proceedings and with binding force for the tribunal.80 The OLG Frankfurt even took the view
that in some cases procedural orders issued by the arbitral tribunal may simply record an
agreement between the parties and are, in such case, binding for the tribunal.81 If the arbitrators are not willing to accept subsequent changes in the procedural rules, they may, however,
under certain circumstances resign from their office.82
75
76
77
78
79
80
81
82
Cf. Musielak-Voit (2013), 1042 para.7; Stein/Jonas-Schlosser (2002), 1042 para.16.

Cf. BGH 28.04.1958, BGHZ 27, 163 (165 et seq.).
BGH 24.11.1988, EWiR 1989, 311 with note by Bredow.
BGH 26.9.1985, BGHZ 96, 40 (42) = NJW 1986, 1436; Musielak-Voit (20013), 1042 para.33; ZllerGeimer (2014), 1042 para.22.
OLG Frankfurt a.M. 17.02.2011 = SchiedsVZ 2013, 49.
Stein/Jonas-Schlosser (2002), 1042 para.3; cf. further on this issue Schtze, SchiedsVZ 2006, 1 (3); cf.
also Weigand-Roth (2009), ML, para. 14.366 with regard to the same discussion concerning the parties
autonomy under the Model Law.
1042 Sachs/Lrcher
251
In contrast to the arbitration agreement (1031 ZPO), the stipulation of procedural rules by 28
the parties is not subject to a mandatory form requirement; accordingly, oral agreements on
procedural rules or agreements by implied consent (konkludente Vereinbarung) are possible.83
Since agreements between the parties which only concern the conduct of the arbitral proceedings are distinct from the arbitration agreement, the nullity of agreements concerning
procedural issues does not affect the validity of the arbitration agreement itself.84
It depends on the individual circumstances of the case whether and to what extent it makes 29
sense for the parties to agree on procedural issues. In most cases it is useful if the arbitration
agreement provides for the number of arbitrators, the place of arbitration and the language
of the proceedings. Among those issues on which the parties may agree, preferably after the
dispute has arisen (and which are often determined in a procedural hearing with the arbitral
tribunal), are the form and content of the written submissions; the respective time periods
for the parties submissions; the procedure for the taking of evidence (e.g. the issues on which
evidence shall be taken, the admissibility of written witness statements and possibly rebuttal
witness statements); rules and time limits for production of document requests; the organization of the main hearing; rules regarding the examination of the witnesses; time limits for
filing post hearing memoranda or the date for oral argument, etc. In practice, tribunals and
parties in international arbitral proceedings that take place in Germany increasingly often
agree that the IBA Rules on the Taking of Evidence shall apply as guidelines for the taking
of evidence. This also occurs in domestic arbitral proceedings. In order to ensure fast trackarbitration the parties may, furthermore, refer to rules for accelerated arbitration provided by
arbitration institutions (e.g. the DIS Supplementary Rules on Expedited Procedures).
B.
Discretion of the Arbitral Tribunal (1042 (4) sentence 1 ZPO)
1042 (4) sentence 1 ZPO, which is identical to Article 19 (2) sentence 1 ML, provides that, 30
failing an agreement of the parties and in the absence of provisions in the German arbitration
law to the contrary, the arbitral tribunal may conduct the arbitral proceedings in such a manner as it considers appropriate.85 Thus, within the limits stated above, the arbitral tribunal is
granted a wide discretion with regard to the conduct of the proceedings, in order to meet the
needs of each particular case.
Under German law, the chairman of the arbitral tribunal has, in principle, no further rights 31
than the party-appointed arbitrators but is equal to them. This principle is expressed in 1052
(1) ZPO, providing that, unless otherwise agreed by the parties, decisions by the arbitral
tribunal are taken by majority vote. Accordingly, the chairman of the arbitral tribunal does
not have a casting vote. These principles not only apply to decisions on substantive issues, but
also to decisions regarding the conduct of the proceedings. However, because he is similarly
remote from both parties, the chairman is considered as the speaker of the arbitral tribunal,
who also coordinates the conduct of the arbitral proceedings and ensures their expeditious
and efficient course.86 This includes that he usually prepares the drafts of procedural orders
or awards and forwards them to the party-appointed arbitrators for comments. 1052 (3)
83
84
85
86

Lionnet/Lionnet (2005), pp.142 and 294 et seq. concerning such tiered provisions (Stufenverhltnis).
For details cf. Schlosser, Befugnisse und Pflichten des Schiedsgerichtsobmanns, SchiedsVZ 2003, 1 et seq.;
Lrcher/Lrcher (2001), paras283 et seq.; Lrcher, Zur Funktion des Vorsitzenden des Schiedsgerichts,
BB 1996, Beilage No. 15, pp.9 et seq.; Lachmann (2008), paras1208 et seq.
252
ZPO furthermore stipulates that the parties or the party-appointed arbitrators may authorize
the chairman to decide individual questions of procedure alone. Such an authorization may
cover, e.g. the determination of the language of the proceedings, the decision on whether or
not to have an oral hearing and the setting of deadlines for submissions of the parties.87
1.
Discretion with Respect to Procedural Issues
32 When exercising its discretion with respect to procedural issues, the arbitral tribunal should
apply procedural rules which are familiar or at least acceptable to the parties, taking into account their (legal) background. Hence, the arbitral tribunal may model the proceedings on
the basis of the typical features of common law proceedings or may apply civil law procedural
rules, or it may, where the parties are from different legal systems, combine features from
both systems of law.88 Especially in international proceedings, it is good practice for the tribunal to agree or at least discuss the course of the proceedings with the parties. In this context,
it is often useful to establish an agreed procedural calendar providing for the different stages
of the proceedings and the respective dates.
33 In particular, the arbitral tribunal has discretion with regard to establishing the facts of the
case. Unlike state court proceedings in Germany which are ruled by the principle of party
presentation (Beibringungsgrundsatz), arbitral proceedings are governed by a principle which
is usually described as limited judicial investigation (beschrnkter Untersuchungsgrundsatz).89
The latter was explicitly provided for in 1034 (1) sentence 1 ZPO of the old German arbitration law, which stated that the arbitral tribunal was to establish the facts of the case by all
appropriate means.90 Although no longer expressly stated, this principle is still considered to
be valid under the revised provisions and it is generally accepted that it applies.91 Since the
tribunal is empowered to establish the facts by all appropriate means, it is in principle limited
neither by the submissions of facts provided to it by the parties nor by their offers to produce
evidence.92 Again, the German arbitration law provides a flexible framework in this context:
The way in which arbitrators exercise their discretion to establish the facts of the case to a
large extent depends upon the legal system from which both the parties and the arbitrators
originate.93 However, the principle of limited judicial investigation and the pro-active role
vested in the arbitral tribunal do not excuse the parties from their responsibility to submit
their statements of facts in an appropriate and exhaustive way.94
87
88
89
90
91
92
93
94

Lionnet/Lionnet (2005), p.304; this flexible approach is one of the most important features of the Model
Law, cf. UN-Commentary A/CN.9/264, UNCITRAL Yearbook XVI (1985), p.104 (125).
Cf. MnchKommZPO-Mnch (2013), 1042 para.107; Lachmann (2008), para.1281; Schtze/Tscherning/Wais (1990), para.332; for an opposing view see Lionnet/Lionnet (2005), p.358 with the argument
that the tribunal has no means to enforce investigation measures.
[U]nd das dem Streit zugrunde liegende Sachverhltnis zu ermitteln, soweit sie die Ermittlung fr erforderlich halten; with regard to the former provision cf. BGH 10.10.1952, BGHZ 3, 215 (217 et seq.).
For more detail Hilger, BB 2000, Beilage No. 8, pp.2 et seq.; MnchKommZPO-Mnch (2013), 1042
paras114 et seq.; Lachmann (2008), para.1281; an opposing view is taken by Lionnet/Lionnet (2005),
p.359.
Rtzel/Wegen/Wilske (2005), p.133.
Lachmann (2008), para.1286; Rtzel/Wegen/Wilske (2005), p.133.
Cf. Lachmann (2008), para.1288; Weigand-Hanefeld (2010), Germany, para.7.95.
1042 Sachs/Lrcher
2.
253
Role of Arbitral Tribunal in Settlement Discussions
One of the differences between arbitral proceedings under civil law and common law95 34
concerns the role of the arbitral tribunal with respect to settlement discussions. While under
the common law tradition an involvement of the arbitral tribunal in settlement discussions is
considered unusual and is likely to give rise to a challenge of the arbitrators (unless the parties
have expressly accepted such settlement discussion being held), parties from Germany and
other civil law jurisdictions will in most cases expect that the arbitral tribunal raises the issue
of a potential settlement. At the request of the parties, it is even considered a nobile officium of
the arbitral tribunal to make a settlement proposal to the parties and to assist them in finding
a settlement. However, it is important that in the course of settlement discussions, the arbitral
tribunal always has to keep its impartiality and independence it has to avoid any impression of bias towards one of the parties.96 In such settlement discussions, the tribunal will
frequently share its risk assessment with the parties. There are many ways how to conduct
such settlement discussions and the tribunal may play a more or less active role reaching
from merely providing the parties the opportunity to discuss to a very active involvement
in the discussion. The tribunal is well-advised to discuss its involvement in the settlement
with the parties beforehand and to keep its role within the agreed limits. A settlement agreement may be recorded in the form of an award on agreed terms, cf. 1053 ZPO. Otherwise,
the arbitral tribunal may be authorized to render the agreed award after the expiration of a
withdrawal period.97
General Standard 4 (d) of the IBA Guidelines on Conflicts of Interest in International Arbi- 35
tration stipulates principles regarding the involvement of arbitrators in settlement discussions
which should be acceptable to parties both from civil law and common law jurisdictions.98
C.
The Taking of Evidence (1042 (4) sentence 2 ZPO)
1.
Powers of the Arbitral Tribunal
1042 (4) sentence 2 ZPO deals with the taking of evidence. It slightly varies from the word- 36
ing of Article 19 (2) sentence 2 ML. While the latter provides that the arbitral tribunal has
the power to determine the admissibility, relevance, materiality and weight of any evidence,
1042 (4) sentence 2 ZPO states that the arbitral tribunal is empowered to determine the
admissibility of taking evidence, take evidence and freely assess such evidence. For a German
lawyer, these rights of a court or an arbitral tribunal are self-evident.99 They are nevertheless
95
96
97
98
99
Cf. infra, paras37 et seq., in particular the references in footnote 101.

For details cf. Lrcher/Lrcher (2001), paras320 et seq. with further references; Raeschke-Kessler, The
Arbitrator as Settlement Facilitator, Arb.Int. 2005, 523 et seq.
Cf. Lachmann (2008), paras 4605 et seq.
General Standard 4 (d) of the IBA Guidelines on Conflicts of Interest in International Arbitration reads
as follows: An arbitrator may assist the parties in reaching a settlement of the dispute at any stage of the
proceedings. However, before doing so, the arbitrator should receive an express agreement by the parties
that acting in such a manner shall not disqualify the arbitrator from continuing to serve as arbitrator. Such
express agreement shall be considered to be an effective waiver of any potential conflict of interest that
may arise from the arbitrators participation in such process or from information that the arbitrator may
learn in the process. If the assistance by the arbitrator does not lead to final settlement of the case, the
parties remain bound by their waiver. However the arbitrator shall resign if, as a consequence of his or
her involvement in the settlement process, the arbitrator develops doubts as to his or her ability to remain
impartial or independent in the future course of the arbitration proceedings..
Cf. Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.46; Rtzel/Wegen/Wilske (2005), p.130.
254
expressly stated in the new German arbitration law in order to emphasize for common law
and other users not familiar with German procedural law that the arbitral tribunal, unless
otherwise agreed by the parties, has the discretion to play an active role in the taking of evidence and to actively manage the case.100 The wording makes clear that the arbitral tribunal
may also determine the specific issues on which it wants to hear evidence.
2.
Conduct of the Taking of Evidence
37 Questions of fact and evidence are in many cases of crucial importance for the outcome of
the dispute. Much has been written about the differences between proceedings conducted
under the civil law and the common law approach.101 These differences become particularly
relevant in the context of the taking of evidence.
38 Although it is well known that Germany is a typical civil law country, the provisions of the
German arbitration law are based on the Model Law and only provide a rudimentary framework for the taking of evidence.102 They allow the parties and the arbitral tribunal to conduct
the proceedings either in a common law or a civil law style or to combine elements from
different systems of law.
39 Arbitral tribunals in Germany in particular are not bound by the procedural rules on the taking of evidence applicable to German state court proceedings.103 They may as a result adopt
common law elements in their proceedings. This approach may be especially appropriate, if
parties from both civil law and common law jurisdictions are involved in the dispute. However, one also has to take into account that when agreeing on a place of arbitration in Germany,
the parties will be aware that Germany is a civil law jurisdiction and, unless otherwise agreed,
are likely to expect to at least find some civil law elements in the arbitral proceedings. Hence,
there is a risk that they will be taken by surprise if an arbitral tribunal adopts a full common
law approach with regard to procedural issues and the taking of evidence without the consent
of the parties.104
40 In any event, the parties to the arbitration are free to agree on the procedure on the taking of
evidence to be followed by the arbitral tribunal. They may agree that the proceedings are to
be conducted in a common law style and may include extensive discovery of documents or
witness depositions, if they deem this appropriate. Even pre-trial discovery is possible if the
parties so agree.105
41 There are limits on the powers of an arbitral tribunal, including that it cannot force witnesses or experts to appear, that it has no power to order the production of documents from
a non-cooperative third party106 and that it does not have the right to administer oaths or
100
101
102
103
104
105
106
Cf. Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.46; Rtzel/Wegen/Wilske (2005), p.130.
Baum, FS-Bckstiegel (2001), pp.21 et seq.; Borris, Arbitration 1994, 78 et seq.; Demeyere, SchiedsVZ
2003, 247 et seq.; Elsing/Townsend, Arb.Int. 2002, 59 et seq.; Kaufmann-Kohler/Brtsch, SchiedsVZ 2004,
13 et seq.; Sachs, SchiedsVZ 2003, 193 et seq.
With regard to documentary evidence cf. infra, Sachs/Lrcher, 1047 paras20 et seq., witness evidence cf.
infra, Sachs/Lrcher, 1047 paras10 et seq. and expert evidence cf. infra, Sachs/Lrcher, 1049.
373 et seq. ZPO; cf. supra, para.1.
Cf. Schtze, SchiedsVZ 2006, 1 et seq.; for a more liberal view Wirth, SchiedsVZ 2003, 9 et seq.
Weigand, RIW 1992, 361 (364 et seq.).
With regard to the consequences of the non-production of documents by a party to the proceedings cf.
infra, Sachs/Lrcher, 1048 paras9 et seq.
1042 Sachs/Lrcher
255
affirmations in lieu of an oath. However, in such situations the arbitral tribunal may request
assistance from the competent court pursuant to 1050 ZPO.107
Yet, requests for assistance are futile when certain evidence has to be totally or partially disre- 42
garded for reasons of formal or material law. For example, certain witnesses can also before
state courts refuse to testify for personal ( 383 ZPO) or factual reasons ( 384 ZPO).108
The freedoms of the arbitral tribunal include that it may confine itself to written witness 43
or expert statements instead of an oral examination, provided this is sufficient taking into
account the particularities of the case in question.109 In particular, when intending to hear
party witnesses, the arbitral tribunal is not constrained by 445 et seq. ZPO, which provide
that parties in state court proceedings may only be heard for evidentiary purposes in specific
situations. In contrast, the arbitral tribunal is free to hear the parties on all issues in dispute
for evidentiary purposes.110
3.
Evaluation of Evidence
The arbitral tribunal is free to evaluate the materiality and weight of any evidence; it is not 44
bound by the rules of evidence applicable in state court proceedings.111 However, the rules
regarding the burden of proof under the substantive law, which has to be determined pursuant to 1051 ZPO, as well as an agreement by the parties regarding the burden of proof, must
be taken into account.112
The arbitral tribunals discretion in evaluating the evidence also includes its power to draw 45
conclusions from witness statements and the appearance of the witness before the arbitral
tribunal. If a witness refuses to give evidence, the party relying on the witness is unable to
prove its factual allegations through this witness. It depends on the individual circumstances
of the case whether the arbitral tribunal can draw negative inferences from the fact that a
witness refuses to give evidence. This may, in particular, be the case if the refusing witness is
an employee or otherwise under the control of one of the parties and the party in question
fails to exercise its influence to ensure that the witness cooperates.
D.
Other Procedural Issues
1.
Multi-party Proceedings 113
A joinder of parties into the proceedings (multi-party proceedings) is admissible provided that 46
all parties are bound by the respective arbitration agreement and that a mutual agreement
on the formation of the arbitral tribunal is reached.114 Accordingly, a joinder of two separate
107
108
109
110
111
112
113
114
For details cf. 1050 para.3. and 1062 (4) ZPO regarding the competent court.
Cf. Lachmann (2008), paras. 1342, 1584; for further details also cf. infra, Sachs/Lrcher, 1050 para. 10.
Cf. Lachmann (2008), para.1490; Rtzel/Wegen/Wilske (2005), p.135; for details cf. infra, Sachs/Lrcher,
1047 para.11.
For details regarding multi-party proceedings and third-party participation cf. Bckstiegel/Berger/Bredow
(eds) (2005).
Cf. Stein/Jonas-Schlosser (2002), 1042 para.20; Zller-Geimer (2014), 1042 para.37; cf. also supra,
Nacimiento/Abt/Stein, 1035 paras 36 et seq.; for details on multi-party proceedings before arbitral tribunals cf. e.g. Berger, RIW 2001, 7 (13 et seq.) with further references.
256
arbitral proceedings requires that the parties and the arbitral tribunal give their consent
thereto.115
47 The parties may also declare the intervention by a third party in support of a claimant or
respondent (Nebenintervention) as admissible and specify the requirements for such third
party intervention.116 Where such an agreement cannot be derived from the arbitration
agreement, the parties to the arbitral proceedings may agree to an intervention in the course
of the proceedings.117 The arbitrators must also give their consent to such third party intervention.118 Only in exceptional cases, the tribunal will refuse to grant such consent. Third
party notices (Streitverkndung) are also admissible, provided, however, that the third party
submits itself to the arbitration agreement, which is possible before or after the dispute has
arisen.119 For instance, in (plant engineering and) construction disputes the parties will often
agree on such multi-party proceedings already in the arbitration agreement.
2.
Counterclaims
48 Regarding counterclaims, amendments to the statements of claim and counterclaim, as well

as the withdrawal of claims see infra, Sachs/Lrcher, 1046 paras6 et seq.
3.
Legal Aid and Security for Costs
49 In German state court proceedings, parties may obtain legal aid for the costs of the proceedings, including the costs for legal representation pursuant to 114ZPO. This provision is
not applicable in arbitral proceedings and therefore legal aid is not available.120 Against this
background, the BGH121 has held that a party that is unable to pay the arbitrators fees may
initiate state court proceedings on the basis that the arbitration agreement has become incapable of being performed within the meaning of 1029 ZPO.122 Even though there exists no
express ruling by the state courts on this question, the courts are likely to take the same view
if a party cannot afford the costs of legal representation before an arbitral tribunal.123 This
115
116
117
118
119
120
121
122
123
Cf. Zller-Geimer (2014), 1042 para.44; Musielak-Voit (2013), 1042 para.13.

Cf. in more detail Stein/Jonas-Schlosser (2002), 1042 paras27 et seq.
For details cf. Musielak-Voit (2013), 1042 para.11; Schwab/Walter (2005), Chap. 16 para.18; Baumbach/Lauterbach (2014), 1042 para.14; Zller-Geimer (2014), 1042 para.41.
A consent is necessary pursuant to Schwab/Walter (2005), Chap. 16 para.18; Baumbach/Lauterbach
(2014), 1042 para.10; Musielak-Voit (2013), 1042 para.11; OLG Stuttgart 16.07.2002, SchiedsVZ
2003, 84 (86) with note by Nacimiento/Geimer; Stein/Jonas-Schlosser (2002), 1042 para.27, however,
takes an opposing view.
Cf. Zller-Geimer (2014), 1042 para.42; Musielak-Voit (2013), 1042 para.11; for more detail on third
party notices in arbitral proceedings cf. Elsing, SchiedsVZ 2004, 88 et seq., including English summary.
Geimer (2009), IZPR para.3857.
Cf. BGH 14.09.2000, BGHZ 145, 116 et seq. = NJW 2000, 3720 seq; cf. also id. 30.01.1964, NJW 1964,
1129 (1130); id. 12.11.1987, NJW 1988, 1215 = WM 1988, 478 (479).
BGH 14.09.2000, BGHZ 145, 116 = NJW 2000, 3720 = JZ 2001, 258, commented by Schlosser, JZ 2001,
260. For a detailed analysis cf. Wagner, in: DIS (ed.) (2004), pp.9 et seq.
Cf. Wagner, in: DIS (ed.) (2004), p.9 (16) with further references.
1042 Sachs/Lrcher
257
ruling has been sharply criticised by several German authors124 and is contrary to a ruling by
a UK Court of Appeal on a similar case.125
110 ZPO, which provides that claimants that do not come from the European Union may 50
be requested to provide appropriate security for the costs of state court proceedings, is not
applicable in arbitral proceedings.126 However, the parties may stipulate that security for the
costs of the proceedings can be requested.127 Failing such agreement, whether or not security
for costs shall be granted lies within the discretion of the arbitral tribunal and depends on the
circumstances of the case.128 In practice, one can observe that arbitral tribunals in Germany
tend to grant requests for security for costs only in exceptional circumstances which seems
to be in line with international arbitral practice.129
4.
Suspension and Stay of Proceedings
The provisions on the suspension (Unterbrechung) and stay (Aussetzung) of proceedings 51

pursuant to 239 et seq. ZPO are not directly applicable in arbitral proceedings.130 These
deal with suspension (i.) due to death, 239 ZPO;131 (ii.) on account of insolvency, 240
ZPO;132 (iii.) in case of loss of capacity to conduct proceedings, 241 ZPO133 or (iv.) due to
124
125
126
127
128
129
130
131
132
133
Risse, BB 2001, Beilage No.6, pp.11 seq; Zller-Geimer (2014) 1029 para. 98 criticizes the legal uncertainty stemming from the ex lege irrelevance of the arbitral agreement. Wagner, in: DIS (ed.) (2004), pp.9
(11 et seq.) with further references. In favour of the decision of the BGH cf. e.g. Schlosser, JZ 2001, 260.
Janos Paczy v. Haendler & Natermann GmbH, Yearbook IX (1984), 445 (448) = (1981) 1 Lloyds Rep.
302(CA).
Cf. Lachmann (2008), para. 1278; Schtze/Tscherning/Wais (1990), para. 593; Zller-Geimer (2014),
1042 para.40; cf. further on the issue of security for costs in international arbitration Karrer/Desax,
FS-Bckstiegel (2001), pp.339 (340 et seq.).
Cf. Geimer (2009), IZPR para.3858.
Karrer, SchiedsVZ 2006, 113 (115 et seq.); Karrer/Desax, FS-Bckstiegel, pp.339 (340 et seq.)
Cf. DIS (ed.), Financial Capacity of the Parties, 2004, p.177.
Schwab/Walter (2005), Chap. 16 paras48 et seq.
239 ZPO reads: [Suspension on account of death] (1) In the case of the death of one of the parties,
the proceedings are suspended until it is entered by the successor. (2) If the entry is delayed, the legal
successor shall, on the motion of the opponent, be summoned to enter and at the same time to appear
at the hearing of the main issue. (3) The summons, together with the pleadings containing the motion,
shall be served on the legal successor personally. The period allowed in the summons shall be fixed by the
presiding judge. (4) If the legal successors fail to appear on the date fixed, the stated successors shall be,
on motion, accepted as acknowledged and as a party to the proceedings on the main issue. (5) The heir is
not obliged to continue the litigation before his acceptance of the decedents estate..
240 ZPO reads: [Interruption through insolvency proceedings] In case of the opening of the insolvency proceedings regarding the assets of a party, the proceedings, if they relate to the insolvency outset,
are interrupted, until they are continued under the provisions applicable to the insolvency proceedings or
until the insolvency proceedings are ended. The same applies accordingly, if the power of administration
and disposal of the assets of the debtor is transferred to a preliminary insolvency administrator..
241 ZPO reads: [Suspension in case of lack of capacity to conduct proceedings] (1) If a party loses
his capacity to conduct proceedings or if the legal representative of a party deceases or his authority to
represent ceases without the party having become capable to conduct proceedings, the proceedings shall
be suspended until the legal representative or the new legal representative notifies the court of his appointment or his opponent notifies the court of his intention to continue the proceedings, and the court
ex officio executes service of this notice. (2) The notification by the legal representative shall be served on
the opponent, on the party represented by him, and a notice by the opponent on the representative. (3)
These provisions are analogously applicable if an order is issued for the administration of an estate..
258
the loss of attorney, 244 ZPO.134 As these provisions on the suspension and stay of proceedings usually concern situations, which affect the right to be heard, arbitral tribunals when
using their procedural discretion likely come to results which are comparable to the solutions
under the ZPO.135 The effect of a suspension or a stay of state court proceedings is to stop
the running of any time limits and the full time limit begins to run anew after the end of the
suspension (249 ZPO).136
52 As 249 ZPO is not applicable, the arbitral tribunal has to determine the effects of a suspension or stay of the arbitral proceedings. In this context, it again has to take into consideration
that the parties right to be heard must not be violated. At the same time, it should always
set a time limit when suspending or staying proceedings in order to avoid any unnecessary
delay.137
5.
Insolvency
53 Also in case of an insolvency of a party, German law takes an arbitration friendly approach.138
The insolvency of a party does not lead to the termination or interruption of the arbitral
proceedings,139 unless the parties have agreed otherwise.140 The insolvency administrator
enters into the proceedings in place of the insolvent party.141 The arbitral tribunal has to grant
the insolvency administrator a reasonable period of time in order to enable him to decide
whether to continue the proceedings.142 The commencement of insolvency proceedings
leaves the arbitration agreement intact, so that the administrator is bound to arbitrate rather
than litigate any disputes relating to contracts containing an arbitration clause.143 Whether
this rule also applies to contracts which are avoided by the administrator is disputed.144
134
135
136
137
138
139
140
141
142
143
144
244 ZPO reads: [Suspension due to loss of an attorney] (1) If, in a litigation by lawyers, the lawyer
of a party dies or is incapacitated and unable to continue to represent the party, the proceedings shall
be suspended until the newly appointed lawyer notifies, the court of his appointment and the court ex
officio serves the notice on the opponent. (2) If such notification is delayed, the party himself shall, upon
petition of the opponent, be summoned to attend the hearing of the main issue or requested to appoint
a new lawyer within a time-limit fixed by the presiding judge. If this request is not complied with the
proceedings shall be regarded as resumed. Until a subsequent appointment of a new lawyer, all services
may be made on the party obliged to make the notification..
Cf. Stein/Jonas-Schlosser (2002), 1042 para.35; Musielak-Voit (2013), 1042 para.15.
249 ZPO reads: [Effect of suspension and stay] (1) The effect of a suspension or stay of proceedings
is that the running of any prescribed period stops and, after the termination of the suspension, the full
period begins to run anew. (2) Any pleadings made with regard to the main issue by a party during the
suspension or stay have no legal effect against the other party. (3) A suspension occurring after the end of
an oral hearing does not prevent the issuance of a decision to be made on the basis of this hearing..
For an overview cf. Krll, Arbitration and Insolvency Proceedings Selected Problems, in: Mistelis/Lew
(eds.), Pervasive Problems in International Arbitration, Aspen 2006, pp.357 et seq.
Weigand-Hanefeld (2010), Germany, paras 7.91 et seq.; Lachmann (2008), para.294: insolvency does not
affect the arbitration agreement.
BGH 28.02.1957, BGHZ 24, 15 (18); Zller-Geimer (2014), 1042 para.48.
Cf. BGH 25.04.2013 on the binding effect of the arbitration agreement for the insolvency administrator.
Cf. Stein/Jonas-Schlosser (2002), 1042 para.35.
Cf. BGH 28.02.1957, BGHZ 24, 15 (18); id. 28.05.1979, NJW 1979, 2567; Thomas/Putzo-Reichold
(2013), 1029 para.14; Wagner, in: DIS (ed.) (2004), p.9 (21).
Cf. for details Wagner, in: DIS (ed.) (2004), p.9 (22).
1042 Sachs/Lrcher
6.
259
Appeal against Awards
Apart from an application for setting aside the award pursuant to 1059 ZPO, arbitral awards 54
are usually not subject to appellate proceedings. Nevertheless, the parties may provide otherwise and arrange for rules governing the form, extent and requirements of an appeal; such
appeal proceedings are e.g. not uncommon in commodity arbitrations such as the Court of
Arbitration of the Waren-Verein der Hamburger Brse e.V.
1042 et seq. ZPO are also applicable with regard to appellate proceedings before arbitral 55
tribunals. However, only the final award of the appellate tribunal is an award within the
meaning of 1051 et seq. ZPO, while the award rendered by the arbitral tribunal of first
instance may not be declared enforceable before the time limit for an appeal has expired.145 It
should also be noted that if the parties agree that the appeal will be heard before a state court,
the previous proceedings before the arbitral tribunal do not constitute arbitration within the
meaning of 1025 et seq. ZPO.146 If the parties have allowed an appeal against an arbitral
award before state courts within a certain period of time, the arbitral award becomes valid
after this time period has expired and no appeal has been filed.147 In practice, outside the field
of commodity arbitration, the stipulation of an appeal arbitral tribunal is extremely unusual.
145
146
147
Cf. Musielak-Voit (2013), 1042 para.29; Schwab/Walter (2005), Chap. 22 para.11.

Cf. OLG Naumburg 20.05.2005, SchiedsVZ 2006, 103 et seq.
Cf. BGH 01.03.2007.
1043 Place of Arbitration

(1) The parties are free to agree on the place of arbitration. Failing such agreement, the
place of arbitration shall be determined by the arbitral tribunal having regard to the
circumstances of the case, including the convenience of the parties.
(2) Notwithstanding the provisions of subsection 1 of this section, the arbitral tribunal
may, unless otherwise agreed by the parties, meet at any place it considers appropriate for an oral hearing, for hearing witnesses, experts or the parties, for consultation
among its members or for inspection of property or documents.
Short Bibliography: See also Short Bibliography before 1042 ZPO; Berger, Sitz des Schiedsgerichts
oder Sitz des Schiedsverfahrens?, RIW 2003, 8; Fouchard/Gaillard/Goldman, On International
Commercial Arbitration, The Hague 1999; Lionnet, Gehrt die Vereinbarung des Schiedsverfahrensortes zum notwendigen Mindestinhalt der Schiedsvereinbarung, in: Briner/Fortier/Berger/Bredow
(eds), FS-Bckstiegel, 2001, 477.
I.
II.
I.
Para.
Determination by the Parties
(1043(1) sentence 1ZPO) . . . . . . . . . . . . 2
Para.
III. Determination by the Arbitral Tribunal
(1043 (1) sentence 2 ZPO) . . . . . . . . . . . . 4
IV. Location of Hearings (1043 (2) ZPO) . . 7
1 1043 Code of Civil Procedure (Zivilprozessordnung ZPO) deals with the place of arbitration. It corresponds to Article 20 UNCITRAL Model Law (ML). The former German arbitration law did not contain a provision regarding this issue. The place of arbitration is of great
importance for the arbitral proceedings in a number of respects. First, it defines whether and
to what extent the German arbitration law is applicable.2 Pursuant to 1025 (1) ZPO, most
of the provisions of the German arbitration law only apply if the place of arbitration is located
in Germany. Only a limited number of provisions are also applicable if the place of arbitration
lies outside Germany (1025 (2) ZPO)3 or has not yet been determined (1025 (2) and
(3) ZPO).4 If the place of arbitration is however in Germany, the German arbitration law is
fully applicable, in particular its mandatory provisions.5 Second, the place of arbitration determines which state courts have jurisdiction with regard to the arbitral proceedings (1062
(1) ZPO). Furthermore, the place of arbitration is crucial for the question whether an award
qualifies as domestic or foreign, and therefore determines whether the recognition and enforcement of the award is governed by 1060ZPO (domestic awards) or 1061 ZPO (for-
1
2
3
4
Cf. Lionnet/Lionnet (2005), pp. 207 et seq.; Weigand-Hanefeld (2009), Germany, para. 7.74; MnchKommZPO-Mnch (2013), 1043 para.12; Kreindler/Schfer/Wolff (2006), para.231.
1032, 1033 and 1050 ZPO.
1032, 1033 and 1050 ZPO; furthermore German courts are competent to perform the functions
specified in 1034 et seq. and 1037 et seq. ZPO, if the respondent or the claimant has his place of business
or habitual residence in Germany; for details cf. supra, Wagner, 1025 paras 31 et seq.
Cf. Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.47; Rtzel/Wegen/Wilske (2005), p.130;
Lrcher/Lrcher (2001), para.170; Geimer (2009), IZPR para.3832; Kronke, RIW 1998, 257 (261).
1043 Sachs/Lrcher
261
eign awards).6 In this context, 1054 (3) ZPO provides that the award is deemed to be made
at the place of arbitration as determined in accordance with 1043 (1) ZPO.7 The place of
arbitration and the applicable arbitration law is thus decisive for the question whether an arbitral award may be set aside, in particular which reasons for setting aside may be raised and
which court has jurisdiction in this respect.8
II.
Determination by the Parties (1043 (1) sentence 1ZPO)
1043 (1) sentence 1 ZPO follows from the principle of party autonomy and puts the choice 2
of the place of arbitration in the parties hands. The parties may choose the place of arbitration either directly or indirectly by referring the determination to an arbitral institution or the
arbitral tribunal.9 When determining the place of arbitration, the parties should bear in mind
the consequences of their choice (see supra, para. 1) and are well advised to take into account
whether or not the legal system at the place of arbitration provides for an arbitration friendly
environment. For Germany, with its new arbitration law, the traditionally liberal approach of
the German courts towards arbitration and Germanys ratification of the New York Convention 1958, this is certainly the case.
As the place of arbitration constitutes an agreement on a procedural issue, the form require- 3
ments of 1031 ZPO regarding the arbitration agreement as such are not applicable.10
Furthermore, neither 1043 ZPO nor the Model Law contain any time limits within which
the parties must reach an agreement on the place of arbitration. Some authors take the view
that a determination of the place of arbitration by the parties is only permitted before the
commencement of the proceedings11 or, afterwards, only with the consent of the arbitral
tribunal.12 Taking into account the principle of party autonomy, the better view seems to
be that the parties are also free to agree on the place of arbitration after the arbitral proceedings have commenced and may even agree on a deviation from a determination made by the
arbitral tribunal. However, the arbitrators may be entitled to resign from their office if such
a subsequent agreement by the parties leads to the applicability of different procedural rules
which are not acceptable to the arbitrators.13
III. Determination by the Arbitral Tribunal (1043 (1) sentence 2 ZPO)

1043 (1) sentence 2 ZPO provides that if the parties fail to agree on the place of arbitra- 4
tion, it is to be determined by the tribunal. This principle of default determination by the
arbitral tribunal is recognized in most legal systems.14 When making such determination, the
tribunal must take into account the circumstances of the case. Although 1043 (1) ZPO
explicitly mentions only the convenience of the parties, the tribunal may, inter alia, also take
6
8
9
10
11
12
13
14
Cf. Weigand-Hanefeld (2009), Germany, para. 7.74; Bill of the Arbitration Law Reform Act, BT-Drs.
13/5274, p.47; Schwab/Walter (2005), Chap. 15 para.38.
In this context, MnchKommZPO-Mnch (2013), 1043 para.12, stresses that the assumption of the
place of arbitration in 1054 (3) ZPO is irrefutable (unwiderlegbar).
Kreindler/Schfer/Wolff (2006), paras262 et seq.; Borges, ZZP 2000, 487 (499).
Musielak-Voit (2013), 1043 para.3 with further references.
Cf. Lionnet, FS-Bckstiegel (2001), pp.477 et seq.
Schtze (2012), para.302.
Zller-Geimer (2014), 1043 para.3; Lachmann (2008), para.1398.
Cf. for all Fouchard/Gaillard/Goldman (1999), para.1240.
262
into account the convenience of the proposed place for itself and potential witnesses,15 as
well as practical considerations such as necessary infrastructure.16 In international arbitral
proceedings, it is important to consider the above-mentioned legal implications of the place
of arbitration on the applicable procedural rules as well as on the recognition and enforcement of the award when weighing up the circumstances of the case and the convenience
of the parties.17 If no place of arbitration was determined by the parties and no actual place
of arbitration can be determined, it should be considered to be the place of the last oral
hearing.18 The Higher Regional Court (Oberlandesgericht OLG) Mnchen decided that
an award is deemed to have been rendered at the place named in the award pursuant to
1054 (3) sentence 1 ZPO, irrespective of a possibly deviating arbitration agreement on the
place of arbitration.19
5 Because of the factual and legal significance of the place of arbitration, it is commonly recognized that its determination by the arbitral tribunal is not a question of procedure which can
be decided by the chairman alone pursuant to 1052 (3) ZPO; rather, this determination
has to be made by the arbitral tribunal as a whole.20
6 An improper determination of the place of arbitration by the arbitral tribunal will usually
result in a breach of procedural rules, which is a ground for setting aside the award pursuant
to 1059 (2) No. 1 (d) ZPO. However, abuse of the arbitral tribunals discretion is limited to
cases of blatant disregard, since state courts are not allowed to substitute the arbitral tribunals
discretion with their own.21
IV. Location of Hearings (1043 (2) ZPO)

7 1043 (2) ZPO allows the tribunal to meet at any place it considers appropriate for (i.)
consultation among its members, (ii.) an oral hearing, (iii.) the hearing of witnesses, experts
or the parties, or (iv.) the inspection of property and documents. Following a proposal of
the Reform Commission, the term oral hearing was added to 1043 (2) ZPO; therefore,
1043 (2) ZPO has an even broader scope of application than Article 20 (2) ML.22
8 The holding of hearings at other places allowed under 1043 (2) ZPO does not affect the
formal place of the arbitration determined pursuant to 1043 (1) ZPO.23 Thus, it is possible
that none or only some of the hearings are held at the place of arbitration or even in the
same country.24 The fact that the place of arbitration can be a purely virtual one is deemed
15
16
17
18
19
20
21
22
23
24

Cf. Weigand-Roth (2009), ML, Art. 20 para.14.381.
OLG Dsseldorf 23.03.2000, EWiR 2000, 795 with note by Krll (CLOUT Case No. 374 and 408); OLG
Mnchen 22.06.2005, SchiedsVZ 2005, 308 (309).
Cf. OLG Mnchen 17.10.2008 = SchiedsVZ 2008, 307 where no oral hearing had taken place and no place
of arbitration had been agreed on; OLG Mnchen 03.02.2010 = SchiedsVZ 2010, 336; see also OLG Kln
11.09.2009.
Cf. Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p 47; Schwab/Walter (2005), Chap. 15
para.43; for details regarding the role of the chairman cf. infra, Sachs/Lrcher, 1042 para.31.
Cf. Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.47; Weigand-Wagner (2002), Germany,
para.170.
Cf. OLG Mnchen 28.06.2013.
Cf. Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.47; Zller-Geimer (2014), 1043 paras1,
4; Stein/Jonas-Schlosser (2002), 1043 para.4; Schlosser, RIW 1994, 723 (727 et seq.); Lachmann (2008),
1043 Sachs/Lrcher
263
appropriate in order to ensure the arbitral tribunals flexibility, particularly with regard to
considerations of practicability on the one hand, and the need to create legal certainty by
fixing a formal place of arbitration on the other.25
As 1043 (2) ZPO is not mandatory, it is in the sole discretion of the parties to exclude or 9
restrict such right of the arbitral tribunal.26
25
26
para.1393; Musielak-Voit (2013), 1043 paras1, 4; an opposing view is taken by Kronke, RIW 1998, 257
(261) who takes the view that the place of arbitration determined pursuant to 1043 (1) ZPO must not
become a purely fictitious one; similar Schtze (2012), para.307.
Cf. Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.47; Schwab/Walter (2005), Chap. 15
para.39.
Cf. Rtzel/Wegen/Wilske (2005), p.130; MnchKommZPO-Mnch (2013), 1043 para.14.
1044 Commencement of Arbitral Proceedings

Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular
dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent. The request shall state the names of the parties,
the subject-matter of the dispute and contain a reference to the arbitration agreement.
Short Bibliography: See Short Bibliography before 1042 ZPO.
I.
I.
Para.
A. Procedural Relevance . . . . . . . . . . . . . . . . 2
B. Substantive Law Relevance . . . . . . . . . . . 3
1. Suspension of Statute of
Limitation . . . . . . . . . . . . . . . . . . . . . . . . 3
Para.
2. Further Substantive Law
Relevance . . . . . . . . . . . . . . . . . . . . . . . . 7
III. The Content of a Request for Arbitration 11
IV. The Form of a Request of Arbitration . . . . 14
1 The proper commencement of the arbitral proceedings is of great practical importance, both
procedurally and substantively.
A.
Procedural Relevance
2 The commencement of arbitral proceedings does not lead to lis alibi pendens (Rechtshngigkeit) within the meaning of 261 (3) No. 1 ZPO, i.e. a plea which is to be considered ex
officio.2 Therefore, recourse to state courts is admissible unless there is an effective arbitration
agreement between the parties and an objection is raised to the jurisdiction of the state court
as a result of the arbitration agreement, 1032 (1) ZPO.3 However, after the commencement
of arbitral proceedings pursuant to 1044 ZPO, the initiation of further arbitral proceedings before another arbitral tribunal is inadmissible if the dispute concerns the same parties
and subject matter, provided that additional claims of the parties can be introduced by way
of extension of the principal claim or as counterclaims to the original dispute.4 It is argued
that in such cases, there is no legitimate interest (Rechtsschutzbedrfnis) for further arbitral
proceedings5 and it is obvious that this also applies with respect to state court proceedings.
If a party is not given proper notice of the commencement of the arbitral proceedings, the
award may be set aside pursuant to 1059 (2) No. 1 (b)ZPO.
1
2
4
5
Cf. Kreindler/Schfer/Wolff (2006), para.734; Schwab/Walter (2005), Chapter 16 para.4 with further
references; Glossner/Bredow/Bhler (1990), para.120; with regard to the former German arbitration law
BGH 11.04.1958, JZ 1958, 406.
Lionnet/Lionnet (2005), p.319; Stein/Jonas-Schlosser (2002), 1044 para.3; for further details regarding
the interrelation between tribunals and state courts cf. Karrer (ed.) (2001).
Cf. Schwab/Walter (2005), Chapter 16 para.4; Baumbach/Lauterbach (2014), 1044 para.3.
1044 Sachs/Lrcher
B.
Substantive Law Relevance
1.
Suspension of Statute of Limitation
265
Similar to Article 21 ML, 1044 ZPO does not contain any details as to how the commence- 3
ment of the arbitral proceedings affects the statute of limitation. It is the understanding under
German law that these effects are determined by the applicable substantive law. If German
law is applicable with regard to the substance of the dispute,6 the respective provisions of the
German Civil Code (Brgerliches Gesetzbuch BGB) apply,7 in particular 204 (1) No. 11
BGB, which expressly states that the commencement of arbitral proceedings (pursuant to
1044 ZPO8) suspends the applicable limitation periods.
Under German substantive law, already the commencement of serious settlement negotia- 4
tions between the parties leads to the suspension of limitation periods.9 If German substantive law is not applicable, the parties should make sure that settlement negotiations have
the same effect. This is particularly relevant if the parties have agreed on a multi-tier dispute
resolution clause, where arbitration proceedings may only be commenced after previous
dispute resolution steps have been fulfilled.
204 (1) No. 11 of the BGB was introduced as part of a reform of the German statutes 5
of limitation. Prior to this reform, 220 (2) BGB required that the claimant had to do
everything he could unilaterally do to constitute the arbitral tribunal in order to interrupt
the limitation period.10 It was unclear whether 1044 ZPO prevailed over 220 (2) BGB
or whether the latter provision was also applicable, which would mean that in addition to
the requirements of 1044ZPO, the claimant also had to propose/appoint an arbitrator.11
Because of the explicit reference in 204 (1) No. 11 BGB to the wording of 1044 ZPO, this
controversy has become obsolete. Therefore, under the present law, the decisive point in time
for the suspension of the limitation period is the date on which the respondent receives the
request for a particular dispute to be referred to arbitration in accordance with 1044 ZPO,
i.e. without the need to appoint an arbitrator already in the arbitration request.12 Hence, the
limitation period is suspended as soon as the debtor receives a notice in accordance with
1044 sentence 2 ZPO that a particular dispute has been submitted to arbitration. However,
it should be noted that institutional sets of arbitration rules impose different and often more
elaborate standards than 1044 sentence 2 ZPO.13 For example, in ICC arbitration proceedings the period of limitation is only suspended if the claimant complies with all the prerequisites of a request for arbitration stipulated by Article 4 ICC Rules, in particular subsection 3,
which requires information about the number and choice of arbitrators in accordance with
the provisions of Articles 8, 9 and 10 ICC Rules.14 Article 8 (4) ICC Rules stipulates in this
6
7
8
9
10
11
12
13
14
For details cf. infra, Schmaltz, 1051 paras 4 et seq. and 25.
203 BGB.
Cf. Weigand-Wagner (2002), Germany, para.185.
Cf. for more details Sandrock, FS-Bckstiegel (2001), pp.671 (682 et seq.); Berger, FS-Bckstiegel (2001),
pp.31 (36 et seq.).
Musielak-Voit (2013), 1044 para. 5; Zller-Geimer (2014), 1044 para. 4; Baumbach/Lauterbach
(2014), 1044 para.3.
Cf. BeckOK ZPO-Wilske/Markert (2012), 1044 paras 7, 8.2.; citing also s. 6.1 DIS Rules ( statement of
claim) and Art. 3 (3) Swiss Rules ( Notice of Arbitration).
Sandrock, FS-Bckstiegel (2001), p.671 (679).
266
context that the claimant has to nominate its arbitrator in the request for arbitration. As a
general rule, the prerequisites of a request for arbitration flow from the relevant arbitration
agreement; thus if the parties chose arbitration under the rules of an institution, the relevant
provisions have to be fulfilled.
6 The rules of various institutions provide that, if a request for arbitration is incomplete, the
claimant will be requested to remedy the defect within an appropriate period of time. If
the claimant complies with such directions within the applicable time limit, the request for
arbitration will be deemed to have been validly filed on the date when the initial request for
arbitration was submitted.15
2.
Further Substantive Law Relevance
7 Further, the commencement of arbitral proceedings has the same effects as the filing of a
claim before state courts. Thus, if German substantive law is applicable, the commencement
of arbitral proceedings may put the other party into default pursuant to 286 (1) sentence
2 BGB and, even if this is not the case, this justifies a claim for interest payable as from commencement of the proceedings (291 BGB). The commencement of arbitral proceedings
may also lead to increased liability standards for the other party.16
II.
Legislative History
8 1044 Code of Civil Procedure (Zivilprozessordnung ZPO) was newly introduced by the
new German Arbitration Act. 1044 sentence 1 ZPO follows Article 21 UNCITRAL Model
Law (ML) word for word. It deals with the initiation of arbitral proceedings and determines
their commencement as the date on which the respondent receives the request for a particular dispute to be referred to arbitration.
9 1044 ZPO represents a default provision for cases where the parties have not agreed on
specific requirements for the commencement of the arbitral proceedings. The parties may
deviate from this provision by either explicitly agreeing on the requirements for the commencement of the proceedings or by making reference to a set of arbitration rules. Many
arbitration rules provide that the arbitral proceedings commence on the date the administering institution receives the request for arbitration and also stipulate additional requirements
regarding its contents,17 e.g. Section6.1 DIS Rules.18
10 The commencement of the arbitral proceedings pursuant to 1044 ZPO entails several procedural and material effects. The most important one is that, at least under German substantive law, statutes of limitation are suspended.19 After the commencement of the proceedings,
the arbitral tribunal has to be constituted. Subsequently, the arbitral tribunal will normally
set the time limits for submitting the statement of claim and defence, 1046 (1) ZPO.20
15
16
17
18
19
20
Article 3 (5) Swiss Rules, s. 6.4 DIS Rules; cf. also Article 4 (4) ICC Rules providing that it is within the
discretion of the ICC Court to grant an additional time period to remedy a defect.
Cf. Stein/Jonas-Schlosser (2002), 1044 para.5; Lew/Mistelis/Krll (2003), para.20-6; Kreindler/Schfer/
Wolff (2006), para.735.
Cf. UN-Commentary A/CN.9/264, UNCITRAL Yearbook XVI (1985), p.104 (126); Weigand-Roth
(2009), ML, Art. 21 para.14.386.
See Part III, Elsing, Section 6 paras 2 et seq.
See further on this issue, supra, paras3 et seq.
Relating to the differences between the request for arbitration and the statement of claim see infra, Sachs/
Lrcher, 1046 and Lionnet/Lionnet (2005), pp.317 et seq.
1044 Sachs/Lrcher
267
III. The Content of a Request for Arbitration

Regardless of how the request is called it may be referred to as notice, request, application 11
or statement of claim, etc. it must make clear that the claimant wants to initiate arbitration
proceedings. It also has to indicate the names and addresses of the parties.21
Furthermore, the matter in dispute has to be sufficiently identified.22 The description of the 12
subject matter in dispute must enable the respondent and, later on, the arbitral tribunal to
verify whether the dispute brought before the arbitral tribunal is covered by the parties
agreement to arbitrate.23 However, it is not necessary that the request states all the facts supporting the claim raised.24 Even though the request for arbitration does not have to contain
a formal prayer for relief, the relief sought has to be sufficiently specific.25 In order to avoid
difficulties, the claimant should state his prayers for relief as precisely as possible.
Finally, 1044 sentence 2 ZPO provides that the request must contain a reference to the arbi- 13
tration clause or, as the case may be, to the separate arbitration agreement. As stated, 1044
ZPO is not mandatory and it is in the discretion of the parties to set additional requirements
that the request for arbitration has to fulfil.
IV. The Form of a Request of Arbitration

The request of the claimant does not have to fulfil any specific form requirements unless the 14
parties have agreed otherwise.26 There are also no form requirements regarding the delivery
of the request.27 1028 ZPO, which deals with the delivery of documents where the respondents place of residence is unknown,28 is also applicable to the request for arbitration.29
However, as the application of this provision significantly affects the respondents right to be
heard, the threshold as to whether its place of residence is unknown must be high.30
21
22
23
24
25
26
27
28
29
30
Cf. UN-Commentary A/CN.9/264, UNCITRAL Yearbook XVI (1985), p.104 (126).

Musielak-Voit (2013), 1044 para.2; MnchKommZPO-Mnch (2013), 1044 paras24 seq.
MnchKommZPO-Mnch (2013), 1044 paras20 et seq.
Schtze (2012), para.319; Musielak-Voit (2013), 1044 para.2; Stein/Jonas-Schlosser (2002), 1044
para.2; an opposing view is taken by Baumbach/Lauterbach (2013), 1044 para.2 and Lionnet/Lionnet
(2005), p.318: request must be in writing.
According to 1028 ZPO in case the residence of a party or of a person entitled to receive communications on his behalf are not known, any written communication shall be deemed to have been received
on the day on which it could have been received at the addressees last known mailing address, place of
business or habitual residence. Further with regard to the details see supra, Wagner, 1028 paras 4 et seq.
OLG Dresden 15.03.2005, SchiedsVZ 2006, 166; Musielak-Voit (2013), 1044 para.3.
Musielak-Voit (2013), 1044 para.3; BeckOK ZPO-Markert (2012), 1044 ZPO paras 5.1 et seq. on
deemed reception in case of frustration of actual receipt in bad faith.
1045 Language of Proceedings

(1) The parties are free to agree on the language or languages to be used in the arbitral
proceeding. Failing such agreement, the arbitral tribunal shall determine the language or languages to be used in the proceedings. This agreement or determination,
unless otherwise specified therein, shall apply to any written statement by a party,
any hearing and any award, decision or other communication by the arbitral tribunal.
(2) The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into the language or languages agreed upon by the parties or
determined by the arbitral tribunal.
Short Bibliography: See Short Bibliography before 1042 ZPO; Binder, International Commercial
Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions, London 2010.
I.
II.
III.
IV.
I.
Para.
Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Determination by the Parties . . . . . . . . . . . . . 2
Determination by the Arbitral Tribunal . . . 4
Scope of Applicability. . . . . . . . . . . . . . . . . . . . 6
Para.
Translation of Documentary Evidence
(1045 (2) ZPO) . . . . . . . . . . . . . . . . . . . . . . . 9
VI. Disregard of the Language of the
Arbitral Proceedings . . . . . . . . . . . . . . . . . . . . 12
V.
Overview1
1 1045 Code of Civil Procedure (Zivilprozessordnung ZPO) incorporates Article 22

UNCITRAL Model Law (ML) into the German arbitration law and, once again, confirms
the principle of party autonomy.2 This provision is of particular importance in international
arbitration proceedings, especially if parties who speak different languages are involved.3
II.
Determination by the Parties
2 As 1045 ZPO does not specify any form requirements, the parties can agree on the language of the proceedings not only expressly, but also by an implied agreement.4 Furthermore,
the parties may determine or change the language even in the course of the proceedings or
after a determination of the language by the arbitral tribunal.5 However, an arbitrator must be
entitled to resign from his office, if after his appointment the parties agree on a language for
the proceedings which the arbitrator does not speak.
3 For practical reasons, it is preferable for the parties to agree on a language which involves
relatively few translation costs6 and in which all or most of the participants are proficient.7
However, 1045 ZPO does not restrict the parties to settle on one language; they are free
1
2
3
4
5
6
7
Cf. Binder (2010), 5067.
Musielak-Voit (2013), 1045 para. 2; Lachmann (2008), para. 1402; an opposing view is taken by
Cf. Rtzel/Wegen/Wilske (2005), p.130; Kreindler/Schfer/Wolff (2006), paras629 et seq.
1045 Sachs/Lrcher
269
to choose two or even more languages to be followed throughout the proceedings.8 Yet, the
parties should take into account that multi-lingual proceedings are likely to cause considerable additional costs. In particular, if the arbitral award is to be rendered in more than one
language, it should always be agreed which language prevails in order to avoid disputes
caused by deviations in the wording of the awards in the different languages.
III. Determination by the Arbitral Tribunal

If the parties have not agreed on the language of the arbitral proceedings, it is up to the 4
arbitral tribunal to make such determination. In doing so, the tribunal must take into account
the principles of equal treatment and the right to be heard, pursuant to 1042 (1) ZPO.9
Apart from these general principles, which apply to all aspects of the arbitral proceedings,
1045 (1) sentence 2 ZPO does not specify what is to be considered by the tribunal when
exercising its discretion.10 An important point to be taken into account by the tribunal is,
however, the language of the parties main contract11 and of their business communications.12
Furthermore, the arbitral tribunal should consider the convenience of the language for the
parties involved and for itself.13 As the language of the arbitral proceedings can have a considerable practical impact on the proceedings, its determination may not be made by the
chairman alone but has to be made by the arbitral tribunal.14
An allegedly wrong determination of the language of arbitration by the arbitrators may 5
only result in a ground for setting aside the award in exceptional cases. With regard to the
question whether a decision of an arbitral tribunal regarding the language of the arbitral
proceedings violated the parties right to be heard, the Higher Regional Court (Oberlandesgericht OLG) Kln held that a party has to indicate in concreto on which occasions it could
not follow the proceedings because of comprehension or communication difficulties. The
mere supposition (not supported by the merits of the award) that the arbitrators have not
properly understood a party is not sufficient.15 The OLG Celle ruled that a party which is not
sufficiently familiar with the language of the proceedings is itself responsible to instruct an
interpreter.16
IV. Scope of Applicability

Pursuant to 1045 (1) sentence 3 ZPO, the language agreed upon by the parties or deter- 6
mined by the arbitral tribunal applies to all written statements by a party, all hearings and
any award, decision or other communication by the tribunal. The parties may also extend
the scope of their agreement to include documentary evidence as provided for in 1045
8
9
10
11
12
13
14
15
16

Cf. Binder (2010), 5071.
Cf. Lrcher/Lrcher (2001), para.179.
This is, e.g. explicitly stated in Art. 16 of the ICC Rules. Also Lionnet/Lionnet (2005), p.354 point out that
guidance can be sought by the various institutional arbitration rules.
For an opposing view cf. Musielak-Voit (2013), 1045 para.2.
OLG Kln 16.12.1992, RIW 1993, 499 (501).
Cf. OLG Celle 02.10.2001, confirmed by BGH 30.01.2003, (2003) Int.A.L.R. N-59 (CLOUT Case No.
559).
270
(2) ZPO. Where there is such an agreement, such documents must be translated into the
language of the proceedings.17
7 However, 1045 ZPO does not apply to any actions carried out before German state courts.
184 Act on the Constitution of the Courts (Gerichtsverfassungsgesetz GVG) provides
that German is the official language of all German state court proceedings.18 In particular, if a
party wants to enforce the award in Germany, the request for a declaration of enforceability
(Antrag auf Vollstreckbarkeitserklrung) to be filed with the competent state court must reflect
the operative part of the award in German.
8 In practice, however, some Higher Regional Courts require that a translation of the whole
award is attached to the request for a declaration of enforceability. Similar to a request for a
declaration of enforceability, all other requests seeking court assistance in arbitral proceedings must be filed in German because of 184 GVG.
V.
Translation of documentary Evidence (1045 (2) ZPO)
9 Pursuant to 1045 (2) ZPO, the arbitral tribunal is not obliged to but may order that any
documentary evidence be translated into the language of the proceedings. Unless otherwise
agreed by the parties, the arbitral tribunal is not obliged to order such translation with regard
to documents which are in a language that all members of the arbitral tribunal properly understand; the opposing party may translate such documents on its part.19
10 The costs incurred for translations ordered by the tribunal are part of the costs of the arbitral
proceedings within the meaning of 1057 ZPO. Accordingly, these costs must be allocated
to the parties in the arbitral tribunals cost decision, regardless of which party had to provide
the translation.20
11 Costs for translations of documentary evidence into the language of the proceedings incurred by a party are also part of the costs of the arbitration and thus recoverable, even if the
translation was not ordered by the arbitral tribunal. However, costs caused by translations
from the language of the proceedings into any other language do not constitute costs of the
arbitral proceedings within the meaning of 1057 ZPO.21
VI. Disregard of the Language of the Arbitral Proceedings

12 If a party submits a statement in a language other than that of the arbitral proceedings or if it
submits a document without a required translation, this may ultimately result in the respective statement or document being disregarded22 namely if the content of the document in
question is disputed between the parties.
13 If the arbitral tribunal disregards the language of the arbitral proceedings and, e.g. conducts the
oral hearing in a different language, this may be a ground for setting aside the award pursuant
17
18
19
20
21
22

Lachmann (2008), para.1408, Musielak-Voit (2013), 1045 para.3; for details cf. 1059 ZPO.
Stein/Jonas-Schlosser (2002), 1045 para.3 elaborating that the right to be heard is violated if one of the
arbitrators does not understand documents essential to the case.
Cf. Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.48; Zller-Geimer (2014), 1045 para.3;
1045 Sachs/Lrcher
271
to 1059 No. 1 (b) ZPO, unless such defect is either remedied by the arbitral tribunal or no
party objects to the deviation from the agreed language (1027ZPO).23
23
Musielak-Voit (2013), 1045 para.4; MnchKommZPO-Mnch (2013), 1045 para.16 in contrast takes
the view that such defect may not be cured and that 1027 ZPO is not applicable.
1046 Statements of Claim and Defence

(1) Within the period of time agreed by the parties or determined by the arbitral tribunal, the claimant shall state his claim and the facts supporting the claim, and the
respondent shall state his defence in respect of these particulars. The parties may
submit with their statements all documents they consider to be relevant or may add
a reference to other evidence they will submit.
(2) Unless otherwise agreed by the parties, either party may amend or supplement his
claim or defence during the course of the arbitral proceedings, unless the arbitral
tribunal considers it inappropriate to allow such amendment having regard to the
delay in making it without sufficient justification.
(3) Subsections 1 and 2 apply mutatis mutandis to counterclaims.
Short Bibliography: See Short Bibliography before 1042 ZPO; Craig/Park/Paulsson, International
Chamber of Commerce Arbitration 2000.
I.
II.
I.
Para.
Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Statement of Claim and Defence . . . . . . . . . 2
A. Core Elements . . . . . . . . . . . . . . . . . . . . . . . 2
B. Submission of Documents and
Other Evidence . . . . . . . . . . . . . . . . . . . . . . 5
Para.
III. Amending and Supplementing the
Claims and Defences, Change of Claim . . . 6
IV. Delay of a Party . . . . . . . . . . . . . . . . . . . . . . . . . . 9
V. Counterclaims . . . . . . . . . . . . . . . . . . . . . . . . . . 11
VI. Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
VII. Agreement of the Parties . . . . . . . . . . . . . . . . 15
Overview1
1 1046 Code of Civil Procedure (Zivilprozessordnung ZPO) sets out the requirements
for the statement of claim, the statement of defence and a counterclaim as well as the limits
on the amendment or supplementation of claims and defences during the course of the
arbitral proceedings. The provision is unprecedented in the former German arbitration law.
While 1046 (1) and (2)ZPO are based on Article 23 UNCITRAL Model Law (ML), they
contain a number of variations. 1046 (3) ZPO clarifies that the provision also applies to
counterclaims.
II.
Statement of Claim and Defence
A.
Core Elements
2 1046 (1) ZPO deals with the preparation of the case in the written proceedings and sets
forth the elements of the statement of claim which are necessary in order to define the subject
matter in dispute that is to be decided by the tribunal. 1046 (1) ZPO varies from Article
23 ML.2 Contrary to Article 23 (1) ML, 1046 (1) sentence 1 ZPO does not require the
claimant to state the points at issue, since they are not decisive to establish the subject matter
1
2
For an overview see Lionnet/Lionnet (2005), p.336.
1046 Sachs/Lrcher
273
in dispute (Streitgegenstand).3 Furthermore, the points at issue usually tend to evolve in the
course of the proceedings, particularly after the defendant has filed its statement of defence.4
Therefore, 1046 (1) sentence 1 ZPO merely sets forth two core elements which the state- 3
ment of claim must contain, namely the claims raised and the facts supporting the claim;
the statement of claim does not necessarily have to state a specific prayer for relief.5 These
two elements can be considered as its indispensable essentials, because the subject matter of
the dispute is defined by the underlying facts and by the claim raised.6 The parties are free,
e.g. by making reference to a set of arbitration rules, to agree on additional elements that the
statement of claim (as well as other written submissions) has to contain.7
With regard to the respondents statement of defence, 1046 (1) ZPO stipulates that the 4
respondent must address the claims and statements of facts raised in the statement of claim.
Although not expressly mentioned in 1046 (1) sentence 1 ZPO, it is self-evident that the
statement of defence also has to state the facts supporting such defence.8 So-called independent means of defence (selbststndige Verteidigungsmittel), such as termination of a contract,
performance or set-off raised by the respondent have to be substantiated in the statement of
defence.9 The parties or (failing such agreement) the arbitral tribunal should set deadlines for
the submission of the statement of claim and defence.10 Such deadlines must be appropriate
to avoid violating the parties right to be heard.11
B.
Submission of Documents and Other Evidence
Pursuant to 1046 (1) sentence 2 ZPO, the parties may, together with their statement of 5
claim or defence, submit all documents they consider to be relevant or may include a reference to other evidence they will submit. Contrary to German procedural law under which the
parties are obliged to submit the evidence they wish to rely upon (Beibringungsgrundsatz),12
the German arbitration law takes a more flexible and liberal approach in order to accommodate the needs and practice of parties coming from other jurisdictions, such as common law
countries.13 Therefore, a partys failure to submit or refer to any documents in its statement of
claim or defence does not automatically preclude these documents if they are submitted at a
later stage of the proceedings.14 However, such preclusion may result from 1046 (2) ZPO.15
3
4
5
6
7
8
9
10
11
12
13
14
15
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.48; Lachmann (2008), para.1445.
Cf. MnchKommZPO-Mnch (2013), 1046 para.6; Bill of the Arbitration Law Reform Act, BT-Drs.
13/5274, p.48.
Weigand-Hanefeld (2009), Germany, para.7.77.
Lachmann (2008), para.1475; BeckOK ZPO-Markert (2012), 1046 ZPO para. 4.1 refers to the possibility of the parties to subsequently alter deadlines by consent.
Musielak-Voit (2013), 1046 para.3; Rtzel/Wegen/Wilske (2005), p.131.
Cf. for more detail supra, Huber/Bach, 1042 para.36.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.48; Zller-Geimer (20014), 1046 para.1.
274
III. Amending and Supplementing the Claims and Defences, Change of Claim
6 Pursuant to Article 23 (2) ML, either party may, unless otherwise agreed, amend or supplement its claims and defences in the course of the proceedings to the extent the arbitral
tribunal considers it appropriate to allow such amendment, having regard to any delay
caused thereby.16 As German procedural law differentiates between the amendment or supplementation of the factual allegations on which a claim or defence is based on the one hand,
and changes to the claim itself and hence the subject matter in dispute on the other hand,
the drafters of the new German arbitration law considered it necessary to explicitly add in
1046 (2) ZPO the possibility of an amendment of claim (Klagenderung).17 Except for
this amendment, 1046 (2) ZPO corresponds word for word to Article 23 (2) ML.18 The
Higher Regional Court (Oberlandesgericht OLG) Dresden held with respect to 1046
(2) ZPO that an arbitral tribunal is also competent to decide on supplementations that have
been submitted after the end of an oral hearing but before an award was rendered.19
7 In addition to express agreements on the admissibility of amendments and supplementations, the parties may also indirectly deviate from the general rule by referring to a set of
arbitration rules. For example, pursuant to Art. 23 (4) of the ICC Rules,20 without the arbitral
tribunals authorization supplementations are only admissible within the limits set by the
terms of reference.
8 The term amendment of claim in 1046 (2) ZPO should be interpreted broadly and should
be understood to include the introduction of new claims as well as the substitution or addition of parties, etc.21 Amendments and changes of claim are only admissible if they do not
exceed the scope of the arbitration agreement, unless the other party at least impliedly agrees
to an extension of the arbitration agreement.22 Even if an amendment of claim is permissible
pursuant to 1046 (2) ZPO, it may be inadmissible for other reasons, e.g. because a contractual time period for the raising of the claim has elapsed. To the extent an amendment of
claim includes a partial withdrawal of claim, the respondent can contradict such a withdrawal
pursuant to 1056 (2) No. 1 (b) ZPO.23
IV. Delay of a Party

9 1046 (2) ZPO provides that, unless otherwise agreed by the parties, the arbitral tribunal
may refuse to accept changes, amendments and the supplementation of claims and defences
made in the course of the proceedings if it deems them not appropriate, having regard to
the delay caused thereby. It is thus in the discretion of the arbitral tribunal to assess whether
any alterations and/or amendments are precluded because they would cause delay which is
16
17
18
19
20
21
22
23
Relating to the abandonment of claim 1056 (2) No. 1 (b) ZPO and Lionnet/Lionnet (2005), p.341.
Which in German state court proceedings is governed by 263 ZPO.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 48; Weigand-Wagner (2002), Germany,
para.196.
Art. 23 (4) of the ICC Rules reads: After the Terms of Reference have been signed or approved by the
Court, no party shall make new claims which fall outside the limits of the Terms of Reference unless it has
been authorized to do so by the arbitral tribunal ().
BGH 13.11.1975, BGHZ 65, 264 (267 et seq.); with regard to withdrawal of claims, cf. infra, von Schlabrendorff/Sessler, 1056 para. 8.
Cf. infra, von Schlabrendorff/Sessler, 1056 para. 8.
1046 Sachs/Lrcher
275
not sufficiently excused. The wording of 1046 (2) ZPO provides no guidance with regard
to the circumstances under which a change, etc., causes delay. When deciding whether or
not to allow a change, the arbitral tribunal has to strike a balance between the parties right
to be heard on the one side and the duty to avoid delay of the proceedings on the other.24
Criteria to be taken into account by the arbitral tribunal in this context are e.g. the extent
and reason for the delay and the prejudice to the other party caused by a further delay of the
proceedings.25 In particular against the background of the parties right to be heard pursuant
to 1042 (1) sentence 2 ZPO, a rejection of changes, amendments and supplementations
by the arbitral tribunal requires that the party concerned failed to assert them within the
time limit set by the arbitral tribunal;26 for the sake of clarity, the arbitral tribunal should
expressly state when setting such time limit that subsequent changes, etc., will be precluded.27
Preclusion can also be justified if the party concerned has violated its obligation to participate
in the proceedings in a grossly negligent manner.28 An example of this would be if a party fails
to make amendments, etc., within an appropriate period of time after the arbitral tribunal
had informed the party that it considers this to be necessary or after the opposing party had
claimed that a point in the other partys submission was not sufficiently substantiated.29
Pursuant to 1046 (2) ZPO, a change or amendment cannot be precluded if the delay is 10
sufficiently excused.30 Such a sufficient excuse is likely to exist if the delay is caused by unforeseeable circumstances, which are beyond the control of the party concerned. An example of
this would be because the claimant became aware of facts previously unknown to it, causing
the supplementation or amendment. Other situations justifying a default would be if the
counsel to a party has to resign because of unforeseeable reasons, cases of severe illness, or
if such delay was caused by the opening of insolvency proceedings and the newly appointed
insolvency administrator needs time to familiarize himself with the dispute.31 It always has to
be decided on the basis of the facts of the individual case, whether or not an arbitral tribunal
will consider an excuse for a delay to be sufficiently justified.
V.
Counterclaims
Pursuant to 1046 (3) ZPO, all the provisions relating to the claim also apply to a counter- 11
claim. Thus, pursuant to 1046 (1) ZPO, the respondents counterclaim also has to contain
the facts supporting the claim and the claim raised. Furthermore, the respondent may annex
all the documents it wishes to rely upon, as well as refer to any other evidence to support
its counterclaim. With respect to 1046 (2) ZPO, the respondent may amend or supplement its counterclaim unless the arbitral tribunal considers it inappropriate to allow such
24
25
26
27
28
29
30
31

UN-Commentary A/CN.9/264, UNCITRAL Yearbook XVI (1985), p.104 (128).
Cf. Zller-Geimer (2014), 1046 para.3; Musielak-Voit (2013), 1046 para.9; according to Thomas/
Putzo-Reichold (2013), 1048 paras2, 4, 8 the parties must be granted the right to be heard before a
rejection of changes, amendments and supplementations due to delay.
Cf. Lrcher/Lrcher (2001), para. 219; Stein/Jonas-Schlosser (2002), 1042 para. 4 in particular with
regard to a preclusion of new factual allegations; Raeschke-Kessler, NJW 1988, 3041 (3049).
Cf. Stein/Jonas-Schlosser (2002), 1042 para.4; Zller-Geimer (2014), 1046 para.3.
Cf. in this context 1048 (4) infra, paras14 et seq.
Cf. Fltter, Schiedsverfahren und Schiedsabrede unter den Bedingungen der Insolvenz, DZWIR2001,
89 (92); Heidbrink/von der Groben, Insolvenz und Schiedsverfahren, ZIP2006, 265 (269); cf. also supra,
Sachs/Lrcher, 1042 para.51.
276
amendment, having regard to the delay caused thereby without sufficient justification.32 But,
most importantly, the counterclaim may not exceed the scope of the arbitration agreement.
Though not specifically mentioned in 1046 ZPO, this prerequisite is self-evident since the
jurisdiction of the arbitral tribunal is solely based on the parties arbitration agreement.33 If
the claim is withdrawn by claimant, this does not affect the existence of the counterclaim.
12 If a counterclaim introduces new issues to the arbitration proceedings, which lead to an
increase of the overall value of the dispute, the arbitral tribunal is entitled to request an additional advance on costs and fees.34 Under German law, the parties are jointly and severally
liable for the payment of the advance payments to the arbitral tribunal and, unless otherwise
agreed, the claimant and the respondent have to make equal advance payments. This is also
the case with regard to advance payments for a counterclaim.
13 In practice, it may occur that a respondent tries to obstruct the claim by raising a counterclaim
which is significantly higher than the claim, knowing or expecting that the claimant will not
be able to pay its share of the advance payment.35 Some arbitration rules provide that in such
situations separate advances may be authorized, obliging the claimant to make the advance
payment for the claim and the respondent for the counterclaim.36 As the German arbitration
law does not contain such a provision, there are doubts as to whether an arbitral tribunal
would be entitled to set separate advance payments for the parties without a contractual basis, which may be contained in an agreement of the parties or the applicable arbitration rules.
VI. Set-off
14 Similar to the Model Law, 1046 ZPO does not expressly refer to set-offs. However, it is
recognized that the above also applies with regard to the set-off of claims.37 Accordingly, a
claim relied upon by the respondent, or the claimant in the case of a counterclaim, for the
purpose of set-off must fall within the scope of the parties arbitration agreement; if the claim
or the counterclaim relied upon for set-off exceeds the scope of the arbitration agreement,
such claims may only be relied upon if the other party does not object to the tribunals jurisdiction.38 Furthermore and also in analogy to 1046 (2) ZPO, when asserting a set-off at a
later stage of the proceedings, such set-off may be precluded if it is delayed and such delay is
not sufficiently excused.
VII. Agreement of the Parties

15 With regard to 1046 (1) sentence 1 ZPO, the parties are free to expand but cannot reduce
the core elements for the statement of claim, as these minimum requirements are indispensa32
33
34
35
36
37
38
UN-Commentary A/CN.9/264, UNCITRAL Yearbook XVI (1985), p.104 (128).

Lrcher/Lrcher (2001), para.239; Henn (2000), para.319; Musielak-Voit (2013), 1046 para.14; Stein/
Jonas-Schlosser (2002), 1042 para.3; for a broader approach cf. Zller-Geimer (2014), 1046 para.4
who takes the view that a counterclaim which does not fall under the arbitration agreement is also permissible provided that there is a legal or factual connection between the claim and counterclaim.
Cf. supra, Trittmann/Hanefeld, 1029 para. 43.
Craig/Park/Paulsson (2000), pp.260 et seq.
Cf. e.g. Art. 30 (2) ICC Rules; Art. 70 (d) WIPO Rules; s.25 DIS Rules provides that the arbitral tribunal
should request each party to pay one half of the advance.
In detail, Lionnet/Lionnet (2005), pp.346 et seq., also with references to German case law.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.49; Lionnet/Lionnet (2005), p.349; Baumbach/Lauterbach (2014), 1046 para.7; Lrcher/Lrcher (2001), para.240 with further references.
1046 Sachs/Lrcher
277
ble to define the subject matter of the dispute. With regard to 1046 (1) sentence 2 ZPO, the
parties may provide rules for the submission of documents and other evidence. The parties
may also vary from 1046 (2) and (3) ZPO. Instead, the parties may provide, for example,
that amendments are generally prohibited or that they are subject to specified time limits.
In the absence of an agreement by the parties, the tribunal is well advised to provide precise
rules regarding the rejection of amendments because of an unjustified delay.
1047 Oral Hearings and Written Proceedings

(1) Subject to agreement by the parties, the arbitral tribunal shall decide whether to
hold oral hearings or whether the proceedings shall be conducted on the basis of
documents and other materials. Unless the parties have agreed that no hearings
shall be held, the arbitral tribunal shall hold such hearings at an appropriate stage of
the proceedings, if so requested by a party.
(2) The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purpose of taking evidence.
(3) All statements, documents or other information supplied to the arbitral tribunal
by one party shall be communicated to the other party. Also, any expert report or
evidentiary document on which the arbitral tribunal may rely in making its decision
shall be communicated to both parties.
Short Bibliography: See also Short Bibliography before 1042 ZPO; Lrcher, Improving Procedures
for Oral and Written Testimony, in: van den Berg (ed.), Planning Efficient Proceedings: The Law
Applicable in International Arbitration, The Hague 1996, p. 145; Holtzmann/Neuhaus, A Guide to
UNCITRAL Model Law on International Commercial Arbitration, Deventer 1989; Schlosser, Verfahrensrechtliche und berufsrechtliche Zulssigkeit der Zeugenvorbereitung, SchiedsVZ 2004, 225;
Weigand, Discovery in der internationalen Schiedsgerichtsbarkeit, RIW 1992, 361.
Para.
Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Decision on Oral Hearings or Written
Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
III. Records of Oral or Evidentiary Hearings . . 8
IV. Notice of Hearings and Meetings
(1047 (2) ZPO) and Submission of
Documents and Other Information
(1047 (3) ZPO) . . . . . . . . . . . . . . . . . . . . . . . 9
I.
II.
I.
Para.
Witnesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . 10
B. No Power to Order a Witness to
Appear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
C. Taking of Witness Evidence . . . . . . . . . 13
1. Written Witness Statements . . . . . . 13
2. Conduct of the Taking of
Evidence. . . . . . . . . . . . . . . . . . . . . . . . . 15
VI. Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
V.
Overview1
1 1047 Code of Civil Procedure (Zivilprozessordnung ZPO) contains basic principles on

oral hearings and proceedings on the basis of documents alone (so-called document-only
proceedings2). It states not only the circumstances under which an oral hearing can or has to
be held (1047 (1) ZPO), but also gives guidance regarding the conduct of these proceedings, 1047 (2), (3) ZPO.
2 Ultimately, 1047 ZPO is a reflection and embodiment of the principle of due process.
This becomes particularly evident from Article 15 of the UNCITRAL Arbitration Rules,
which was the basis for Article 24 UNCITRAL Model Law (ML); Article 24 ML was in turn
adopted by 1047 ZPO.3 Although from the view of German procedural law the principles
1
2
3
Sanders (2004), p.109 arbitration on documents only.
1047 Sachs/Lrcher
279
set forth in 1047 ZPO are self-evident, it was agreed that these should be explicitly stated
since parties from other jurisdictions might be in doubt as to whether they apply.4
II.
Decision on Oral Hearings or Written Proceedings
In order to allow the parties and the arbitral tribunal a large degree of flexibility as to how to 3
conduct the proceedings, 1047 ZPO in line with Article 24 ML does not provide for
a mandatory oral hearing.5 1047 (1) ZPO identifies three different situations regarding
the question whether oral hearings are to be held; this provision once more highlights the
significance of party autonomy in the new German arbitration law.
First, where the parties have agreed to hold one or more oral hearings, the tribunal is bound 4
by this agreement. Similarly, where the parties have agreed to conduct document-only proceedings, such an agreement is, at least in principle, binding on the arbitral tribunal. However,
in cases where there are compelling reasons for an oral hearing to ensure the parties right to
be heard, the tribunal as an exception may deviate from the parties agreement and order an
oral hearing to be held.6 Second, if there is no agreement of the parties concerning this issue,
the arbitral tribunal, pursuant to 1047 (1) sentence 2 ZPO, is bound to hold an oral hearing
if a party so requests. Third, if there is no agreement of the parties on this issue and no request
by a party to hold an oral hearing, it is up to the arbitral tribunal to decide whether or not an
oral hearing will be held. In this context it is worth noting that in German arbitration practice,
oral hearings are the rule, rather than an exception, unless special circumstances exist which
justify a document-only proceeding.7
In the absence of an agreement of the parties, the tribunal may decide the length of oral hear- 5
ings, the procedure and, as stated in 1047 (1) sentence 2 ZPO, the stage of the proceedings at which an oral hearing is suitable. Furthermore, the arbitral tribunal may conduct the
proceedings partly on the basis of oral arguments and partly as written proceedings; it may
thus hold oral hearings which only relate to part of the proceedings.8
The parties written submissions are of fundamental importance in arbitral proceedings. 6
Similar to other jurisdictions, it is standard practice to exchange one or two rounds of written
submissions in order to prepare an oral hearing. The so-called Mndlichkeitsgrundsatz that all
written submissions have to be introduced at the oral hearing, which applies to German state
court proceedings, is not applicable in arbitral proceedings.9 Even if there is no explicit reference to certain written submissions or aspects thereof in the oral hearing, they still form part
of the proceedings and have to be fully taken into account by the arbitral tribunal.10 Written
submissions by the parties are admissible as long as the proceedings have not been officially
declared closed or a preclusive time limit for written submissions determined by the arbitral
4
5
6
7
9
10

Weigand-Wagner (2002), Germany, para.163. 128 (1) ZPO, to the contrary, makes oral hearings mandatory in proceedings before German state courts.
Bill of the Arbitration Law Reform Act, BT-Drs 13/5274, p.49; Rtzel/Wegen/Wilske (2005), p.132.
Schwab/Walter (2005), Chap. 15 para.32; Rtzel/Wegen/Wilske (2005), p.132; with regard to necessity
and advantages of oral hearings cf. Lachmann (2008), paras1592 et seq.
Rtzel/Wegen/Wilske (2005), p.132; Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.49;
Musielak-Voit (2013) 1047 para.2.
Cf. Kreindler/Schfer/Wolff (2006), para.803 with further references.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.49; Zller-Geimer (2014), 1047 para.2,
280
tribunal has not elapsed.11 If the arbitral tribunal wants to avoid a situation where after the
exchange of written submissions a party makes additional unsolicited written submissions
briefly before the oral hearing or thereafter, it is well advised to state at an early stage of the
proceedings (preferably in a procedural order) that it reserves its right not to consider such
last minute submissions.12 Without such clear order, the principle of due process requires
either the rejection of the submission or the allowance of additional sufficient time to react.
The latter solution, however, may necessitate the postponement of the scheduled oral hearing or a subsequent further oral hearing, if the opposing party cannot reasonably be expected
to respond during the already scheduled oral hearing.13
7 Failing an agreement by the parties to the contrary, the arbitral tribunal is not obliged to take
evidence in an oral hearing, since 1047 (1) ZPO has not included the addendum for the
presentation of evidence contained in Article 24 ML. Provided that the parties right to be
heard is not violated, it may suffice to take evidence on the basis of written witness and expert
statements.14 In arbitral practice, however, it is rather the rule that witnesses nominated by
the parties are indeed heard by the tribunal, at least to the extent that the testimony seems
relevant to the outcome of the case.
III. Records of Oral or Evidentiary Hearings

8 The new German arbitration law does not stipulate an obligation of the arbitral tribunal to
create a record of oral hearings and evidentiary proceedings, but leaves this question to the
discretion of the arbitral tribunal.15 However, if the parties agree to DIS Rules, pursuant to
Section 29 DIS Rules a record shall be made.16 This provision, however, does not specify
such record but leaves room for different kinds of recording. In any case, the arbitral tribunal
should ensure that a record is created, if only for the purpose of proving what actually happened in the course of the hearing in case the award should later be challenged before a state
court.17 For this purpose, it is not necessary to produce verbatim records by a court reporter
or transcribed from an audio tape. It is, for example, also admissible for the chairman of the
arbitral tribunal to prepare minutes summarizing the oral hearing.18 It has been the traditional
practice in German arbitral proceedings (similar to the standard practice of German state
courts) for the chairman of the tribunal to dictate a summary of the evidence in the presence
of the witness or expert. They are then asked by the chairman to confirm that the summary
is correct or to suggest changes. This system, which has been and still is widely accepted in
Germany, has received quite a lot of criticism from abroad, in particular from common law
practitioners. Hence, in international proceedings an arbitral tribunal should only follow this
procedure if the parties expressly agree to it.
11
12
13
14
15
16
17
18
Stein/Jonas-Schlosser (2002), 1047 para.1; cf. with regard to supra, Sachs/Lrcher, 1046 (2) para.9.
Cf. in this context supra, Sachs/Lrcher, 1046 para.9.
Cf. in this context supra, Sachs/Lrcher, 1042, para. 11.
Musielak-Voit (2013), 1042 para.14; Schwab/Walter (2005), Chap. 15 para.17.
Section 29 DIS Rules reads: Records of oral proceedings
A record shall be made of all oral hearings. The record shall be signed by the chairman. The parties shall
each receive a copy of the record.
Cf. Lachmann (2008), para.1507.
1047 Sachs/Lrcher
281
IV. Notice of Hearings and Meetings (1047 (2) ZPO) and Submission of
Documents and other Information (1047 (3) ZPO)
1047 (2) ZPO provides that the parties shall be given sufficient advance notice of any hear- 9
ing and of any meeting of the arbitral tribunal for the purpose of taking evidence. Pursuant to
1047 (3) ZPO, all documents and other information supplied by one party to the arbitral
tribunal have to be communicated to the other party and any other information such as expert reports relied upon by the arbitral tribunal have to be submitted to the parties. The latter
provision requires as another consequence of the right to be heard that the documentation
and information concerned is made available to the parties in full; summaries or descriptions
in reported speech do not suffice.19 Both provisions are mandatory, as they reflect indispensable principles for the protection of the parties right to be heard. In case of violation, an award
may be set aside pursuant to 1059 (2) No. 1 (b) ZPO.20
V.
Witnesses
A.
Introduction
The German arbitration law does not contain any provisions which explicitly deal with 10
witness evidence. Even though 1042 (4) sentence 2 ZPO allows the arbitral tribunal to
determine the admissibility of taking evidence. To take evidence and to freely assess such
evidence, such powers are granted only within the framework provided by an agreement
of the parties.21 Within the limits established by the mandatory provisions of the German
arbitration law, the parties are therefore free to agree on issues relating to the taking of witness
evidence. It would, e.g. be possible for them to agree that common law procedures should
apply even if the parties come from Germany or other civil law jurisdictions. Where there
is no agreement between the parties, the arbitral tribunal is empowered to determine the
procedure to be followed in the taking of witness evidence.22
In German state court proceedings, a distinction is made between witnesses and parties. The 11
parties to a dispute, including the managing directors of a company, may not be heard as
witnesses but only give evidence as a party, which is only admissible in certain situations.23 In
contrast, an arbitral tribunal is free to hear the parties on all issues in dispute for evidentiary
purposes.24 However, when assessing the probative value of witness testimony, the arbitral
tribunal has to take into account the personal interest of the witness/party in the outcome
of the case.25
B.
No Power to Order a Witness to Appear
The arbitral tribunal has no power to order a witness to appear and to give evidence. In 12
practice, the arbitral tribunal will usually request each party to present those witnesses on
19
20
21
22
23
24
25

MnchKommZPO-Mnch (2013), 1047 para. 12; Stein/Jonas-Schlosser (2002), 1047 para. 3; for
details cf. infra, Krll/Kraft, 1059 paras63 et seq.
Cf. Holtzmann/Neuhaus (1989), p.575; MnchKommZPO-Mnch (2013), 1042 para.120 with further
references.
Lrcher, in: van den Berg (ed.) (1996), pp.145 et seq.; cf. infra para.16.
Cf. 445 et seq. ZPO.
Cf. Lachmann (2008), para.1490; Rtzel/Wegen/Wilske (2005), p.135.
Lachmann (2008), para.1583; Lrcher/Lrcher (2001), para.263.
282
whose evidence it wants to rely.26 There may, however, be situations where it is beyond the
power of the respective party to present a witness, e.g. because the witness is not cooperative
and refuses to testify. In such a situation, the only means to obtain evidence from the witness is to request court assistance pursuant to 1050 ZPO.27 It depends on the individual
circumstances of the case whether an arbitral tribunal may draw negative inferences from the
fact that a witness refuses to cooperate.28
C.
Taking of Witness Evidence
1.
Written Witness Statements
13 Written witness statements are not usually part of state court proceedings in Germany.29 In
arbitral proceedings, it lies within the arbitral tribunals discretion to request them from the
parties.30 At least in international arbitral proceedings, the exchange of written witness statements has become a widely accepted practice; they are indispensable, if it is intended that the
witnesses will be questioned by the parties through direct and cross-examination.31 While a
written witness statement does not need to satisfy any formal requirements, it should always
be signed by the witness in order to prove the statements authenticity.32
14 German arbitration law does not expressly state under what circumstances the arbitral tribunal has to grant a request by one of the parties that a witness, whose written witness statement
has been submitted in the proceedings, be questioned in person. Taking into account that
1047 (1) ZPO makes clear that the opportunity to present ones case in an oral hearing is
of fundamental importance to the principle of a fair trial, the arbitral tribunal should usually
grant such an application if the requesting party provides at least prima facie reasons for its
request.33 If, however, the questioning of the witness is obviously intended only to delay the
proceedings or if there are other compelling reasons why the witness cannot be questioned at
an oral hearing, it may be legitimate for the arbitral tribunal to deny the request; the same applies if the witness evidence is irrelevant for the outcome of the dispute.34 When deciding on
whether to hear the witness or to solely rely on their written witness statement, the arbitral
tribunal should bear in mind that the probative value of the written witness statement, which
in most cases is drafted with the help of counsel,35 is lower than that of an oral testimony
given in front of the arbitral tribunal, when the arbitrators are able to form a far better view
on the credibility of the witness.
26
27
28
29
30
31
32
33
34
35

Cf. infra, Sachs/Lrcher, 1050 ZPO.
Cf. supra, Sachs/Lrcher, 1042 ZPO para. 42.
In relation to injunctions (einstweilige Verfgungen) before state courts, written witness statements in the
form of affidavits (eidesstattliche Versicherung) do however play an important role.
Cf. supra, Sachs/Lrcher, 1042 para.43.
Weigand-Hanefeld (2009), Germany, para. 7.108.
Weigand-Hanefeld (2009), Germany, para. 7.109.
OLG Hamburg 31.07.2003, OLGR Hamburg 2004, 97; OLG Naumburg 21.05.2004, [2006] Int.A.L.R.
N-6162.
Under German law, it is not per se unethical for an attorney to contact a witness out of court; there also is
no strict rule against the coaching of witnesses, for details cf. Schlosser, SchiedsVZ 2004, pp.225 et seq.
1047 Sachs/Lrcher
2.
283
Conduct of the Taking of Evidence
As witnesses are under no legal obligation to give evidence before the arbitral tribunal, there 15
is no need to instruct them about any right to refuse to give evidence (Zeugnisverweigerungsrecht).36 Rather, the arbitral tribunal should instruct the witness that there is no obligation
to give evidence. It may also be useful to add that if the witness knowingly gives wrong
evidence, this may be fraud37 and is therefore a criminal offence, mainly a violation of 263
of the Criminal Code (Strafgesetzbuch StGB).
In accordance with 1042 (4) sentence 2 ZPO, the procedure for the taking of witness 16
evidence lies within the arbitral tribunals discretion, unless the parties have agreed on this
issue.38 Under the German legal tradition, a witness is firstly questioned by the arbitral
tribunal.39 Thereafter, the parties are given the opportunity to put questions to the witness,
including questions which test the credibility of the witness and the probative value of their
statement.40 However, the manner in which the witness hearing is conducted depends on
the individual circumstances of the case. In international arbitral proceedings taking place
in Germany, in particular if parties from a common law jurisdiction are involved, it has become quite common that the witnesses are first questioned by the parties (direct and crossexamination) and then by the arbitral tribunal.
The issue how the questioning of witnesses will be conducted should always be discussed 17
and determined sufficiently in advance to the hearing of the witnesses, preferably at an early
stage of the proceedings. The procedure of the questioning of witnesses may be adapted to
particular needs and situations. For example, it is possible to have a witness conferencing,
where more than one witness is heard at the same time.41 In practice, witness conferencing is
more often used regarding expert witnesses than fact witnesses.
Arbitral tribunals are not allowed to administer oaths. Although 1035 (2) ZPO of the 18
former German arbitration law (which explicitly prohibited the administration of oaths)
was abolished, this was not intended to change the law on the issue. If the arbitral tribunal
considers it necessary that a witness gives sworn testimony, then the arbitral tribunal must
seek court assistance pursuant to 1050ZPO.42 If the arbitral tribunal itself nevertheless
puts a witness under oath, the arbitral award which is based on such witness evidence may
be set aside in subsequent state court proceedings.43 Even though arbitral tribunals are not
allowed to administer oaths, it is customary that the tribunal advises the witnesses on their
duty to state the truth and the risks of criminal law sanctions if they knowingly provide false
statements.
36
37
38
39
40
41
42
43
Lachmann (2008), para.1493; Schtze (2012), para.348.

The giving of wrong evidence does not constitute a false statement pursuant to 153 et seq. StGB, which
can only be committed before a state court.
For details Lrcher, in: van den Berg (ed.) (1996), pp.145 et seq.
Cf. with regard to the question whether the arbitral tribunal is free to order that the taking of evidence
should follow common law procedures in a purely civil law dispute supra, Sachs/Lrcher, 1042 paras36
et seq.
For details Peter, Witness Conferencing, Arb.Int. 2002, 47 et seq.
Musielak-Voit (2013), 1042 para.23 also dealing with the question, whether and to which extent an
affidavit provided by a witness may be taken into account by the arbitral tribunal.
284
19 The party presenting a specific witness will usually cover the witness costs (travel costs,
compensation for loss of earnings). These costs may be reallocated in the arbitral tribunals
award on costs. The same applies if the witness was summoned by the arbitral tribunal.44
VI. Documents
20 The use of documents and especially the obligation of the parties to produce them is one
of the most controversial issues at the interface between civil law litigation practice and the
Anglo-American. While under civil law the pre-trial discovery proceedings or common law
style document production are considered inadmissible fishing expeditions, they are considered by common law practitioners as an indispensable tool for determining the truth.45
21 It is characteristic of state court proceedings in Germany, as a typical civil law jurisdiction,
that there is in principle no discovery.46 Only in specific situations can a party demand the
production of documents from the other party. This is for example the case if the other party
has referred to a document in its pleadings47 or if the other party is obliged to produce a
particular document under substantive law.48 With regard to such cases, 424 ZPO provides
that the party requesting the production of a document has to specify not only the document, including its author and date, but also its content and the basis for assuming that the
document is in the possession of the other party. In the course of a reform of the German
civil procedure rules in 2001, the scope of 142 ZPO which grants state courts the right to
order the production of documents from the other party or a third party was broadened.
However, this provision does not enable German state courts to order general discovery or
disclosure from the parties to the dispute.49 Particularly compared to common law jurisdictions, the threshold for obtaining documents which are in the possession of the other party is
quite high before German state courts.50
22 Although the provisions of the ZPO dealing with the production of documents in state
court proceedings are not applicable in arbitral proceedings, the right of an arbitral tribunal
to order the production of documents has to be seen against this background.51 1042 (4)
ZPO leaves the particulars of fact-gathering to the discretion of the arbitral tribunal. Accord-
44
45
46
47
48
49
50
51
Rtzel/Wegen/Wilske (2005), pp.135 et seq.

For details Sachs, Use of documents and document discovery: Fishing expeditions versus transparency
and burden of proof, SchiedsVZ 2003, 193 (194) with further references.
Weigand-Hanefeld (2009), Germany, para.7.117. As to the differences between US-American discovery,
English discovery and to the submission of documents in civil law systems Lionnet/Lionnet (2005),
pp.310 et seq.
423 ZPO.
422 ZPO. The most important provision in this context is 810 Civil Code (Brgerliches Gesetzbuch
BGB) which provides that any party who has a legal interest in the inspection of a document that
is in the possession of another party may request the owner to allow such inspection if this document
was written in this partys interest or if the document provides proof of a legal relationship between this
party and another party, or if the document contains evidence of negotiations about a legal transaction
conducted between this party and another party or between one of them and an agent of the two..
Cf. for details Stein/Jonas-Leipold (2005), 142 para.4; Zller-Greger (2014), 142 para.1; Zekoll/Bolt,
Die Pflicht zur Vorlage von Urkunden im Zivilprozess Amerikanische Verhltnisse in Deutschland?,
NJW 2002, 3129 et seq.
Cf. Weigand-Wagner (2002), Germany, para.251 with further references.
1047 Sachs/Lrcher
285
ingly, under German law the arbitral tribunal may require the parties to produce a particular
document or particular categories of documents.52
However, the scope of this discretion is not entirely clear. There are doubts whether an 23
arbitral tribunal would at least in cases where the proceedings have no connection to
common law jurisdictions be allowed to adopt the English practice of requiring the parties to exchange lists of documents in their possession which contain material relevant to
the case in dispute.53 Since some scholars argue that such a request by the arbitral tribunal
might contradict fundamental principles of German procedural law,54 the arbitral tribunal
should ensure that the parties agree to this procedure. It would, in any event, go too far for
an arbitral tribunal to order extensive discovery of documents which may contain material
relevant for the outcome of the proceedings without requiring the party making the request
to specify what kind of documents it expects to find and the facts on which this expectation
is founded.55 Hanefeld rightly points out that while an arbitral tribunal acting under German
law is not bound by the extremely narrow rules on documentary evidence that apply to state
courts, it should however also avoid imposing an extensive discovery scheme on the parties
which the latter did not have in mind when they decided to choose Germany as the place of
arbitration.56 However, this does not limit the parties autonomy; they can still agree to a full
US-style discovery procedure or any other procedure they deem appropriate.57
Particularly in international arbitral proceedings, the IBA Guidelines on the Taking of Evidence 24
provide a framework for the arbitral tribunal if it has to determine whether and to what
extent the production of documents should be ordered at the request of a party. They may
even provide valuable guidance if the parties have not agreed on their applicability. The IBA
Guidelines are especially helpful if parties from both civil law and common law jurisdictions
are involved, as they try to strike a balance between the civil law and the common law approaches with respect to the production of documentary evidence.58
Because no general disclosure obligation exists under German law, there is no elaborated 25
doctrine regarding privilege of documents. There are, however, a limited number of substantive law provisions which can be used as a basis to claim privilege. The most important provision in this respect is 203StGB, pursuant to which it constitutes a criminal offence if, inter
alia, a lawyer discloses information concerning his client which he obtained in the capacity
of his profession. However, as this duty is intended to protect the interests of the client, it
does not apply if the client himself discharges his lawyer from this obligation. Furthermore,
a defence which can be raised against an order to produce documents can be that this
document is protected by a trade secret. In this case, a solution may be that only the arbitral
tribunal or even a third party reviews and evaluates the evidence.59 However, such a solution
must be carefully balanced against the other partys right to be heard, as it is hardly possible
52
53
54
55
56
57
58
59
Rtzel/Wegen/Wilske (2005), p.134 (referring also to 1049 (1), 1048 (3) ZPO); cf. also Lachmann
(2008), para.1568.
Musielak-Voit (2013), 1042 para.25; Schtze (2012), para.356; id., Die Ermessensgrenzen des Schiedsgerichts bei der Bestimmung der Beweisregeln, SchiedsVZ 2006, 1 et seq.; Weigand, RIW 1992, 361 (364
seq.) (unless otherwise agreed by the parties).
Berger, International Economic Arbitration, Kln 1992, p.258.
Cf. Weigand-Hanefeld (2009), Germany, para.7.118.
Weigand, RIW 1992, 361 (364 et seq.).
Cf. Lachmann (2008), paras1570 et seq.
For details cf. Weigand-Hanefeld (2009), Germany, para.7.121.
286
for the other party to raise efficient defences against the content of such documents.60 If an
arbitral tribunal intends to order discovery or disclosure in a dispute between parties that
come from countries with different concepts of privilege, it should at the same time address
the issue of privilege and should make sure that a level playing field for the parties exists; this
will frequently mean that the higher standard of protection regarding privilege will apply to
both parties.61
26 If a party refuses to provide the other party and the arbitral tribunal with documents the
arbitral tribunal has ordered, the arbitral tribunal has no power to force the refusing party to
cooperate. If in state court proceedings a party refuses to produce a document without a valid
excuse, the state court may not compel the party to produce the document either, but may
only assume that the allegation that was to be proven by the production of the document is
true.62 Against this background, a request to a state court to compel the party in question to
produce a document pursuant to 1050 ZPO is not possible. In the event of the failure of
a party to produce documents, the arbitral tribunal may therefore only draw negative inferences from the fact that a party refuses to produce a document.63
60
61
62
63
Cf. Haller, Protection of Business Secrets by Way of Protective Orders, SchiedsVZ 2013, 135, 139.
Berger, Evidentiary privileges, in: Wirth (ed.) (2006), pp.19, 36 et seq.
Cf. 427 ZPO.
Lachmann (2008), para.1568; Glossner/Bredow/Bhler (1990), para.389; Schwab/Walter (2005), Chap.
15 para.22.
1048 Default of a Party

(1) If the claimant fails to communicate his statement of claim in accordance with
1046(1), the arbitral tribunal shall terminate the proceedings.
(2) If the respondent fails to communicate his statement of defence in accordance with
1046 (1), the arbitral tribunal shall continue the proceedings without treating
such failure in itself as an admission of the claimants allegations.
(3) If any party fails to appear at an oral hearing or to produce documentary evidence
within a set time limit, the arbitral tribunal may continue the proceedings and may
issue the award based on the insights it has obtained.
(4) Any default which has been justified to the tribunals satisfaction will be disregarded.
Apart from that, the parties may agree otherwise on the consequences of default.
Short Bibliography: See Short Bibliography before 1042 ZPO; Quinke, Sumnis im Schiedsverfahren, SchiedsVZ 2013, 129.
I.
II.
III.
IV.
I.
Para.
Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Agreement of the Parties . . . . . . . . . . . . . . . . . 2
Failure to Submit the Statement of Claim . 3
Respondents Failure to Submit the
Statement of Defence . . . . . . . . . . . . . . . . . . . . 6
Para.
Default to Appear at an Oral Hearing or
To Produce Documentary Evidence . . . . . . 9
VI. Justification of the Default. . . . . . . . . . . . . . . 13
V.
Overview1
1048 Code of Civil Procedure (Zivilprozessordnung ZPO) sets out the consequences 1
of a partys default (Sumnis) during the arbitral proceedings. The provision is structured
and worded slightly differently from Article 25 UNCITRAL Model Law (ML). In particular,
deviating from the wording of Art. 25 (c) ML, the German legislator clarified that the award
should be based on the entire submissions (insights), rather than exclusively evidence.2 It
follows from the right to be heard that the justified default of a party has to be excused.3
II.
Agreement of the Parties
Pursuant to 1048 (4) sentence 2 ZPO, the parties to the arbitral proceedings are free to 2
vary the provisions contained in 1048 (1)(3) ZPO. The only exception is that the right
to justify a delay or default pursuant to 1048 (4) sentence1ZPO cannot be excluded. It is
therefore possible, although not likely to happen often in practice, that the parties agree that
in the event of default of a party in the written proceedings or at an oral hearing, all factual
allegations made by the other party are deemed to be admitted and that the arbitral tribunal
may render its award on that basis. This course of action would be in line with the rules applying to default judgments in German state court proceedings (330 et seq.ZPO).4
1
2
3
4
Cf. Quinke, SchiedsVZ 2013, 129 (134).
Cf. Musielak-Voit (2013), 1048 para.7.
Cf. Raeschke-Kessler/Berger (1999), para.719. 330 ZPO reads: [Default judgement against the plaintiff] If the plaintiff fails to appear at the session fixed for the hearing, there shall be entered upon petition
288
III. Failure to Submit the Statement of Claim

3 Commonly the claimant in domestic arbitral proceedings, and also in disputes between parties from civil law countries, will submit a full statement of claim when initiating the arbitral
proceedings, a priori averting a default. However, occasionally he may only submit a request
for arbitration, for example, because settlement negotiations are pending between the parties
and the claimant wants to increase the pressure on the respondent or because there is only
limited time available for the initiation of the arbitral proceedings due to the statute of limitations. If it is not entirely clear whether the proceedings were commenced by a request for
arbitration or a statement of claim, the arbitral tribunal should seek an early clarification from
the claimant whether the request for arbitration shall be treated as the statement of claim or
whether the claimant intends to submit a separate statement of claim.
4 Unless otherwise agreed by the parties, the arbitral tribunal shall terminate the proceedings
if the claimant indeed fails to submit its statement of claim in accordance with 1046 (1)
ZPO, in particular, within the time limit agreed upon between the parties or determined by
the arbitral tribunal. In accordance with 1056 (2) No.1(a) ZPO, the termination of the
proceedings is to be declared by an order of the arbitral tribunal (Beschluss). In order to avoid
a violation of the right to be heard, the arbitral tribunal should however, before issuing such
an order, give the claimant the opportunity to justify its default.
5 If the statement of claim is submitted after the time limit pursuant to 1046(1)ZPO has
elapsed but before an order pursuant to 1056 (2) No.1(a)ZPO is issued, the statement of
claim has to be considered by the arbitral tribunal. Any other solution would cause additional
costs and would not meet the parties interests.5 These implications do, however, not apply if
the time limit was either expressly agreed by the parties or determined by the arbitral tribunal
to be a preclusive period after which a statement of claim would not be considered.6
IV. Respondents Failure to Submit the Statement of Defence

6 It is important to note that even if a respondent does not at all participate in the arbitration,
the arbitral proceedings will continue. Such default does not prevent the arbitral tribunal
from rendering a final award. Provided that the respondent was given the proper opportunity
to present its case, such an award based on the respondents default will be enforced by German courts.
7 However, unlike in cases of default before German courts, the respondents failure to submit
a statement of defence in accordance with 1046 (2) ZPO may not as such be considered
an admission of the claimants allegations. It is rather within the discretion of the arbitral
tribunal whether to take evidence or to conclude under the individual circumstances of the
case that the respondents failure to respond constitutes an admission of claimants factual
allegations.7 Taking this and also the express wording of 1048 (2) ZPO into account, the
5
a default judgement that the plaintiffs claim is dismissed..

Cf. Musielak-Voit (2013), 1048 para.2 who, nonetheless, takes the view that a statement of claim submitted late may not be considered by the arbitral tribunal unless the delay is justified to its satisfaction or
if the parties agree that the statement of claim should nevertheless be considered.
Stein/Jonas-Schlosser (2002), 1048 para.2; in this sense also Thomas/Putzo-Reichold (2013), 1048
paras2 et seq.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.50; Lachmann (2008), para.1658; cf. also
Schwab/Walter (2005), Chap. 16 para.53; MnchKommZPO-Mnch (2013), 1048 para.10; ZllerGeimer (2014), 1048 para.1.
1048 Sachs/Lrcher
289
arbitral tribunal should only assume such an admission by the respondent if there is no
doubt that the respondent agrees with the facts put forward by the other party, e.g. because
the correspondence between the parties shows that the respondent did not contradict or
even expressly agreed such facts.8 Usually, the arbitral tribunal will at least take evidence on
the claimants core allegations.9
In the same vein, the arbitral tribunal will usually consider a statement of defence that is 8
submitted after the respective time limit has expired10 as the arbitral proceedings continue
in the case of 1048 (2) ZPO. If such default causes additional costs, this can be taken into
account by the arbitral tribunal when allocating the costs to the parties.
V.
Default to Appear at an Oral Hearing or to Produce Documentary Evidence
1048 (3) ZPO provides that if a party fails to appear at an oral hearing (alt. 1) or to produce 9
documentary evidence (alt. 2) within the time limit set, the arbitral tribunal may continue
the proceedings and may issue the award based on the insights it has obtained. However,
the arbitral tribunal may only make an award on this basis if the parties were given sufficient
advance notice of the hearing in question, be it an oral hearing or for the purpose of taking
evidence.11 Failing this, an award which is based on the results of such oral hearings may be
set aside pursuant to 1059 (2) No. 1 (b) or (d) ZPO if the non-participation presumably
affected the outcome of the proceedings.12
When making an award on the basis of insight it has obtained, the arbitral tribunal may again 10
not treat the failure to appear, in itself, as an admission of the other partys allegations. If the
arbitral tribunal considers a crucial factual allegation to be disputed between the parties, it
must take evidence in this respect.
It is possible for the arbitral tribunal to make an award in favour of the claimant on the basis of 11
the insight before it even if the claimant is in default, unless it finds that the default constitutes
a waiver of the claim. If the respondent defaults, the arbitral tribunal has to determine on
the basis of the respondents submissions including statements made outside the arbitral
proceedings where such have been submitted whether the factual allegations raised by the
claimant are true.13
The same considerations apply if documentary evidence is not submitted within the time 12
limit determined by the arbitral tribunal or agreed between the parties. Scholars disagree on
whether documentary evidence in this context should be interpreted literally, thus rendering the delayed provision of, inter alia, visual evidence objects without sanction.14 If the documentary evidence is produced with an unjustified delay, the arbitral tribunal has discretion
8
9
10
11
12
13
14

Cf. Quinke, SchiedsVZ 2013, 129 (132); Stein/Jonas-Schlosser (2002), 1048 para. 3.
See 1047 (2) ZPO; cf. Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.50; MnchKommZPO-Mnch (2013), 1048 para.25.
Musielak-Voit (20013), 1048 para.4; for details see infra, Krll/Kraft, 1059 paras63 et seq. and 72 et
seq.
Cf. MnchKommZPO-Mnch (2013), 1048 para. 32; for analogous application cf. Stein/Jonas-Schlosser
(2002), 1048 para.4.
290
whether or not to accept the delayed submission.15 When exercising this discretion, the
arbitral tribunal should always take into account whether an acceptance of the document
would cause a delay to the proceedings.
VI. Justification of the Default

13 Pursuant to 1048 (4) sentence 1 ZPO, any default which has been justified to the arbitral
tribunals satisfaction has to be disregarded. As mentioned, 1048 (4) sentence 1 ZPO is
mandatory in order to ensure the parties right to be heard.16
14 The justification of a delay has to be to the tribunals satisfaction. This wording makes clear
that it is not necessary to take evidence regarding the justification. Rather, it is sufficient if the
facts put forward as justification appear at least plausible and that there are no circumstances
which call them into question.17 Again, a sufficient justification in this sense is likely to exist
if the delay is caused by unforeseeable circumstances that are beyond the control of the party
concerned.18 It always depends on the individual circumstances of the case whether or not an
excuse for a delay can be considered to be sufficient in this sense.
15 If the default is justified, a delayed statement of claim or statement of defence has to be
accepted and considered by the arbitral tribunal; documentary evidence which was not
submitted within the set time limit has to be taken into account by the arbitral tribunal; an
oral hearing has to be repeated or the defaulting party has at least to be given the opportunity to comment on the results of the oral hearing. If the defaulting party, however, fails to
request a repetition of an oral hearing or the taking of evidence while at the same time giving
reasons justifying the default, it may not later request the setting aside of the award pursuant
to 1059 (1) No.1(b) ZPO on these grounds if such a request would have been possible.19
16 Problems may arise if the arbitral tribunal has terminated the proceedings pursuant to 1056
(2) No. 1 (a) ZPO because of the claimants failure to submit a statement of claim and only
afterwards receives a valid justification for the default pursuant to 1048 (4) sentence 1
ZPO. If all parties agree, it seems possible to continue the arbitral proceedings, even though
1056 (3) ZPO provides that the mandate of the arbitral tribunal terminates at the end
of the arbitral proceedings. If, however, the other party objects to a continuation of the
proceedings, the claimant must initiate new arbitral proceedings.20 The same applies if the
justification is raised after an award has been rendered.
15
16
17
18
19
20
Musielak-Voit (2013), 1048 para.6; for a narrower view cf. Stein/Jonas-Schlosser (2002), 1048 para.4
(documents have to be considered unless the time-limit was either expressly agreed by the parties or
determined by the arbitral tribunal to be a preclusive period).
Cf. also Quinke, SchiedsVZ 2013, 129 (131): a contrario reading of 1042 (3) otherwise.
Stein/Jonas-Schlosser (2002), 1048 para.5; cf. also Musielak-Voit (2013), 1048 para.7 (the standard
applicable to the justification has to be determined by the arbitral tribunal); MnchKommZPO-Mnch
(2013), 1048 para.44 (preponderant likelihood); Lachmann (2008), para.1669.
Cf. supra, Sachs/Lrcher, 1046 para.9.
OLG Celle 24.07.2003.
MnchKommZPO-Mnch (2013), 1048 para.48; in contrast, Musielak-Voit (2013), 1048 para.8 takes
the view that the arbitral tribunal may continue the proceedings in such case at the request of one of
the parties; see Quinke, SchiedsVZ 2013, 129 (130), for respondents procedural possibilities to prevent
initiation of new arbitral proceedings after termination due to a failure to submit statement of claim.
1048 Sachs/Lrcher
291
In order to avoid such situations, the arbitral tribunal should set a time limit for the defaulting 17
party to submit a justification for the default, making clear that any justifications submitted
after the time limit has elapsed will not be considered.
1049 Experts Appointed by Arbitral Tribunal

(1) Unless otherwise agreed by the parties, the arbitral tribunal may appoint one or
more experts to report to it on specific issues to be determined by the arbitral tribunal. It may also require a party to give the expert any relevant information or to
produce, or to provide access to, any relevant documents or property for his inspection.
(2) Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it necessary, the expert shall, after delivery of his written or oral
report, participate in an oral hearing where the parties have the opportunity to put
questions to him and to present expert witnesses in order to testify on the points at
issue.
(3) 1036 and 1037 (1) and (2) apply mutatis mutandis to an expert appointed by the
arbitral tribunal.
Short Bibliography: See also Short Bibliography before 1042 ZPO; Holtzmann/Neuhaus, A Giude
to UNCITRAL Model Law on International Commercial Arbitration, Deventer 1989; Lrcher, Der
vom Schiedsgericht bestellte Sachverstndige im Verfahren, in: Briner/Fortier/Berger/Bredow (eds),
FS-Bckstiegel, 2001, p.485; Trittmann, Typische Probleme bei der Auswahl von Experten und bei
der Wrdigung von Expertisen in komplexen Fllen, in: Nicklisch (ed.), Der Experte im Verfahren,
Mnchen 2006, p.59; Lotz, Der Sachverstndige im Schiedsverfahren, SchiedsVZ 2011, 203.
Para.
I. Purpose and Relevance . . . . . . . . . . . . . . . . . . 1
III. Tribunal-Appointed Experts . . . . . . . . . . . . . 7
A. Selection and Appointment of
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
B. Procedural Issues . . . . . . . . . . . . . . . . . . . 10
I.
Para.
C. Independence and Impartiality of
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
D. Contractual Relationship with the
Tribunal-Appointed Expert, Liability 17
IV. Party-Appointed Experts. . . . . . . . . . . . . . . . 20
1 One of the important differences between common law and civil law jurisdictions is the
question whether experts are appointed by the tribunal or by the parties. In civil law countries, tribunal-appointed experts who assist the arbitral tribunal and are neutral are the rule.
In contrast, in common law jurisdictions party-appointed experts tend to be the rule. They
are chosen and instructed by the respective party and therefore have a more or less close
relationship to one of them.
2 1049 Code of Civil Procedure (Zivilprozessordnung ZPO) provides a legal framework
primarily for tribunal-appointed experts in arbitral proceedings.
II.
Legislative History
3 Except for minor variations, 1049 (1) and (2) ZPO adopt the wording of Article26 UNCITRAL Model Law (ML). 1049 (3) ZPO, which has no precedent in the Model Law,
1
1049 Sachs/Lrcher
293
states that tribunal-appointed experts may be challenged by the parties on the same grounds
as arbitrators.
Pursuant to 1049 (1) ZPO the arbitral tribunal may appoint experts to report on specific 4
issues determined by the arbitral tribunal. However, 1049 (2) sentence2 ZPO shows that
this power of the arbitral tribunal does not prevent the parties from appointing their own
experts. While 1049 (1) sentence 2 ZPO empowers the arbitral tribunal to require the
parties to provide the tribunal-appointed expert with the information relevant for his expert
opinion, 1049 (2) sentence 1 ZPO protects the parties right to be heard by providing that
the expert if so requested has to participate in an oral hearing. Party-appointed experts are
not subject to challenge pursuant to 1036 et seq. ZPO, as 1049 (3) ZPO only applies to
experts appointed by the arbitral tribunal.
1049 (1) and (2) ZPO are not mandatory and can be altered by party agreement. For 5
example, the parties may agree on a common law style procedure by excluding the arbitral
tribunals right to appoint an expert,2 or they may exclude the possibility of presenting partyappointed experts at an oral hearing.3 They may also agree that the appointment of experts is
limited to certain issues or limit the number of experts in order to save costs.4
1049 ZPO expresses principles which are self-evident under German law. The provision 6
was nevertheless introduced in order to make clear to foreign users that the principles established in Article 26 ML also apply, if the place of arbitration is in Germany.5
III. Tribunal-Appointed Experts

A.
Selection and Appointment of Experts
It is advisable to involve the parties in the selection process for a tribunal-appointed expert as 7
such involvement increases the acceptance of the expert by the parties and reduces the risk
of a challenge to the expert.6 As the arbitral tribunal may not itself require an expert to give
a sworn expert opinion, it can be helpful to appoint an officially approved and sworn expert
(vereidigter Sachverstndiger); often institutions such as the regional Chambers of Commerce
keep lists of such experts in different areas. Nevertheless, it is often quite difficult to identify
an appropriate expert for a particular issue.
Because of the principle of party autonomy, it is possible that if the arbitral tribunal wants 8
to appoint an expert, the parties agree on who the expert should be; such an agreement is
binding on the arbitral tribunal. Similarly, the arbitral tribunal may not appoint an expert
whom both sides reject, e.g. on grounds of incompetence. 7
When appointing an expert, the arbitral tribunal has to determine the terms of reference for 9
his engagement, identify the matters on which the expert is asked to report and the scope of
his task. As the experts task can be difficult to specify and describe and as the arbitral tribunal
2
4
5
6
7
Cf. Musielak-Voit (2013), 1049 para.2 with regard to whether an arbitrator may resign if the appointment of an expert is excluded and the arbitrator is unable to determine an issue without the help of an
expert.
Cf. Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.50; Weigand-Hanefeld (2009), Germany,
para.7.125; Baumbach/Lauterbach (2014), 1049 para.2.
Lrcher, FS-Bckstiegel (2001), p.485 (490); Rtzel/Wegen/Wilske (2005), p.137.
294
may, at this stage of the proceedings, not be able to fully determine all the relevant issues, it is
again advisable to involve the parties in drawing up the experts terms of reference.8
B.
Procedural Issues
10 The expert may report on any specific issue. This will often involve factual issues, such as
technical problems or financial questions;9 while it may also include the evaluation of legal
questions, the final decision in this respect has to be taken by the arbitral tribunal. Pursuant
to 1046 (1) sentence 2 ZPO, the arbitral tribunal may require a party to give the expert any
relevant information, to produce documents or grant access to property for inspection. This
obligation of the parties to cooperate with the expert can be of fundamental importance for
the experts to successfully perform their task. In accordance with the Model Law, the ZPO
does, however, not permit the expert himself to require the parties cooperation.10
11 1049 ZPO does not stipulate what sanctions may be levied against a party that refuses to
comply with such an order. In this context, 1048 (3) ZPO is of relevance, which provides
that if a party fails to produce documentary evidence, the arbitral tribunal may continue the
proceedings and make the award on the basis of the information before it.11 In line with this
principle, if a party refuses to fulfil a request by the arbitral tribunal, pursuant to 1049 (1)
sentence 2 ZPO it is possible to draw inferences detrimental to the non-complying party.12
12 Pursuant to 1049 (2) ZPO, at the request of any party or if the arbitral tribunal considers
it necessary, the expert is obliged to participate in an oral hearing. At this hearing, the parties
must be given the opportunity to put questions to the expert and to present their own experts
to testify on the points at issue.13 1049 (2) ZPO, moreover, allows an expert conferencing,
i.e. a direct discussion between the experts in case of contradictory statements. The parties
may vary the provisions of 1049 (2) ZPO, provided that such variation does not violate the
parties right to be heard. Accordingly, the parties may agree that the expert will not be available for questions in an oral hearing. However, such agreement must not deny the parties the
opportunity to comment on the experts report and to put forth additional questions which
they may have to the expert.14
C.
Independence and Impartiality of Experts
13 1049 (3) ZPO, which applies to tribunal-appointed experts but not to experts appointed
by a party,15 makes reference to 1036 and 1037 (1) and (2) ZPO. Accordingly, experts
appointed by the tribunal must be independent and impartial. This is of fundamental importance to the integrity of the arbitration process, as a tribunal-appointed expert assumes the
role of an assistant to the arbitral tribunal by providing the tribunal with skills its members
do not possess themselves.16
8
9
10
11
12
13
14
15
16
Lrcher, FS-Bckstiegel (2001), p.485 (492).

For details cf. Musielak-Voit (2013), 1049 para.3; MnchKommZPO-Mnch (2013), 1049 paras 11 et
seq.
Cf. Holtzmann/Neuhaus (1989), p.719.
For details cf. Weigand-Wagner (2002), Germany, para.270 with further references.
Stein/Jonas-Schlosser (2002), 1049 para.3; Rtzel/Wegen/Wilske (2005), p.137.
1049 (2) sentence 2 ZPO.
Cf. Schwab/Walter (2005), Chap. 15 para.21.
1049 Sachs/Lrcher
295
In accordance with 1036 (1) ZPO, a tribunal-appointed expert is under an ongoing obliga- 14
tion to disclose any circumstances likely to give rise to justifiable doubts as to his independence or impartiality.17 He may be challenged by a party if such circumstances exist or if he
does not possess the qualifications agreed upon by the parties. However, such a challenge
may only be based on circumstances of which the respective party was not aware at the time
when it participated in the appointment of the expert.18
With regard to the procedure for challenging an expert, 1049 (3) ZPO refers to 1037 (1) 15
and (2) ZPO. Accordingly, unless otherwise agreed by the parties, a party which intends to
challenge an expert has to bring this challenge before the arbitral tribunal within two weeks
after becoming aware of the appointment of the expert or of the grounds for challenge. Unless
the expert withdraws from his appointment voluntarily or the other party agrees, the arbitral
tribunal has to make a decision on the challenge.19 1049 (3) ZPO does not make reference
to 1037 (3) ZPO, which reserves the challenging party a right of recourse to the state courts
if the arbitral tribunal does not allow the challenge. Accordingly, the arbitral tribunals decision to dismiss the challenge of an expert is final and binding on the parties. However, the
aggrieved party may later challenge the award before the state courts pursuant to 1059 (2)
No. 1 (d) ZPO on the basis that the challenge to the expert was wrongfully turned down.20
In order to avoid this risk, some scholars propose that the parties should be entitled to ex- 16
pressly provide for recourse to the courts pursuant to 1037 (3)ZPO, if the arbitral tribunal
dismisses the challenge of the expert.21 There are doubts whether such an agreement would
be valid or whether a state court would refuse such a review, arguing that 1049 (3) ZPO
is mandatory in the sense that the parties may not provide for recourse to the courts in their
agreement.22 Even if the validity of such an agreement is uncertain, it would not cause much
harm to the parties, as the worst consequence would be that the court rejects such an application.
D.
Contractual Relationship with the Tribunal-Appointed Expert, Liability
The arbitral tribunal enters into a civil law contract for works with the tribunal-appointed 17
expert. This contract is, however, usually not concluded by the arbitral tribunal in its own
name but rather on behalf of the parties.23 The opposing view that the arbitral tribunal itself
is a contracting party24 leads to intricate dogmatic complications.25 Under this contract, the
tribunal-appointed expert is obliged to be and remain independent and impartial and to
render an expert report on the issues specified in the experts terms of reference. The expert
is also obliged to participate in an oral hearing to explain his report and may be questioned
by the parties.26 Even though the arbitral tribunal cannot compel the expert to participate, it
17
18
19
20
21
22
23
24
25
26
Cf. supra, Nacimiento/Abt/Stein, 1036 paras 10 et seq. with regard to arbitrators.

1036 (2) ZPO; for details cf. supra, Nacimiento/Abt/Stein, 1036 para. 55.
1037 (2) ZPO; for details cf. supra, Nacimiento/Abt/Stein, 1037 para. 10.
MnchKommZPO-Mnch (2013), 1049 para.33; Schwab/Walter (2005), Chap. 15 para.21.
For details cf. Musielak-Voit (2013), 1049 para.8; Schtze (2012), para.354; Trittmann, in: Nicklisch
(ed.) (2005), pp.59 (66 seq.).
Cf. MnchKommZPO-Mnch (2013), 1049 para. 22 for the new law.
For details cf. Lotz, SchiedsVZ 2011, 203 (206).
296
constitutes a breach of contract if he refuses to participate in a hearing which was properly

scheduled for the purpose of discussing the experts report.27
18 This contract also forms the basis of the experts claim for remuneration against the parties.28
When the expert is appointed, the arbitral tribunal should discuss the question of remuneration with the parties and also with the expert.29 The arbitral tribunal should also usually
request the parties (or the party which bears the burden of proof with regard to the issue to
be determined by the expert) to pay an advance towards the remuneration.
19 The expert is liable to the parties for errors in the report pursuant to the standard liability
provisions applicable to such contracts. Unless otherwise agreed, the experts liability is,
however, usually considered to be limited to cases of gross negligence.30
IV. Party-Appointed Experts

20 Whereas tribunal-appointed experts assume the role of an assistant to the arbitral tribunal,
party-appointed experts are expected to help and support the party appointing them.31 Accordingly, party-appointed experts are not required to be independent and impartial, nor are
they subject to the challenge procedures pursuant to 1037 ZPO because 1049 (3) ZPO
only refers to tribunal-appointed experts. When evaluating the probative value of the report
of a party-appointed expert, the arbitral tribunal accordingly has to keep in mind that the
experts position may be close to that of the appointing party. Because of this role, 1049 (1)
sentence 2 ZPO obliging the parties to cooperate with the tribunal-appointed expert, is also
not applicable in relation to party-appointed experts.
21 Although 1049 (2) sentence 2 ZPO only stipulates that the parties have the opportunity
to present expert witnesses to testify at the oral hearing when a tribunal-appointed expert
is heard, this does not preclude party-appointed experts from also rendering written expert
reports on the issues in question.32
27
28
29
30
31
32

Cf. with regard to the old German arbitration law BGH 19.11.1964, BGHZ 42, 313 (315) = NJW 1965,
298; Lachmann (2008), para. 1538; Lrcher/Lrcher (2001), para. 274; for a different view cf. Stein/
Jonas-Schlosser (2002), 1049 para.2 (claim only against the party which requested an expert report
with regard to the fact in question); MnchKommZPO-Mnch (2013), 1049 para.29 (claim against the
members of the arbitral tribunal).
With regard to the amount of remuneration cf. MnchKommZPO-Mnch (2013), 1049 para.29.
Cf. BGH 19.11.1964, BGHZ 42, 313 (316) = NJW 1965, 298; Schwab/Walter (2005), Chap. 15 para.18;
MnchKommZPO-Mnch (2013), 1049 para.31 with further references.
Cf. Weigand-Hanefeld (2009), Germany, para.7.125; cf. also Trittmann, in: Nicklisch (ed.) (2005), p.59
(69).
Musielak-Voit (2013), 1049 para.11; for a contrasting view cf. Baumbach/Lauterbach (2014), 1049
para.3.
1050 Court Assistance in Taking Evidence and Other Judicial Acts

The arbitral tribunal or a party with the approval of the arbitral tribunal may request
from a court assistance in taking evidence or performance of other judicial acts which
the arbitral tribunal is not empowered to carry out. Unless it regards the application as
inadmissible, the court shall execute the request according to its rules on taking evidence
or other judicial acts. The arbitrators are entitled to participate in any judicial taking of
evidence and to ask questions.
Short Bibliography: See Short Bibliography before 1042 ZPO.
I.
II.
I.
Para.
Context, Relationship to the
UNCITRAL Model Law. . . . . . . . . . . . . . . . . 1
Application to the State Court,
Competence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Para.
III. Procedure Before the State Court . . . . . . . . 4
IV. Evaluation of Evidence . . . . . . . . . . . . . . . . . . 11
Context, Relationship to the UNCITRAL Model Law1
1050 Code of Civil Procedure (Zivilprozessordnung ZPO) deals with court assistance in 1
the taking of evidence and other judicial acts. The provision is in line with the legal situation
under the previous German arbitration law.2 At the same time, it follows the lead of Article
27 UNCITRAL Model Law (ML) without exactly copying it. While the latter only applies to
court assistance in the taking of evidence, 1050 sentence 1 ZPO also covers court assistance
in the performance of other judicial acts which the arbitral tribunal is not empowered to
carry out. Such other acts include,3 e.g. the service of process pursuant to 199 et seq.ZPO,
the application to government authorities for permission for a civil servant to testify and
the ordering of documents to be served by public notice pursuant to 185 et seq. ZPO
(ffentliche Zustellung).4 1050 ZPO is also considered applicable in cases where the arbitral
tribunal requests a preliminary reference to the European Court of Justice (ECJ) pursuant to
Article 267 of the Treaty on the Functioning of the EU.5
A further difference is that Article 27 ML only applies to assistance by the state courts if the 2
place of arbitration is located in the respective country. In contrast, 1050 ZPO is also applicable if the place of arbitration lies outside Germany (1025 (2) ZPO) or has not yet been
determined (1025 (3) ZPO).6 Also 1050 sentence 3 ZPO, which has no precedent in the
1
2
3
In contrast the Federal Court of Justice (Bundesgerichtshof BGH) has clarified that the decision on the
amount in dispute constitutes no forbidden indirect decision on its own account but rather follows from
the capacity to decide as to costs pursuant to 1057 ZPO; cf. BGH 28.03.2012 = SchiedsVZ 2012, 154.
Cf. also Musielak-Voit (2013), 1050 para. 2; Lachmann (2008), para. 1621; Schwab/Walter (2005),
Chap. 17 paras2 et seq.; MnchKommZPO-Mnch (2013), 1050 paras4 et seq.; Kreindler/Schfer/Wolff
(2006), para.859.
MnchKommZPO-Mnch (2013), 1050 para. 11; Stein/Jonas-Schlosser (2002), 1050 para.4; for a
differentiating view cf. Musielak-Voit (2013), 1050 para.2; based on ECJ 23.03.1982, Case C-102/81
(Nordsee Deutsche Hochseefischerei GmbH Bremerhaven v. Reederei Mond Hochseefischerei Nordstern AG &
Co. KG) (1982) ECR 1095 = NJW 1982, 1207, 1208.
298
Model Law, confirms that the arbitrators are entitled to participate in any judicial taking of
evidence and to ask questions. As the assistance by the courts is intended to help the parties
of the arbitral proceedings, they are free to modify the applicability of 1050 ZPO and the
scope of the court assistance.7 However, there are doubts as to whether it would be possible
for the parties to fully exclude any court assistance.8
II.
Application to the State Court, Competence
3 Assistance by the state court requires a request either by the arbitral tribunal or by a party.
Where a party makes the request, the arbitral tribunal has to agree to the request, which the
requesting party has to show when making the application to the state court.9 The competent
court for judicial assistance is not the Higher Regional Court (Oberlandesgericht OLG),
which is usually in charge in matters concerning arbitral proceedings.10 Rather, pursuant to
1062 (4) ZPO the competence for assistance in taking of evidence and other judicial acts
lies with the Local Court (Amtsgericht AG) in whose district the judicial act is to be carried
out. An advantage which can be relevant, especially in cases where a party is represented by
counsel who is not admitted to the German bar, is that it is not necessary under German law
to be represented by counsel in proceedings before Local Courts.
III. Procedure before the State Court

4 Pursuant to 1050 sentence 2 ZPO, the court shall carry out the request in accordance with
its procedural rules unless it regards the application as inadmissible.11 In this regard, the
state court is not entitled to review whether the requested measure, e.g. the taking of witness
evidence, is necessary for the proper conduct of the arbitral proceedings.12 It may, however,
exercise a certain degree of control with regard to whether the arbitral tribunal itself would
be able to undertake the requested measure, and may refuse the assistance if it is manifest that
this is the case.13 The Local Court is obliged to carry out the request to take witness evidence
if it is likely, for example, that a witness will not appear before the arbitral tribunal or will
refuse to make a witness statement.14
5 It is disputed whether the Local Court may refuse to assist the arbitral tribunal if it finds
that the arbitration agreement is invalid. While some scholars take the view that the Local
Court may undertake a full review of the arbitration agreement in this context,15 others argue
8
9
10
11
12
13
14
15
MnchKommZPO-Mnch (2013), 1050 para.12 who points out that it is a different issue whether the
courts will accept an extension of its duties under 1050 ZPO by the parties.
Stein/Jonas-Schlosser (2002), 1050 para.7; Schwab/Walter (2005), Chap. 17 para.7.
Cf. infra, Schroeder/Wortmann, 1062 paras 1 et seq.
For example, the determination of the amount in dispute does not fall under 1050 ZPO, cf. OLG Dresden 11.12.2000, BB 2001, Beilage No. 6, pp.21 et seq.
Cf. Stein/Jonas-Schlosser (2002), 1050 para.7; Schwab/Walter (2005), Chap. 17 para.8; MnchKommZPO-Mnch (2013), 1050 para.24.
Cf. the example in footnote 10; Stein/Jonas-Schlosser (2002), 1050 para.6; Zller-Geimer (2014), 1050
para.8; for a narrower approach cf. Musielak-Voit (2013), 1050 para.2 with further references.
1050 Sachs/Lrcher
299
that the court should refuse assistance only if it is obvious that the arbitration agreement is
invalid.16
In contrast to these views, other authors are of the opinion that the Local Court should not 6
be entitled to review the validity of the arbitration agreement at all when asked to provide
judicial assistance under 1050 ZPO.17 The opposing views neglect the fact that 1040
ZPO provides an exclusive remedy for a party wishing to challenge the validity of an arbitration agreement. It provides that the arbitral tribunal is first to decide on the validity of
the arbitration agreement (1040 (1) ZPO). The arbitral tribunals decision confirming its
jurisdiction is then, at the request of the challenging party, subject to review by the Higher
Regional Court at the place of arbitration. If the validity of the arbitration agreement were to
be subject to (even a limited) review by the Local Court in cases of applications under 1050
ZPO, that would open up an alternative route to challenge the arbitration agreement. If the
Local Court considers the arbitration agreement to be invalid, this might at least in practical terms block the further conduct of the arbitral proceedings. The German legislator
wanted to concentrate the jurisdiction of the state courts in relation to arbitral proceedings at
a high level, i.e. the Higher Regional Courts. This includes decisions concerning the validity
of the arbitration agreement. That would be undermined if the Local Court which under
1050 ZPO is intended to assist the arbitral tribunal and not control it were to be entitled
to review the validity of the arbitration agreement.
The Local Court must however, regardless of any agreements between the parties, refuse to 7
provide assistance if the requested measure is inadmissible under German procedural law. In
this respect, the Local Court has no discretion but is obliged to dismiss the request.18 This
would, e.g. be the case if the arbitral tribunal or a party requests the state court to order a
US-style discovery of documents.19
The state court renders its decision in the form of a court order (Beschluss),20 after having 8
granted the right to be heard to the other party, if only one party has filed the request.21 The
manner of carrying out the court assistance undertaken by the state court depends on the
individual circumstances of the case. For example in relation to evidence, the rules governing the taking of evidence by state courts (355 et seq. ZPO) are applicable.22 The arbitral
tribunal and the parties have to be informed sufficiently in advance of the date and time for
the taking of evidence, which can be made subject to the advance payment of the court fees.23
At first sight, it is surprising that 1050 sentence 3 ZPO only provides that the arbitrators are
entitled to participate in the taking of evidence and to ask questions. However, the right of
the parties to be present at such a hearing is already contained in 357 (1) ZPO24 which is
applicable to proceedings before the state court and therefore not repeated in 1050 ZPO.
16
17
18
19
20
21
22
23
24
Musielak-Voit (2013), 1050 para.5; Stein/Jonas-Schlosser (2002), 1050 para.7; Lachmann (2008),
para.1634; cf. also OLG Stuttgart 15.11.1957, NJW 1958, 1048 with regard to the old law.
Cf. Musielak-Voit (2013), 1050 para.6 concerning the remedies available against such an order.
Schwab/Walter (2005), Chap. 17 para. 13; for details cf. MnchKommZPO-Mnch (2013), 1050
para.28.
Musielak-Voit (2013), 1050 para.7 points out that there is no room for the parties to agree on the applicability of other procedural rules.
For details cf. MnchKommZPO-Mnch (2013), 1050 paras31 et seq.
357 (1) reads as follows: The parties are permitted to attend the taking of evidence.
300
9 Pursuant to 377 (3) ZPO, the state court may order that a witness only has to provide a
written witness statement if it deems this appropriate in the light of the matter at hand and
who the witness is. Voit correctly points out that, when assisting an arbitral tribunal pursuant
to 1050 ZPO, the court requires the consent of the arbitral tribunal if it wants to proceed on
this basis, because the probative value of such a written witness statement is limited and only
the arbitral tribunal may assess whether or not it would be a sufficient basis for its decision.25
10 While witnesses are not obliged to testify before an arbitral tribunal, they are under a legal
obligation to appear before a state court and to give evidence. Commensurate with this legal
obligation of the witness, detailed provisions concerning privileges are contained in 383 et
seq. ZPO, which also apply to experts (408 ZPO). Pursuant to 383 ZPO, witnesses who
have a personal relationship with one of the parties as fiance, spouse or close relative, as well
as priests, journalists and persons who are subject to a duty of confidentiality are excused
from the obligation to testify in general. In contrast, 384 ZPO entitles a witness to refuse
only particular questions, e.g. if the answer would cause direct financial loss to the witness or
their fiance, spouse or a close relative, if it would subject the witness or one of their relatives
to criminal prosecution or if it would lead to the disclosure of a trade secret.
IV. Evaluation of Evidence

11 The result of the taking of evidence by the state court is introduced into the arbitral proceedings through a copy of the protocol of the evidentiary hearing prepared by the court.26
The evaluation of the evidence given before the Local Court and the determination of the
consequences, if a certain fact is not proven, is the task of the arbitral tribunal.27 Only these
aspects form part of the proceedings before the arbitral tribunal; as a consequence, a request
for the setting aside of an arbitral award may only be based on mistakes made by the arbitral
tribunal in this regard.28 If the state court has violated procedural rules while taking evidence,
this only affects the validity of the arbitral award if the award is based on evidence which was
improperly obtained in state court proceedings pursuant to 1050 ZPO.29
25
26
27
28
29

The arbitral tribunal is entitled to request a copy of this protocol even if the state court assistance was
requested by one of the parties, Zller-Geimer (2014), 1050 para.6.
Schwab/Walter (2005), Chap. 17 para.14; Stein/Jonas-Schlosser (2002), 1050 para.11.
Chapter VI
Making of the Award and
Termination of the Proceedings
1051 Rules Applicable to Substance of Dispute
(1) The arbitral tribunal shall decide the dispute in accordance with such rules of law as
are chosen by the parties as applicable to the substance of the dispute. Any designation of the law or legal system of a given State shall be construed, unless otherwise
expressed, as directly referring to the substantive law of the State and not to its
conflict of laws rules.
(2) Failing any designation by the parties, the arbitral tribunal shall apply the law of the
State with which the subject matter of the proceedings is most closely connected.
(3) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the
parties have expressly authorized it to do so. The parties may authorize the arbitral
tribunal up to the time of its decision.
(4) In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction.
Short Bibliography: Adolphsen/Schmalenberg, Islamisches Recht als materielles Recht in der
Schiedsgerichtsbarkeit, SchiedsVZ 2007, 57; Berger, The New Law Merchant and the Global Market
Place, in: Berger (ed.), The Practice of Transnational Law, 2001, p. 1; Bckstiegel, Die Bestimmung des
anwendbaren Rechts in der Praxis internationaler Schiedsverfahren, in: Sandrock (ed.), FS-Beitzke,
1979, p. 443; Born, International Commercial Arbitration, London 2009; Bhler/Webster, Handbook of ICC Arbitration, 2008; Geimer, Internationales Zivilprozessrecht, Mnchen 2009; Grimm,
Applicability of the Rome I and Rome II Regulations to International Arbitration, SchiedsVZ 2012,
189; Handorn, Das Sonderkollisionsrecht der deutschen internationalen Schiedsgerichtsbarkeit,
Tbingen 2005; Junker, Deutsche Schiedsgerichte und Internationales Privatrecht, in: Berger et al.
(eds), FS-Sandrock, 2000, p. 443; Hartenstein, Das IPR der Schiedsgerichte ( 1051 ZPO), TranspR
2010, 261; Hausmann, Die Aufhebung von Schiedssprchen nach neuem deutschen Schiedsverfahrensrecht, in Hohloch/Frank/Schlechtriem (eds), FS-Stoll, 2001, p. 594, Kondring, Flucht vor dem
deutschen AGB-Recht bei Inlandvertrgen. Gedanken zu Art. 3 Abs. 3 Rom-I-VO und 1051 ZPO,
RIW 2010, 191; Lew/Mistelis/Krll, Comparative International Commercial Arbitration, The Hague
2003; Junker, Deutsche Schiedsgerichtsbarkeit und Internationales Privatrecht ( 1051 ZPO) in
Berger et al. (ed.), FS-Sandrock, 2000, p. 443; Kronke, Internationale Schiedsverfahren nach der Reform, RIW 1998, 257; Khn, Express and Implied Choice of the Substantive Law in the Practice of
International Arbitration, in: van den Berg (ed.), Planning Efficient Arbitration The Law Applicable
in International Arbitration, The Hague 1996; Lachmann, Handbuch fr die Schiedsgerichtspraxis,
Kln 2008; Lachmann, Schiedsvereinbarungen im Praxistest, BB 2000, 1633; Lepschy, 1051 Das
anwendbare materielle Recht in internationalen Schiedsverfahren, Frankfurt 2003; Lew, Proof of
Applicable Law in International Commercial Arbitration, in: Berger et al. (eds.), FS-Sandrock, 2000,
p. 581; Mankowski, Rom I VO und Schiedsverfahren, RIW 2011, 261; Martiny, Die Bestimmung
des anwendbaren Sachrechts durch das Schiedsgericht, in: Geimer (ed.), FS-Schtze, 1999, p. 529;
302
McGuire, Grenzen der Rechtswahlfreiheit im Schiedsverfahrensrecht? ber das Verhltnis zwischen

der Rom-I-VO und 1051 ZPO, SchiedsVZ 2011, 257; Moss, Can an arbitral tribunal disregard
the choice of law made by the parties?, SIAR 2005, 1; Kronke, Internationale Schiedsverfahren nach
der Reform, RIW 1998, 257; Ostendorf, Wirksame Wahl auslndischen Rechts auch bei fehlendem
Auslandsbezug im Fall einer Schiedsgerichtsvereinbarung und auslndischem Schiedsort, SchiedsVZ 2010, 234; Pfeiffer, Die Abwahl des deutschen AGB Rechts in Inlandsfllen bei Vereinbarung
eines Schiedsverfahrens, NJW 2012, 1169; Quinke, Schiedsvereinbarungen und Eingriffsnormen
Zugleich Anmerkung zu OLG Mnchen 17.05.2006, Az. 7 U 1781/06 , SchiedsVZ 2007,
246; Redfern/Hunter, Redfern and Hunter on International Arbitration, Oxford 2009; Reithmann/
Martiny, Internationales Vertragsrecht Das internationale Privatrecht der Schuldvertrge, Kln
2004; Ritlewski, Die Lex Mercatoria in der schiedsrechtlichen Praxis, SchiedsVZ 2007, 130; Rtzel/
Wegen/Wilske, Commercial Dispute Resolution in Germany, Mnchen 2005; Sandrock, Zgigkeit und
Leichtigkeit versus Grndlichkeit, JZ 1986, 370; Sandrock, Die objektive Anknpfung von Vertrgen nach 1051 Abs. 2 ZPO, RIW 2000, 321; Schmitt-Ahrendts/Httler, Anwendbares Recht bei
Schiedsverfahren mit Sitz in Deutschland, SchiedsVZ 2011, 267; Schulze, Billigkeitsentscheidungen
im intrnationalen Schiedsrecht in Geimer/Schtze (ed.) FS-Kaissis 2012, 875; Schwab/Walter,
Schiedsgerichtsbarkeit, Mnchen 2005; Solomon, Das vom Schiedsgericht in der Sache anzuwendende Recht nach dem Entwurf eines Gesetzes zur Neuregelung des Schiedsverfahrensrechts, RIW
1997, 981; Teubner, Global Bukowina: Legal Pluralism in the World Society, in: Teubner(ed.),
Global Law without a State, 1997, p. 21; Trittmann/Duve, UNCITRAL Arbitration Rules, in: Weigand (Hrsg.), Practitioners Handbook on International Arbitration, Mnchen/Copenhagen 2002;
Wagner, Rechtswahlfreiheit im Schiedsverfahren: Ein Probierstein fr die juristische Methodenlehre, in: Gottwald/Roth (Hrsg.), FS-Schumann, 2002; Wagner, in: Weigand (Hrsg.), Practitioners
Handbook on International Arbitration, Mnchen/Copenhagen 2002; Zuberbhler/Mller/Habegger/Besson, Swiss Rules of International Commercial Arbitration, Zrich 2005; Zumbansen, Piercing
the Legal Veil: Commercial Arbitration and Transnational Law, ELJ 2002, 400.
I.
II.
Para.
A. Relevance of the Rule in the
B. Relevance of the Rule in Practice . . . . . 3
C. Comparison with the UNCITRAL
Model Law . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Priority of Party Autonomy
(1051(1) ZPO) . . . . . . . . . . . . . . . . . . . . . . . 9
A. Choice of Law by the Parties. . . . . . . . . 12
B. Concept of Rules of Law . . . . . . . . . . . 20
C. Transnational Rules and Lex
Mercatoria . . . . . . . . . . . . . . . . . . . . . . . . . . 21
D. Reference to the Substantive Law
of the State. . . . . . . . . . . . . . . . . . . . . . . . . . 24
E. Restrictions to Party Autonomy . . . . . 26
1. Mandatory Rules of Law of
German Law . . . . . . . . . . . . . . . . . . . . . 27
Para.
2. Consumer Protection . . . . . . . . . . . . 33
3. Mandatory Provisions of Third
Countries . . . . . . . . . . . . . . . . . . . . . . . . 35
4. International Public Policy . . . . . . . 38
F. The Closest Connection Test
(1051 (2) ZPO) . . . . . . . . . . . . . . . . . . 41
G. Decision ex aequo et bono and
amiable composition (1051 (3)
ZPO). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
1. Necessity of an Explicit
Authorization by the Parties . . . . . . 57
2. Scope of Power Conferred to
the Arbitral Tribunal . . . . . . . . . . . . . 62
3. Setting Aside of an Award . . . . . . . . 63
H. Terms of the Contract and
Relevant Trade Practices (1051
(4) ZPO) . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
1051 Schmaltz
I.
A.
Relevance of the Rule in the Context of German Arbitration Law
303
International commercial arbitration usually involves a set of different legal rules: the law gov- 1
erning the arbitration agreement, the law governing existence and proceedings of the arbitral
tribunal, the relevant legal rules governing substantive issues, other applicable non-binding
guidelines or recommendations and the law governing recognition and enforcement of the
award. 1051 Code of Civil Procedure (Zivilprozessordnung ZPO) deals with the law, or
the relevant legal rules, governing the substantive issues in dispute generally described as
applicable law, governing law of the contract, proper law of the contract or the substantive
law.2
To date, not even a handful of court decisions related to arbitration in Germany deal with 2
questions of the choice of law applicable to the merits of the dispute. There are two possible
explanations: first, the significance of choice of law issues in international arbitration can be
exaggerated, since arbitrations appear to turn on issues of fact, credibility, trade usages or
equity rather than subtle conflict of law issues.3 Second, even if an arbitral tribunal is mistaken
in which law shall be applied to the merits of the dispute, it will only in exceptional cases lead
to a setting aside of the award.4
B.
Relevance of the Rule in Practice
Legal articles have regularly analysed the issue of how arbitrators determine the applicable 3
substantive law.5 This issue is usually resolved by applying a certain set of choice of law rules
or by directly applying the legal rules a tribunal considers appropriate. For an international
arbitral tribunal in Germany, further issues arise. Is an arbitral tribunal in Germany only
bound by 1051 ZPO? Does an arbitral tribunal in Germany like a state court have to
apply ordinary conflict of law rules? Can arbitrators in Germany apply a substantive law that
has no connection with the contract, the nationality of the parties or the seat of arbitration?
Can arbitrators in Germany apply a law which has no national character, e.g. the lex mercatoria
or general principles of law? These issues are covered by 1051 ZPO, which is applicable for
international arbitrations with their seat in Germany. It is necessary that there is a connection to a foreign state in the arbitration proceeding.6 1051 ZPO is not applicable in purely
domestic cases.
1
2
3
5
6
Redfern/Hunter (2009), para. 3.91.
MnchKommZPO-Mnch (2013), 1051 para. 5; Redfern/Hunter (2009), paras 3.01 et seq.; Born (2009),
p. 2109.
Neither the New York Convention nor most developed arbitration statutes expressly permit nonrecognition of an arbitral award because the arbitrator erred in their choice-of-law analysis. Except where
statutory protections or public-policy issues are involved, judicial review of arbitrators choice-of-law
decisions concerning the substantive law applicable to the merits of the disputes is minimal developed,
In practice, however, the arbitrators selection of the substantive law applicable to the parties dispute is
virtually never invoked as grounds for annulling or denying recognition of an award). cf. Born (2009),
pp. 2151 et seq., p. 2152. An exception must be made for cases where an arbitrator rendered a decision ex
aequo et bono without being empowered by the parties, infra C. Fn. 82.
Cf. Born (2009), pp. 2119 et seq.; Lew/Mistelis/Krll (2003), paras 18-8 et seq.
304
C.
4 1051 (1), (3) and (4) ZPO are an almost verbatim adoption of Article 28 UNCITRAL
Model Law (ML).7 By contrast, amendments are made for 1051 (2) ZPO. 1051 (2) ZPO
refers to the application of the law of the state to which the subject-matter of the proceedings
has the closest connection.8 Article 28 (2) ML provides for application of the law determined
by the conflict of law rules which the arbitral tribunal considers applicable. Art. 28 (2) ML gives
the arbitrator a broad power to apply a system of conflict of laws that it concludes is most appropriate to the case.9 Rules with a closest connection test require from arbitrators not only
a choice of law analysis, but prescribe particular conflict of law rules that must be applied.10
5 The German legislator felt bound by public international law.11 The Bill of the Arbitration
Law reform refers in particular to the European Convention on the Law Applicable to
Contractual Obligations of 19 June 1980 (Rome Convention).12 The Rome Convention is
applicable in the courts of the contracting states (essentially EU member states) to all cases
involving the selection of law applicable to contracts. The concepts of the Rome Convention
have been transferred to German law by conflict of laws provisions (in particular, Articles
27-35 of the Introductory Act to the Civil Code (EGBGB)).13
6 The legislator wanted 1051 ZPO to be coherent with the mandatory provisions of the
Rome Convention, in particular for contractual relations (now Article 3 (1) Rome I Regulation (transferred to German law by former Article 27 (1) EGBGB (free choice of law)14 and
Article 4 (1) (2), (4) Rome I Regulation (transferred to German law by former Article28
7
8
9
10
11
12
13
14
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 22 (52).

From Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 22 (53) it becomes clear that the
subject matter of the proceeding is assumed to be identical with the contract.
Born (2009), p. 2116.
Born (2009), p. 2118.
For detailed discussion cf. Handorn (2005), pp. 49 et seq.
BGBl. 1986 II, 809. Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 22 (52); The Rome
Convention was not applicable to arbitration proceedings (Art. 1 II e Rome Convention). For discussions relating to the relevance of the Rome Convention for arbitration see in particular Weigand-Wagner
(2002), Germany, paras 351 et seq.; Kronke, RIW 1998, 257 (262 et seq.). The German legislator referred
to the report of Giuliano/Lagarde on the Rome Convention, BT-Drs. 10/503, p. 44 (Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, 22 (52)). For the discussion in the context of the working group
prior to the reform see Handorn (2005), pp. 55 seq.
For contracts dating after 17December 2009, the provisions of the Regulation No. 593/2008 of 17June
2008 on the law applicable to contractual obligations (Rome I Regulation) apply. Art 2735 were
deleted from the EGBGB. Art. 1 II (e) Rome I Regulation states that it is not applicable to arbitration
clauses or jurisdiction clauses but is silent with respect to its application when it comes to the determination of the applicable law. This opens the floor for new discussions, cf. McGuire, SchiedsVZ 2011, 257 et
seq.; Hartenstein, TransportR 2010, 261; Schmidt- Ahrendts/Httler, SchiedsVZ 2011, 267 (269).
The relevant paragraphs of the former Art. 27 EGBGB read as follows: Free choice of law (1) A contract is
governed by the law chosen by the parties. The choice of law must be expressed or implied with sufficient
certainty by the provisions of the contract or the circumstances of the case. (2) The parties may at any
time agree that the contract be governed by a law other than the one which was determinant by the reason
of a prior choice of law or by reason of other provisions of this subsection (). (3) If the other factual
circumstances are, at the time of choosing the law, tied to only one state, then the choice of law of another
state () may not affect the provisions which may not be avoided by contract under the law of that state
(binding provisions). (4) ()
1051 Schmaltz
305
EGBGB (objective standard).15 But the German legislator wanted 1051 ZPO at the same
time to be coherent with the provisions of Article 28 ML.
The result of this balancing act is the wording of 1051 ZPO, which replicates the former 7
Articles 27, 28 EGBGB and deviates from the wording of Article 28 (2) ML. It is still in
dispute whether arbitral tribunals in Germany have to apply the same conflict of laws rules
as the state courts,16 or whether 1051 ZPO creates a particular conflict of laws rule for
international arbitration in Germany. The prevailing opinion in legal literature is that 1051
ZPO is lex specialis.17 If the arbitration is governed by 1051 ZPO, there is no room for the
arbitral tribunal to use its discretion to decide which law is applicable to the substance of the
dispute. This approach is supported by the wording of 1051 ZPO, which does not contain
any reference to other conflict of law rules. Another argument raised in this context is that
there is no need for further protection of a party adversely affected for structural reasons. These
are sufficiently taken into account by the public policy exception (1059 (2) (b) ZPO).18
Others are of the opinion that an arbitral tribunal in Germany, just like national courts in 8
Germany, has the obligation to take into consideration all other conflict of law rules of the
German private international law (IPR).19 The compromise opinion is that the principles
of German IPR should at least be considered when interpreting or supplementing 1051
ZPO.20
15
16
17
18
19
20
The relevant paragraphs of the former Art. 28 EGBGB read as follows: Applicable law in the absence of
choice of law (1) Insofar as the law applicable to the contract has not been agreed upon as provided in Art,
27, the contract is governed by the law of the state with which it shows the closes connection. () (2)
It is presumed that the contract shows the closest connection with the state in which the party, which is
required to make the specific performance, had his usual residence at the conclusion of the contract or, if
a company, an association or a juristic person is concerned, it had therein its head office () (3) Insofar
as the subject matter of the contract is a real right in a plot of land or the right of use of a plot of land, it
is presumed that it shows the closest connection to the state in which the plot of land is located. (4) As
regards contracts for the carriage of goods, it is presumed that they show the closest connection with the
state in which the carrier has its principal office at the time of the conclusion of the contract, insofar as
also the place of shipping, the place of unloading or the ain office of the sender is located in this state ()
Zller-Geimer (2014), 1051 para. 2; McGuire, SchiedsVZ 2011, 257, 262; Ritlewski, SchiedsVZ 2007,
130 (136); Solomon, RIW 1997, 981.
BeckOK ZPO/Wilske (2013), 1051 para. 3; MnchKommBGB-Martiny, Rom I VO, Vorb Art 1 para.
100; Stein/Jonas-Schlosser (2002), 1051 para. 2; Staudinger/Magnus (2007), Art. 27 EGBGB para. 9;
Junker, FS-Sandrock (2000), p. 454; Musielak-Voit (2013), 1051 para. 3; Sandrock, RIW 2000, 321
(323); Solomon, RIW 1997, 981 (983); Martiny, FS-Schtze (1999), 529 (533); Schwab/Walter, pp. 539
et seq.; Schmidt-Ahrendts/Httler, SchiedsVZ 2011, 267 (269 et seq.); Wagner, FS-Schumann (2002), p.
535.
Cf. infra, Krll/Kraft, 1059 paras 84 et seq.; Junker, FS-Sandrock (2000), 443, (454); Solomon RIW
1997, 981 (989); Schmidt-Ahrendts/Httler, SchiedsVZ 2011, 267, ( 269).
MnchKommZPO Mnch (2013), 1051, paras 16 et seq., 26 et seq.; Kronke, RIW 1998, 263.
Zller-Geimer (2014), 1051 para. 3
306
II.
Priority of Party Autonomy (1051 (1) ZPO)
9 The doctrine of party autonomy is internationally recognized, is prescribed by various institutional arbitration rules21 and has joined extensive acceptance in national systems of law22
and in international conventions.23
10 Parties are free to choose for themselves the law (or the legal rules) applicable to their contractual relationship. 1051 (1) ZPO confirms that the agreement of the parties is authoritative when determining the law applicable to the substance of the dispute.
11 Parties are not bound by the choice of the legal system of one specific state in its entirety.
Indeed, they may choose individual provisions of various national legal systems for various
aspects of the dispute, or they may select from internationally acquired comprehensive bodies of legislation.24 They may also agree on rules that have been elaborated by an international
forum but have not yet been incorporated into any national legal system. Parties may even
authorize the arbitrators to make a choice.25 Although this freedom exists in theory, the author of this article submits that the fragmentation and application of various bodies of law to
a specific commercial transaction, however, is onerous and impractical in practice.
A.
Choice of Law by the Parties
12 The choice of law clause is not bound by the form requirements of 1031 ZPO.26 In particular, it is not necessary that the choice of law clause is contained in a document signed by both
parties.
13 Parties may explicitly agree to a choice of law. In practice, the language of such explicit choice
of law clause can be either broad and abstract (German law shall apply) or more narrow
and specific (the interpretation and performance of the contract are governed by German
law).27
14 There may be need for interpretation in the case of ambit of national law.28 If there is, for
example, a general reference to British law, there is a need to specify English, Scottish or
Northern Ireland law. General reference to US law will call arbitrators to determine which
states law governs the contract.29 In the case of Swiss law, it may be preferable to make a
reference to Swiss law in general rather than a specified cantons law.
21
22
23
24
25
26
27
28
29
Cf. Art. 28.1. AAA; Art. 3.2. Rules of Milan Chamber of Arbitration; Art. 47 (2) CIETAC Arbitration
Rules (2012); Art. 23 Sec 1 DIS-Rules; Art. 21.1 ICC Rules 2012; Art. 41 (1) Japan Commercial Arbitration Association; Art. 22.3 LCIA Rules; Art. 46 Rules of the Netherlands Arbitration Instution; Art. 22
SCC Rules; Art 27.1 SIAC Rules; Art. 33 (1) Swiss Rules.
Cf. English Arbitration Act 1996, section 46 (1); Art 187 (1) of the Swiss Private International Law Act;
Art. 1496 of the French Code of Civil Procedure.
Art 42 Washington Convention; Art. 33 UNCITRAL Rules.
Stein/Jonas-Schlosser (2002), 1051 para. 6; Musielak-Voit (2013), 1051 para. 2.
Geimer (2005), IZPR para.3869; Stein/Jonas-Schlosser (2002), 1051 para. 5; MnchKommZPO-Mnch
(2013), 1051 para.9.
MnchKommZPO-Mnch (2013), 1051, para. 15.
Cf. Lew/Mistelis/Krll (2003), paras 18-25 et seq.
Lew/Mistelis/Krll (2003), paras 18.2418.30.
Handorn (2005), p. 100.
1051 Schmaltz
307
The choice of law also includes provisions related to the burden of proof (Beweislastverteilung) 15
if they are intertwined with substantive law (Huckepack des materiellen Rechts).30 The rules
related to the taking of evidence (for example, availability or non-availability of discovery)
or to the assessment of evidence are part of the procedural law. German procedural law does
not provide for availability of discovery, written witness statements and cross examinations.
The choice of law can be agreed not only when signing a contract, but also at a later point.31 16
It can also be changed with the consent of both parties,32 or the parties can agree on different
laws to be applied to different aspects of the dispute.33
In the absence of an explicit choice of law clause, the tribunal will usually look first if there is 17
an implied or tacit choice of law.34
The Rome Convention provides that a choice of law must be expressed or demonstrated with 18
reasonable certainty by the circumstances of the case (Article 3 (1)). Implied choice of law
is possible,35 but is difficult to prove. But the wording of the Rome Convention does not
suggest that a tacit choice of law shall be possible.36
An implied choice can, for example, be inferred from a common reference to the same na- 19
tional law in the submissions exchanged by the parties in the arbitral proceedings. German
courts, on some occasions, found that an implied or tacit choice for German law as substantive law was made when the parties agreed that the place of arbitration shall be in Germany.
This approach is questionable.37 In that context, a decision of the arbitral tribunal applying
Hamburg Amicable Arbitration (Hamburger freundschaftliche Arbitrage) ad hoc rules38 deserves to be noted.39 The court held that the parties consented to Hamburger freundschaftliche
Arbitrage and therefore tacitly agreed on German law. The arbitral tribunal of the Chamber
of Commerce in Hamburg40 decided that the choice of German law can be deduced from an
agreement of the parties to submit their dispute to arbitration in Germany. The choice of the
place of arbitration may be influenced by a number of tactical and strategic considerations
that have no bearing on the issue of the applicable law.41 Therefore, it is not sufficient for the
30
31
32
33
34
35
36
37
38
39
40
41
Musielak-Voit (2013), 1051 para. 2; MnchKommZPO-Mnch (2013), 1051 para. 12; cf. Born (2009),
p. 1856-1858; 2148; Zuberbhler/Mller/Habegger/Besson (2005), ART. 33, para. 3 (() it is not
always easy to distinguish matters of substance and of procedure, especially in the field of evidence).
The Rome Convention, Article 3, provides that a choice of law, or variation of the choice can be made
at any time after the conclusion of the contract by agreement between the parties, cf. Redfern/Hunter
(2009), p.197.
Musielak-Voit (2013), 1051 para. 2; Thomas/Putzo-Reichold (2013), 1051 para. 2; Ritlewski, SchiedsVZ
2007, 130 ff.
Cf. Redfern/Hunter (2009), para. 3.206.
Handorn (2005), p. 101; Musielak-Voit (2013), 1051 para. 2.
Cf. Handorn (2005), pp. 102 et seq.; Baumbach-Lauterbach (2014), 1051 para. 2 (tacite choice of law
is not sufficient); Schmidt-Ahrends/Httler, SchiedsVZ 2011, 267 (269); Zuberbhler/Mller/Habegger/
Besson (2005), Art. 33, para. 6; different opinion: Saenger (2013), 1051 para. 3 mentions the possibility
of tacit consent to a choice of law clause; MnchKommZPO-Mnch (2013), 1051, para. 15 (qui elgit
arbitrium, elegit ius).
See on this set of rules Part IV, Karstaedt, Trade Arbitration in Germany, paras 34 et seq.
Schiedsgericht Hamburger freundschaftliche Arbitrage, 29.12.1998, NJW-RR 1999, 780, (781).
Court of Arbitration of the Hamburg Chamber of Commerce Arbitration (Schiedsgericht Handelskammer
Hamburg), 21.3.1996, NJW 1996, 3229 (3230).
308
assumption of an implied choice of law that the chosen arbitration rules provide for arbitration in Germany.42
B.
Concept of Rules of Law
20 The term Rules of Law used in 1051 (1) ZPO deserves further analysis, since it is a broader
concept than law. The concept of rules of law is considered to encompass not only rules laid
down in one or various legal systems, but it encompasses a whole range of sources, including
general principles of commercial law, the lex mercatoria or the UNIDROIT Principles of
International Economic Agreements.43
C.
Transnational Rules and Lex Mercatoria
21 The parties to an arbitration with its seat in Germany may also submit their dispute to transnational rules, for example the lex mercatoria.44 Lex mercatoria is, however, a difficult concept
to pin down and the term has different meanings to different authors.45
22 What has frequently been overlooked in the long and controversial debate about this global
law without a state46 is the fact that deciding on the basis of the lex mercatoria does not mean
the absence of rules. To the contrary, the arbitral tribunal applies general principles deduced
from various legal systems, the further details of which can in fact be defined with specificity,
given the extensive comparative law research available today to the legal community.47 It is
suggested that a decision pursuant to the lex mercatoria is a decision pursuant to content
driven application of equitable principles (inhaltlich przisierte Billigkeit), taking into account trade practices.48 Lex mercatoria emerged during the last decades, but a local court,
which will develop those rules, is still missing.
23 As a practical matter, when arbitrators in Germany seek to identify the content of lex mercatoria, they draw upon the UNIDROIT principles.49
D.
Reference to the Substantive Law of a State
24 When parties agree that a specific national law should govern their contractual relationship, it
is assumed that they refer to the substantive law of the state indicated and not to the conflict
of laws rules of that state.50
42
43
44
45
46
47
48
49
50
Redfern/Hunter (2009), paras 3.212 seq.

Bill of the Arbitration Law Reform Act, BT-Drs. Nr. 13/5274, p. 22 (52); Zumbansen, ELJ 2002, 400
(405); cf. Lepschy (2003), pp. 103 et seq.
For Shariah see Redfern/Hunter (2009), paras 3.191 et seq.; Lew/Mistelis/Krll (2003), para. 18.31;
Adolphsen/Schmalenberg, SchiedsVZ 2007, 57 et seq.; Schroeder (2007), 134 et seq.
Handorn (2005), pp. 83 et seq.; Redfern/Hunter (2009), paras 3.167-3.184; Lew/Mistelis/Krll (2003),
paras 18.46-18.58.
See Teubner, in: Teubner (ed.) (1997), p. 21.
Weigand-Trittmann/Duve (2002), UNCITRAL Arbitration Rules, Art. 33 para. 3.
Redfern/Hunter (2009), paras 3.167-3.184. The introduction of the UNIDROIT Principles explains
their purpose, inter alia, as follows: The UNIDROIT Principles may be applied when parties have agreed
that their contract be governed by general principles of law, the lex mercatoria and the like.; see ICC
case No. 10422 (2001), JDI 2003, 1142. Redfern/Hunter refer to an ICC Bulletin Special Supplement:
UNIDROIT principles of international commercial contracts Reflections on their use in international
arbitration (2002), published by Prof. Mayer, cf. Redfern/Hunter (2009), para. 3.179, Footnote 143.
1051 Schmaltz
309
This corresponds to the objective standard ( 1051 (2) ZPO) as well as to the German 25
private international law (Article 4 (2) EGBGB). However, pursuant to the principle of
party autonomy, the parties may expressly agree on a conflict of laws system (disprove by
agreement).51
E.
Restrictions to Party Autonomy
The wording of 1051 ZPO suggests that the law chosen by the parties must be applied for 26
every aspect of the dispute. But what about mandatory rules of the substantive law chosen
by the parties that cannot be derogated from by way of contract?52 Is mandatory German law
applicable, even if the parties agreed to apply a different substantive law to an arbitration in
Germany? Is an arbitral tribunal in Germany, despite a choice of law clause, bound by mandatory law of a third country, for example the law of the place of arbitration or the place where
the contract was to be performed, or the law of the place of enforcement? Can a tribunal
disregard the choice of the parties when determining that there is a contrary mandatory rule
in one of those places?
1.
Mandatory Rules of Law of German Law
The German legislator found it self-explanatory that the freedom of the parties for their 27
choice of law was not unlimited and there was no need to explicitly mention this limitation
in the wording of 1051 ZPO.53 An arbitral tribunal in Germany must apply mandatory
provisions of German substantive law.54 These provisions are applicable despite a foreign
law clause, at least if the award shall be enforceable in Germany. Otherwise, the award risks
to be set aside for ordre public reasons ( 1059 (2) 2 ZPO). The autonomy of the parties
with respect to the choice of law on the merits does not permit the arbitral tribunal to ignore
mandatory law of the place of the arbitration, be it in Germany or elsewhere.
The most frequently encountered instance of the application of mandatory law is competi- 28
tion and anti-trust law. An arbitral tribunal with its seat in Germany will have to consider
European competition law if they are concerned about potential challenges to, and ultimate
enforceability of, their awards both within Europe and without. The misapplication of
Arts101, 102 of the Treaty on the Functioning of the European Union (TFEU, formerly
Arts 81 and 82 of EC Treaty) justifies annulment under national law and refusal of enforcement under the New York Convention.55
Although not dealing explicitly with the choice of law clause, a few court decisions deserve 29
to be noted, for they can underline the argument that German mandatory law must be taken
into account in proceedings having their place of arbitration in Germany, when the tribunal
51
52
53
54
55

Redfern/Hunter (2009), para. 3.128 referring to Art 3 (3) of the Rome Convention on the law applicable
to contractual obligations.
Stein/Jonas-Schlosser (2002), 1051 para. 5; Thomas/Putzo-Reichold (2013), 1051 para. 2; ZllerGeimer (2014), 1051 para. 3.
Art. 6 EGBGB provides: A provision of the law of another country shall not be applied where its application would lead to a result which is manifestly incompatible with the fundamental principles of German
law. In particular, inapplicability ensues, if its application would be incompatible with civil rights.
ECJ 1.6.1999 Case C 126/97 (Eco Swiss China Ltd v. Benetton International), ECR I-3055: Breach of EU
competition law is breach of public policy. However, the Advocate General Saggio denied that arbitrators
are under a duty to apply community law ex officio and was of the opinion that arbitrators should not be
under a duty to consider issues outside the orbit of the dispute as defined by the parties.
310
wants to ensure an enforceable award. German courts appear to have a slight tendency to declare arbitration clauses invalid if they assume that the arbitral tribunal will not apply German
mandatory law because of the parties choice of law clause and if the seat of the arbitration
outside Germany.
30 The Higher Regional Court (Oberlandesgericht OLG) Mnchen56 had to decide whether
it had jurisdiction in a dispute between a German distributor and its US principal. The contract provided for arbitration pursuant to the Rules of the American Arbitration Association
(AAA) in California. The contract was governed by US law. The German court held that an
arbitration clause establishing the competency of a foreign arbitral tribunal is not enforceable
if, from the German courts perspective, there is a risk that the foreign arbitral tribunal will
not apply the mandatory German law provisions on the sales agents claim for compensation
due to a deviating choice of law clause in the contract.
31 The OLG Kln57 decided on an arbitration clause which did not explicitly provide for the
application of the Convention on the Contract for the International Carriage of Goods by
Road (CMR). The court held that a clause providing for arbitration als goede mannen naar
billijkhei, including the obligation to apply mandatory law and provisions of international
transportation agreements, was not sufficient to provide for the mandatory application of
the CMR.
32 The Federal Court of Justice (Bundesgerichtshof BGH),58 in an earlier decision, held that
the agreement on a foreign arbitration for time bargain contracts (Brsentermingeschfte) at
a foreign stock exchange shall not be valid if the seat of the arbitration, in connection with
foreign law, leads to a disregard of mandatory German law provisions (61 Stock Exchange
Act (Brsengesetz BrsG)). Pursuant to 61 BrsG, the German judge must apply certain
principles, even if the dispute is submitted to a foreign law that does not recognize mandatory
provisions.
2.
Consumer Protection
33 Arbitration clauses in Germany are also more and more common for contracts involving
consumers, in which case the question of applicable mandatory provisions for consumers
has to be considered. Arbitration with consumers is generally admitted. Yet, it must be noted
that the European Court of Justice (ECJ) in a decision in 2006 held that, where a court finds
that a stipulation is unfair, the invalidity of such a clause can be invoked in annulment proceedings, even if it was not raised in the course of the arbitration.59
34 To agree on arbitration with consumers evokes a number of issues, including but not limited
to the question of the applicability of the stipulations related to general terms and conditions
56
57
58
59
OLG Mnchen 17.05.2006, IPRax2007, 322; Horn, Zwingendes Recht in der internationalen Schiedsgerichtsbarkeit, SchiedsVZ 2008, 209 et seq.; Quinke, SchiedsVZ 2007, 246 et seq. He comes to the conclusion that German courts have to honour arbitration agreements in favour of foreign arbitral tribunals
even if the dispute concerns internationally mandatory provisions, unless the party resisting the arbitration proceedings demonstrates that the later arbitral award would violate the German ordre public and
would therefore not be recognized or enforced in Germany.
OLG Kln 02.08.2005, TranspR2005, 472 (473).
BGH 15.06.1987, NJW 1987, 3193.
ECJ 26.10.2006, Case C-168/05, (Elisa Maria Mostaza Claro v. Centro Mvil Milenium SL) (2006) ECR
I-10421.
1051 Schmaltz
311
( 305 et seq. Civil Code (Brgerliches Gesetzbuch BGB).60 In cases of consumer contracts
or employment contracts, the freedom of the parties is limited by Art. 6 (2) and 8 (2) of the
Rome I Regulation (former Articles 29, 30 EGBGB).61 The German legislator considered
the application of the former Article 29 EGBGB as mandatory, for it is lex specialis and cannot
be overruled or contracted out of.62 Against this background, should there be a valid arbitration agreement with consumer participation at all (1031 (5) ZPO), an arbitral tribunal
in Germany will have to consider mandatory rules on consumer protection and European
directives related to consumer protection, as European law forms part of the German legal
system and has to be applied by arbitral tribunals in Germany.63
3.
Mandatory Provisions of Third Countries
The prevailing opinion argues that an arbitral tribunal should consider or even apply foreign 35
mandatory rules of law. Foreign law is law that is different from the lex fori to be determined
pursuant to the law applicable at the place of the arbitration. Indeed, an arbitral tribunal that
follows the arbitration agreement without applying foreign mandatory law may run the risk
of rendering an award that violates public policy (ordre public).
While it is accepted that arbitral tribunals are not part of the judicial system of a country, 36
they perform judicial functions. Therefore, they cannot disregard the legitimate expectations
of the states and limit themselves to the expectations of the parties.64 Also, arbitral tribunals
should be concerned that they are not being abused. Parties should not be able, by procuring
an arbitration, to conceal that one of them is, for example, seeking to enforce a contract the
purpose of which is illegal.65 Public policy will not allow it.
It also appears that anti-bribery and corruption issues become more important in inter- 37
national arbitration. It is established that seeking to bribe or corrupt a government official
affects international public policy (infra sub. 4), and it is suggested that an arbitral tribunal
consider complying with provisions included in foreign mandatory law with extraterritorial
reach (such as the UK Bribery Act or the Foreign Corrupt Practices Act (FCPA)).
4.
International Public Policy
International public policy provides a limited basis were the arbitral tribunal has a duty to 38
disregard the chosen law if its application would contravene international public policy.
Public policy can be national, regional, international or transnational. The existence and 39
content of national and regional public policy may be identifiable. Four issues frequently
arise in this context: anti-trust or competition law, protective national law relating to agen60
61
62
63
64
65
Hanefeld/Wittinghofer, Schiedsklauseln in Allgemeinen Geschftsbedingungen, SchiedsVZ 2005, 217

(226).
Highly disputed. Junker, FS-Sandrock (2000), p. 443 (463); Martiny, FS-Schtze (1999), pp. 529 et
seq.; MnchKommZPO-Mnch (2013), 1051 para.20; Schtze, para. 388; Stein/Jonas-Schlosser (2002),
1051 para. 4; Thomas/Putzo-Reichold (2013), 1051 para. 1; Solomon, RIW 1997, 981 (983).
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 22 (53); Martiny, FS-Schtze (1999), 529
(537 et seq.) proposes that the arbitral tribunal shall be oriented by Art. 29, but not bound; see also
ECJ 26.10.2006, Case C-168/05, (Elisa Maria Mostaza Claro v. Centro Mvil Milenium SL) (2006) ECR
I-10421.
Lew/Mistelis/Krll (2003), paras 17.36 et seq.
312
cies, consumer protection and employment law issues. A violation of European community
law has been qualified as a reason for an award to be set aside by a national court, because
European competition law qualified as a matter of public policy. In the European Union,
EU competition law is mandatory.66 Therefore, if a distribution contract or a joint venture
agreement offends the provisions of EU competition law, the award based on it may not be
enforceable in Europe, even if the distribution contract or joint venture agreement is governed by another system of law. With respect to employment agreements, there will be (at
least in Europe) a mandatory choice of law or the mandatory application of certain principles
of legal protection.
40 It is more difficult when it comes to international or transnational public policy. Examples
include not seeking to bribe corrupt officers, agreements to transport children intended for
slavery or under age labour, or to smuggle individuals in another country, supplying armaments to a terrorist organisation or the supply of illicit drugs.67
F.
The Closest Connection Test (1051 (2) ZPO)
41 Failing any designation of the substantive law by the parties, the arbitral tribunal shall apply the law of the state with which the subject matter of the proceedings is most closely
connected.68 1051 (2) ZPO differs from the wording of Article 28 (2) ML. Article 28 (2)
ML provides that the applicable law shall be determined by the conflict of laws rules which the
tribunal considers applicable.
42 The German legislator concluded that the rule in 1051 (2) ZPO conforms most closely to
Article 4 of the Rome Convention.69 The provisions of the Rome I Regulations (former Articles 28, 29 EGBGB) shall give guidance to an arbitral tribunal when interpreting the term
closest connection.70 Any further clarification, such as a mandatory rule of law provided for
in Art. 6 Rome I Regulation (former Article 29 (2) EGBGB), was considered disposable.71
43 1051 (2) ZPO evokes the issue of whether this rule creates specific conflict of laws rules
applicable before the arbitral tribunal through an empowerment to determine the applicable
law or rules of law, without first referring to the national conflict of laws system.72 In practice,
however, there seems to be no significant difference between (i.) choosing the law by reference to the conflict of laws rules applicable as determined by the arbitrators (Article 28 ML)
and (ii.) a direct choice of law by the arbitrators in use of the closest connection-test (1051
66
67
68
69
70
71
72
ECJ 1.6.1999 Case C 126/97 (Eco Swiss China Ltd v. Benetton International), ECR I-3055.
Cf. Lew/Mistelis/Krll (2003), para. 17.36.
Swiss International Private Law resorts in a similar way (Art. 187) to the law with which the substance of
the dispute is most closely connected.
BGBl. 1986 II, 809 (referring to the Rome Convention); Thomas/Putzo-Reichold (2013), 1051 para. 3.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 22 (53); Geimer (2009), IZPR para. 3788;
Lachmann (2008), para. 943; Thomas/Putzo-Reichold (2013), 1051 para. 3; dissenting Reithmann/
Martiny (eds.) (2004), para. 3517; Junker, FS-Sandrock (2000), p. 443 (462) prefers the US choice
of laws process and holds that Art. 28 EGBGB is not binding; thus following the arguments raised by
Sandrock, Welches Kollisionsrecht hat ein internationales Schiedsgericht anzuwenden?, RIW 1992, 785
(795).
Handorn (2005), p. 71.
MnchKommZPO-Mnch (2013), 1051 para. 27 holds that 1051 (2) ZPO is a binding rule, and not
only a standard for the exercise of discretion by the arbitral tribunal. cf. Handorn (2005), 126; Junker, FS
Sandrock (2000), 457; Hartenstein, TransportR 2010, 261 (262).
1051 Schmaltz
313
(2) ZPO).73 Any difference is neutralized, because the closest connection test is an objective
test.74 Hence, the arbitrators can neither act arbitrarily nor apply a legal order which has little
or no connection to the substance of the dispute.75 Consequently, the discretion which the
Model Law awards to the arbitrators in the case of conflict of laws rules usually culminates in
the application of the law which is most closely connected to the subject matter.
The closest connection test provided for by 1051 (2) ZPO differs from the solution of the 44
majority of other institutional arbitration rules. Other rules confer the power to the arbitral
tribunal to determine the rules of law which it considers to be appropriate.76 If the parties agree,
for example, on ICC arbitration without choice of substantive law, there is no room for this
broad discretion of the arbitral tribunal under the wording of 1051 ZPO.77 An arbitral
tribunal in Germany must apply the closest connection test provided for in 1051 (2) to
assess the applicable law.
The decisive test is how the term closest connection is to be interpreted. Even though not 45
mentioned in 1051 (2) ZPO, a mutatis mutandis reference to the concepts in Art 4 (1) of
the Rome Regulation (former Article 28 (2)(4)EGBGB) is deemed reasonable.
In the absence of a choice by the parties, Art. 4 (1) of the Rome Regulation deals with 46
the applicable law in a three-step method.78 It shall be presumed that the contract has the
closest connection with the country where the party, which is to effect the characteristic
performance of the contract, has its habitual residence or, in the case of a body corporate or
incorporate, its central administration. Language, currency and the place where the contract
was signed are not as strong of indicators. If the contract is entered into in the course of that
partys trade or business, that country shall be the country in which the principal place of
business or, where under the terms of the contract the performance is to be effected through
a place of business other than the principal place of business, the country in which this other
place of business is situated.79
73
74
75
76
77
78
79
It cannot, however, be denied that the solution elected in the Model Law basically gives the arbitral
tribunal a wider scope in their decision on the applicable law than the provision in 1051 (2) ZPO.
MnchKommZPO-Mnch (2013), 1051 para. 25; Schmidt-Ahrendts/Httler, SchiedsVZ 2011, 267
(271).
Art. 28.1 AAA, Art. 21 (1) ICC-Rules 2012 (tribunal shall apply such law(s) or rules of law as it determines appropriate); Art. 47 (2) CIETAC 2012 (tribunal shall determine the substantive law applicable
to the dispute); Art. 22 SCC (tribunal shall apply the law which it considers to be most appropriate);
Art. 28.1. AAA, Art. 22.3 LCIA-Rules, Art. 46 NAI-Rules, Art. 27.1. SIAC-Rules (tribunal shall apply the
law(s) or rules of law which it considers appropriate).
Schtze, para. 386.
Special Rules apply for transportation (Article 5 (1) Rome I Regulation), Consumers (Article 6 Rome I
Regulation), Insurances (Article 7 Rome I Regulation) and individual employment contracts (Article 8
Rome I Regulation).
Cf. report of Giuliano/Lagarde on the Rome Convention, BT-Drs. 10/503, p. 44 (for the report in multiple
languages, see http://www.rome-convention.org/instruments/i_rep_lagarde_en.htm): For example in
a banking contract the law of the country of the banking establishment with which the transaction is
made will usually govern the contract; in a commercial contract of sale it is usually the law of the vendors
place of business that will govern the contract. In an agency contract concluded in France between a
Belgian commercial agent and a French company, the characteristic performance being that of the agent,
the contract will be governed by Belgian law if the agent has his place of business in Belgium.
314
47 The rebuttable presumptions in Art. 4 (1), (2) of the Rome I Regulation apply, unless according to all circumstances as a whole, the governing contract has a closer connection with
another country (Art. 4 (3) Rome I Regulation, former Article 28 (5) EGBGB).80
48 The proposal to apply Article 4 of the Rome I Convention (former Article 28 (2)(4)
EGBGB) for interpreting the term closest connection gives no answer to cases where the
performance characteristic to the contract cannot be determined, e.g. in the case of a bilateral
executors contract. In such cases, the arbitral tribunal may apply the law of a different state in
disputes where it gives other aspects a heavier weighting. Determinative factors may include,
amongst other things, common nationality of the parties, common usual residence, to a
lesser extent language of the contract, place of signature or currency.81
G.
Decision Ex Aequo et Bono and Amiable Composition (1051 (3) ZPO)
49 1051 (3) ZPO corresponds to Article 28 (3) ML. The fact that these terms have been left
in French and Latin in the Model Law is an indication as to their uncertain meaning in English.82 The German wording of 1051 (3) ZPO uses the term Billigkeit, which may translate
in decisions to equity or fairness.83 The concept of a decision in equity is not the same as
the decision ex aequo et bono or deciding as amiable compositeur. As a matter of principle,
decisions in equity are only in exceptional cases part of the German legal system.84
50 Equity principles empower the arbitral tribunal to mitigate the effects of the applicable law to
the extent they appear unfair in the case at hand.85
51 A judgment made ex aequo et bono is based on considerations of fairness, not of a specific
existing law. The expression ex aequo et bono can be traced back to Roman law meaning in
justice and fairness, according to what is just and good or according to equity and conscience. It is argued that the arbitral tribunal, if designated to decide ex aequo et bono, does not
even have to explain its considerations with respect to any provisions of law.86
52 The concept of amiable compositeur was developed in France and other civil law countries
with the aim of restoring harmony and achieving a workable legal relationship between the
parties. It is defined as the arbitrators power not to restrict themselves to applying the rules
of law, thereby allowing them not only to ignore the rules altogether, but also to depart from
them to the extent that their conception of equity requires.87
53 French case law offers excellent illustration of ex aequo et bono principles as applied in
practice. A tribunal deciding a case as amiable compositeur must explain why in his eyes the
solution proposed is just.88
80
81
82
83
84
85
86
87
88
Thomas/Putzo-Reichold (2013), 1051 para. 3; Rtzel/Wegen/Wilske (2005), p. 140.

Bhler/Webster (2008), para. 17.66.
Cf. Schulze, FS-Kaissis, pp. 875 et seq.
There are very few exceptions to this general rule. In a few cases, the legislator has conferred the power to
use discretion as method for decision to the national court, for example 315 (3) BGB, 319 (1) BGB,
91a ZPO, 287 ZPO.
Cour dAppel de Paris 28.11.1996, Rev.Arb. 1997, 380.
Bhler/Webster (2008), para. 17-67 with further references.
Bhler/Webster (2008), para. 17-68.
1051 Schmaltz
315
The common principle of the decisions pursuant 1053 (3) is that arbitrators may be re- 54
leased from their obligation to apply substantive law.89 The arbitral tribunal is only entitled to
decide ex aequo et bono if all parties to the arbitration have explicitly empowered the arbitral
tribunal to do so.
It deserves to be mentioned, that the mere fact of mentioning good faith in an award is not 55
an indication that the tribunal has rendered a decision ex aequo et bono. The same is true if an
arbitral tribunal uses the possibility to estimate damages in using the discretion conferred to
a national the court in 287 ZPO.90
A decision ex aequo et bono without explicit consent of the parties is a reason for setting aside 56
an award.91 Yet, there are limits: the agreement of the parties and the trade usages are to in
any event be applied.92
1.
Necessity of an Explicit Authorization by the Parties
The authorization to arbitrate ex aequo et bono (or amiable compositeur) needs to be explicit 57
and it needs to be given by all the parties to the arbitration.93 Implied consent to decide ex
aequo et bono is excluded.94 It is, however, disputed if this explicit authorisation needs to fulfil
the form requirements of 1031 ZPO.95
Practitioners argue that parties should empower the arbitral tribunal to act and decide in 58
equity only if they have full trust in the specific knowledge, judgment and common sense of
the arbitral tribunal.96
The explicit consent may be given in the course of the arbitral proceedings, but it must be giv- 59
en prior to the decision of the tribunal. In general, parties may wish to provide a clarification
in the arbitration agreement. However, it can also be given in the course of the proceedings
by conferring a more specific authorization to the arbitral tribunal. For example, the parties
may opt to limit the decision in equity as to cost, use of estimates or collateral decisions.
89
90
91
92
93
94
95
96
Baumbach/Lauterbach (2014), 1051 para. 4; Stein/Jonas-Schlosser (2002), 1051, para. 9; Zller-Geimer

(2014) 1051, para. 8; Musielak-Voit (2013), 1051, para. 4; cf. Schroeder (2007), p. 135.
OLG Mnchen 14.03.2011, SchiedsVZ 2011, 159 (166). An English abstract of the decision can be found
in SchiedsVZ 2011, 159. But unfortunately the part that is relevant for the discussion of 1051 (3) ZPO
is missing and not even indicated in this abstract.
OLG Mnchen 22.06.2005, 34 Sch 10/05, 308, 309; OLG Mnchen 14.03.2011, 34 Sch 8/10, para.
116 in SchiedsVZ 2011, 159; Zller-Geimer, (2014), 1051 para. 7. In its decision of 14.3.2011, the
OLG Mnchen deals with an estimate of damages 287 ZPO by an arbitral tribunal (OLG Mnchen
14.03.2011, 34 Sch08/10, SchiedsVZ 2011, 159 et seq.). The arbitral tribunal used the possibility to
estimate the amount of damages based on indications submitted by the parties. The German Civil Code
(ZPO) grants to judges the possibility to estimate by assessing and evaluating certain documents that
were submitted by the parties (287 ZPO). Although this estimate contains elements of equity, its application by an arbitral tribunal is no indication that it rendered a decision ex aequo et bono.
MnchKommZPO-Mnch (2013), 1051, para. 46, 55. Dissenting BeckOK ZPO/Wilske (2013), 1051
para.12.
OLG Mnchen 22.06.2005, SchiedsVZ 2005, 308; MnchKommZPO-Mnch (2013), 1051, para. 47.
MnchKommZPO-Mnch (2013), 1051 para. 48 ( 1031 ZPO is not applicable); Musielak-Voit (2013),
1051 para. 4; dissenting Thomas/Putzo-Reichold (2013), 1051 para. 4; Baumbach/Lauterbach-Hartmann (2014), 1051 para. 4.
Rtzel/Wegen/Wilske (2005), p. 141.
316
60 Explicit has the meaning of doubtless and crystal clear.97 The necessity of explicit consent
by all parties to the arbitration is an indication that the application of substantive law is the
standard in arbitration and that decisions in equity (Billigkeitsentscheidungen) are an exception.98
61 The parties request to an arbitral tribunal to submit proposals for a settlement must not be
considered as an implied consent to decide ex aequo et bono.99 The OLG Mnchen ruled that
an implied consent of the parties granted after commencement of the arbitral proceedings
does not constitute valid authorization anyway.100 The reasoning of the court suggests that an
authorization can be granted in the course of the arbitral proceedings, but it must be declared
expressly and not by implied consent. By analogy, a hidden indication to institutional rules
of arbitration that, in principle, allow a decision ex aequo et bono will likely not be considered
sufficient to constitute proper authorization.101
2.
Scope of Power Conferred to the Arbitral Tribunal
62 A clear concept of equity does not exist. One can try to define the negative limits of equity:
the arbitral tribunal is bound by contract stipulations (1051 (4) ZPO and by ordre public
(1059 (2) Nr. 2 ZPO).102 The arbitral tribunal can ignore applicable law rules, but not the
contract between the parties.103 However, legal scholars deny that consent to a decision ex
aequo et bono frees the arbitral tribunal from any boundaries of the respective legal system.104
3.
Setting Aside of an Award
63 Should the arbitral tribunal render a decision ex aequo et bono in lieu of a strict legal decision
absent explicit authorization by the parties, then the decision and award may be set aside in
its entirety.105
64 Conversely, if the arbitral tribunal renders a legal decision in lieu of a decision ex aequo et bono
as requested by the parties, the award can only be set aside on exceptional grounds.
65 There are very few cases in which a decision rendered on the basis of existing law is actually
inequitable.106 In addition, a case in which the arbitral tribunal wanted to render a legal deci97
98
99
100
101
102
103
104
105
106

Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 22 (53); MnchKommZPO-Mnch (2013),
1051 para. 44.
OLG Mnchen 22.06.2005, SchiedsVZ 2005, 308.
MnchKommZPO-Mnch (2013), 1051 para. 48, appears to be in favour of such an interpretation
despite his postulation for a crystal-clear agreement.
MnchKommZPO-Mnch (2013), 1051 para. 56; Stein/Jonas-Schlosser (2002), 1051 para. 10; Lew/
Mistelis/Krll (2003), para. 18-93; Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 22 (53).
MnchKommZPO-Mnch (2013), 1051, para. 56 (only a legal solution is an adequate solution); different opinion Schulze, FS Kaissis (2012), 875 (884) [limits are 138, 242 BGB and ordre public exception]; Stein/Jonas-Schlosser (2002), 1051 para. 9.
Under the old law BGH 26.09.1985, NJW 1986, 1436 (1437); OLG Mnchen 22.06.2005, SchiedsVZ
2005, 308; Musielak-Voit (2013), 1051 para. 5; Hausmann, FS-Stoll (2001), p. 593 (601); Reithmann/
Martiny (eds.), (2004), para.3518; Stein/Jonas-Schlosser (2002), 1051 para. 9; Zller-Geimer (2014),
1051 para.7.
Geimer (2009), IZPR para.3875; Musielak-Voit (2013), 1051 para. 5; Zller-Geimer (2014), 1051
para.8.
1051 Schmaltz
317
sion, but where the award rendered contravenes mandatory provisions of the law or has failed
to observe such provisions, does not per se constitute sufficient grounds for setting aside of
the award.107 It may happen that an arbitral tribunal is mistaken when applying conflict of
laws rules in order to determine the rules applicable to the merit of the dispute. Yet, the award
will usually not be vacated, provided the arbitral tribunal is only incorrect and not arbitrary
or not entirely unfounded.108
H.
Terms of the Contract and Relevant Trade Practices (1051 (4) ZPO)
1051 (4) ZPO suggests that the tribunal must decide in accordance with the contractual 66
provisions agreed by the parties and must take into account relevant trade practices. It appears self-evident that the arbitral tribunal must decide in accordance with the terms of
the contract. To take trade usages into account corresponds to undisputed and established
practice in international arbitration.109 However, trade usages apply only to the extent they do
not contravene mandatory law at the place of the arbitration.110
The effect of this provision is largely limited to (i.) codifying the universally recognised 67
principle pacta sunt servanda,111 (ii.) providing that the terms of the contract must always
prevail over trade usages and (iii.) confirming that agreements of the party and trade usages
supersede even those decisions rendered ex aequo et bono.
In many commercial arbitrations, the arbitral tribunal begins its analysis with the terms of the 68
contract and reverts to it as the central point of deliberations.112
However, 1051 (4) ZPO stresses that even in cases where an arbitral tribunal decides ex 69
aequo et bono, the arbitral tribunal is not allowed to divert from the terms of the contract and
shall take into account the trade practices applicable to the commercial transaction underlying the agreement.113
107
108
109
110
111
112
113

Gottwald, Die sachliche Kontrolle internationaler Schiedssprche durch staatliche Gerichte, in: Habscheid (ed.), FS-Nagel, 1987, p. 54 (62); Sandrock, Zgigkeit und Leichtigkeit vs. Grdlichkeit, JZ 1986,
374 arguing against BGH 26.09.1985, NJW 1986, 1436; Hausmann, FS-Stoll (2001), p. 593 (601);
BeckOK ZPO/Wilske (2013), 1051 para. 15.
Junker, FS-Sandrock (2000), p. 443 (458); Stein/Jonas-Schlosser (2002), 1051 para. 10; Zuberbhler/
Mller/Habegger-Besson (2005), Art. 33, paras 39 seq.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 22 (53); BeckOK ZPO/Wilske (2013),
1051, para. 13; Musielak-Voit (2013), 1051 para. 8; MnchKommZPO-Mnch (2013), 1051 para.41;
Stein/Jonas-Schlosser (2002), 1051 para. 10; Thomas/Putzo-Reichold (2013), 1051 para. 8; Lepschy
(2003), p. 199; Zller-Geimer (2014), 1051 para.10.
Kronke, RIW 1998, 257 (263); Junker, FS-Sandrock (2000), p. 443 (458); MnchKommZPO-Mnch
(2013), 1051, paras 38, 40.
Lew/Mistelis/Krll (2003), para. 18-6; Redfern/Hunter (2009), paras 3.01 et seq., paras 3.88 et seq.
1051 para. 23; Musielak-Voit (2013), 1051 para. 1, 8; Stein/Jonas-Schlosser (2002), 1051 para.10;
Saenger, ZPO (2013), 1051 para. 1; Thomas/Putzo-Reichold (2013), 1051 para.5; Weigand-Trittmann/
Duve (2002), UNCITRAL Arbitration Rules, Art. 33 para. 7.
1052 Decision Making by Panel of Arbitrators

(1) In arbitral proceedings with more than one arbitrator, any decision of the arbitral
tribunal shall be made, unless otherwise agreed by the parties, by a majority of all its
members.
(2) If an arbitrator refuses to take part in the vote on a decision, the other arbitrators
may take the decision without him, unless otherwise agreed by the parties. The
parties shall be given advance notice of the intention to make an award without the
arbitrator refusing to participate in the vote. In the case of other decisions, the parties shall subsequent to the decision be informed of the refusal to participate in the
vote.
(3) Individual questions of procedure may be decided by the presiding arbitrator alone
if so authorised by the parties or all members of the arbitral tribunal.
Short Bibliography: Gleiss/Helm, Beratungsgeheimnis im Schiedsgerichtsverfahren, MDR 1969,
93; Habscheid/Calavros, Aus der hchstrichterlichen Rechtsprechung zur Schiedsgerichtsbarkeit,
KTS 1979, 1; Hanefeld, Country Report Germany, in: Weigand (Hrsg.), Practitioners Handbook on
International Commercial Arbitration, Oxford 2010; Holtzmann/Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration, Deventer 1989; Lachmann, Handbuch
fr die Schiedsgerichtspraxis, Kln 2008; Lionnet/Lionnet, Handbuch der internationalen und
nationalen Schiedsgerichtsbarkeit, Stuttgart Berlin 2005; Lrcher, Verfahren im Verfahren bei der
Einschaltung von Experten, in: Nicklisch (ed.), Der Experte im Verfahren, Mnchen 2006, p. 39;
Mistelis, Confidentiality and Third Party Participation, Arb.Int. 2005, 211; Prtting, Zur Rechtsstellung des Schiedsrichters dargestellt am richterlichen Beratungsgeheimnis, in: Gottwald/Prtting
(eds), FS-Schwab, 1990, p.409; Schlosser, Befugnisse und Pflichten des Schiedsgerichtsobmanns,
SchiedsVZ 2003, 1; Schlosser, Das Recht der internationalen privaten Schiedsgerichtsbarkeit, Tbingen 1989; Schtze, Das Zustandekommen des Schiedsspruchs, SchiedsVZ 2008, 10; Schtze,
Dissenting Opinions im Schiedsverfahren, in: Heldrich (ed.), FS-Nakamura, 1996, p.525; Schwab/
Walter, Schiedsgerichtsbarkeit, Mnchen 2005; Wagner, in: Weigand (Hrsg.), Practitioners Handbook on International Arbitration, Mnchen/Copenhagen 2002; Wieczorek/Schtze, Zivilprozessordnung und Nebengesetze, Berlin 1995.
I.
II.
III.
IV.
V.
Para.
Mandatory Requirements of Provision . . . 4
Decision Making by Majority (
1052(1) ZPO) . . . . . . . . . . . . . . . . . . . . . . . . . . 5
A. Majority Principle. . . . . . . . . . . . . . . . . . . . 5
B. Procedure of Deliberations and
Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Refusal of an Arbitrator to Participate
in the Voting ( 1052(2) ZPO) . . . . . . . . . 12
Para.
VI. Authorisation of the Presiding
Arbitrator to Decide on Individual
Questions of Procedure (1052(3)
ZPO) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
A. Basis of Authority to Decide . . . . . . . . . 14
B. Restriction on Procedural
Questions . . . . . . . . . . . . . . . . . . . . . . . . . . 15
C. Restriction on Individual
Procedural Questions . . . . . . . . . . . . . . . 16
1052 von Schlabrendorff/Sessler
I.
319
The provision sets out the basic procedure applying to the decision making of an arbitral 1
tribunal that consists of a panel of more than one arbitrator. Beyond these basic principles,
if the parties have not agreed otherwise, the decision making is subject to the discretion of
the arbitral tribunal. Subsection1 establishes the self-evident principle that all decisions to
be made by a panel of arbitrators shall be made by a majority. Subsection2 provides that an
arbitral tribunal may take decisions, even if one of the arbitrators refuses to take part in the
voting. Subsection3 covers the issue of the authority of the chairman of the tribunal to take
decisions with regard to questions of procedure.
According to the explicit wording of 1052 Code of Civil Procedure (Zivilprozessordnung 2
ZPO), the provision applies to any decision made by the arbitral tribunal. Thus, not only
the various types of arbitral awards2 but also procedural orders3 and informal notices are
generally to be decided by a majority of the members of the arbitral tribunal.
II.
Legislative History
Subsections1 and 3 largely correspond to Article29 of the UNCITRAL Model Law on In- 3
ternational Commercial Arbitration (ML). In contrast to the former 1038ZPO pre-1998,
subsection1 applies to any decision, not only to the voting on the award. Subsection2, dealing with cases where an arbitrator refuses to take part in the voting, represents a self-standing
solution of the German legislator that goes beyond Article29 ML.
III. Mandatory Requirements of Provision

Whilst subsections1 and 2 explicitly state that the parties are free to agree otherwise, subsec- 4
tion3 is silent in this regard. According to one legal commentator,4 who bases his argumentation on a grammatical interpretation of 1052 (3) ZPO, the power of the arbitrators to
authorise the chairman to decide individual questions of procedure cannot be limited by
the parties. This view, however, undervalues the importance of the fundamental principle
of party autonomy in commercial arbitration.5 The authors are not aware of any published
German court precedents to date on this issue.
IV. Decision Making by Majority ( 1052 (1) ZPO)

A.
Majority Principle
Subsection 1, which establishes the principle of majority decision making, applies not 5
only to the voting on the award but also to any decision that the arbitral tribunal may take,
whether of a substantive or procedural nature. Unless otherwise agreed by the parties, an
absolute majority of all members of the tribunal is required. However, if the tribunal fails to
reach the required majority, i.e. because of a split decision, the arbitral tribunal shall issue an
order for the termination of the arbitral proceedings in accordance with 1056 (2) No.3
1
2
3
4
5
Cf. infra, von Schlabrendorff/Sessler, 1055 paras7 et seq.
Cf. Stein/Jonas-Schlosser (2002), 1054 para.3; Schwab/Walter (2005), Ch.16 para.56.
BeckOKZPO/Markert (2013), 1052 para.27; cf. also Schlosser, SchiedsVZ 2003, 1 (8) who emphasizes
that the parties are the masters of the arbitral proceedings and may decide about the division of work
between the presiding arbitrator and the arbitral tribunal in accordance with their ideas.
320
ZPO.6 The rules laid down in the 10th Book of the ZPO after the law reform, in line with the
Model Law, do not provide the chairman of the arbitral tribunal with a tie-breaking vote in
the event of deadlock. This is because such a provision is considered to potentially deprive
the other members of the arbitral tribunal of adequate influence on decisions to be taken;
a tie-breaking mechanism could impede efforts to reach an amicable decision.7 However,
under subsection1 the parties are free to opt for other solutions and to agree, i.e. as provided
for in Article31(1) of the ICC Rules of Arbitration, on giving the presiding arbitrator the
authority to decide alone in instances of deadlock.8
6 Provided that the parties have not agreed on anything specific in this respect, the internal
decision making procedure is entirely in the discretion of the arbitrators. It is in the hands of
all arbitrators or the majority to decide when the proceedings have come to a point where the
internal deliberations of the arbitral tribunal should be terminated and an award be made.9
See infra, von Schlabrendorff/Sessler, 1054 paras 19 seq. on dissenting opinions.
B.
Procedure of Deliberations and Voting
7 No formal requirements are prescribed by statute regarding the procedure to be followed

by a panel of arbitrators in its deliberations and voting.10 Therefore, it is considered to be the
prerogative and task of the chairman to organize this process. Guidance as to the organisation of the deliberations and the voting procedures may be garnered from the UNCITRAL
Notes on Organizing Arbitral Proceedings, as well as from the relevant provisions of the
German Act on the Constitution of the Courts (Gerichtsverfassungsgesetz GVG). Both
the deliberations and the voting may be conducted at the arbitral tribunals discretion by
oral discussion, correspondence, telephone, video-conferencing, e-mail or other means of
telecommunication.11
8 The arbitral tribunal also decides if it is necessary in its deliberations to consult any third
parties such as technical or legal experts, e.g. the latter on a law the arbitrators are not familiar
with.12 If the arbitral tribunal appoints an expert not only for the purpose of assisting it in understanding certain technical issues but for the purpose of establishing the facts of the case, it
becomes a paramount procedural requirement that the parties right to be heard is observed
in all phases of the procedure involving the expert. The arbitral tribunal will then typically
6
7
8
9
10
11
12
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 53; in case of more than two opinions
concerning the quantum of a claim a number of legal writers propose to follow the voting rule for courts
in 196 (2) GVG, which provides for the allocation of the vote for the highest amount to the nextlower amount until a majority vote is reached: Baumbach/Lauterbach (2014), 1052 para. 2; Stein/
Jonas-Schlosser (2002), 1052 para.1; Schwab/Walter (2005), Ch.19 para.1; Weigand-Wagner (2002),
Germany, para.326.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.54; Lionnet/Lionnet (2005), p.385.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.54; Schlosser (1989), para.682; WeigandWagner (2002), Germany, para.325; cf. history of Article29 ML at Holtzmann/Neuhaus (1989), p.808.
OLG Hamburg 08.12.1960, KTS 1961, 174 (175); Holtzmann/Neuhaus (1989), p.809.
Schtze, SchiedsVZ 2008, 10 provides practical examples on how to deal with differing views as to the
interpretation of the applicable law and legal or factual aspects.
OLG Hamburg 14.05.1964, MDR 1965, 54; Zller-Geimer (2014), 1052 para.2; Musielak-Voit (2013),
1052 para.1; Lachmann (2008), para.1680. MnchKommZPO-Mnch (2013), 1052 para.2 consents,
but believes that bilateral telephone calls might not be sufficient.
BGH 18.01.1990, NJW 1990, 2199; Baumbach/Lauterbach (2014), 1052 para. 4; Schwab/Walter
(2005), Ch.19 para.3.
321
not only consult the parties prior to the appointing of the expert, but will also involve the
parties in the process of defining the terms of reference of the expert. The tribunal will invariably give the parties the opportunity to submit comments on the experts report and ask
him questions. What is required in terms of observing the parties right to be heard must be
determined in each individual instance. However, it is clear that the process of involving an
expert significantly changes the process of the deliberations of the arbitral tribunal and its
communication with the parties.
The information of the parties is extremely important as on the one hand the parties must 9
be aware of all the facts that the arbitral tribunal bases its decision on. On the other hand,
the parties ultimately must bear the costs of the consultation.13 Additionally, the information
about the consultation constitutes a precondition for the parties to exercise their right pursuant to 1049 (2) ZPO, whereby the parties can request the participation of the expert in the
oral hearings in order to have the opportunity to put questions to him. If the consultation is
meant to be of an advisory nature only, for example if the expert merely explains or illustrates
certain issues to the arbitrators, the arbitral tribunal may still be required to inform the parties
if the parties right to be heard requires such a notice.
In any case there are certain limits regarding availing of the assistance of third parties. A third 10
party that is consulted may not exercise any of the arbitrators key responsibilities, i.e. the expert is allowed to explain (but not determine) the facts of the case, nor may he proceed with a
legal evaluation.14 Since the arbitral tribunal is to resolve the dispute, the arbitral tribunal may
not merely endorse a decision prepared by an external legal expert.15 On the other hand, it
does not offend the ordre public international if a legal expert participates in the deliberations
and gives advice on the evaluation of evidence and the legal assessment of the case.16 An
assistant may also draft the award as long as it is based on the arbitral tribunals assessment of
the matter.17 In essence, it can be said that the participation of an advisor becomes inadmissible if he in effect becomes an additional member of the arbitral tribunal.
It is a fundamental principle in German jurisprudence that the arbitrators must preserve the 11
secrecy of the deliberations.18 Records and documents originating from the deliberations
also fall within the scope of this obligation because they disclose the internal process of
the deliberations.19 An arbitrator may not be examined as a witness in court if by testifying
13
14
15
16
17
18
19
Lrcher, in: Nicklisch (ed.) (2006), p.39 (44).

BGH 22.05.1957, ZZP 1958, 427 (435) = BB 1957, 689; OLG Dsseldorf 27.10.1975, BB 1976, 251;
Schwab/Walter (2005), Ch.19 para.2; Wieczorek/Schtze-Schtze (1995), 1038 para.2; dissenting
Musielak-Voit (2013), 1052 para.2 who believes that any such involvement of a foreign legal consultant
should be part of the procedure of taking evidence. MnchKommZPO-Mnch (2013), 1052 para.5
favours the latter approach as well.
OLG Dsseldorf 27.10.1975, BB 1976, 251; Habscheid/Calavros, KTS 1979, 1 (7); Stein/Jonas-Schlosser
(2002), 1042 para.2.
BGH 18.01.1990, NJW 1990, 2199.
BGH 18.01.1990, NJW 1990, 2199; Baumbach/Lauterbach (2014), 1052 para.4; Musielak-Voit (2013),
1054 para.5.
BGH 05.05.1986, NJW 1986, 3077 (3078); OLG Mnchen 23.10.2006 (34 SchH 8/06 (1)); Gleiss/
Helm, MDR 1969, 93; Mistelis, Arb.Int. 2005, 211; Lachmann (2008), para.1695; Prtting, FS-Schwab
(1990), p.409 (415); Peltzer (1999), pp.67 et seq.
Baumbach/Lauterbach (2014), 1052 para. 5; HK-ZPO-Saenger (2013), 1052 para. 3; Prtting,
FS-Schwab (1990), p.409 (417); cf. also Haller, Vorlagepflicht von Schiedsrichterakten im staatlichen
berprfungsverfahren, SchiedsVZ 2011, 179 (180 et seq.) who argues that a state court which is called
to review an arbitral award may not order the submission of the file(s) of the arbitral tribunal.
322
he would violate his duty to preserve the secrecy of the deliberations.20 This principle also
protects the interests of the arbitrators.21 Even if the parties unanimously ask an arbitrator
to testify before a court on an issue of the deliberations of the arbitral tribunal, the arbitrator
may not do so unless all members of the arbitral tribunal consent,22 i.e. none of the arbitrators
can be forced to testify even by a majority decision of the others. If an infringement of the
requirement of secrecy of deliberations has possibly had an impact on the decision made, this
may justify the setting aside of an award pursuant to 1059 (2) No.1 (d) ZPO.23
V.
Refusal of an Arbitrator to Participate in the Voting ( 1052(2) ZPO)
12 Pursuant to this provision, an arbitrator who refuses to take part in the voting without a valid
reason cannot hinder the majority to take a decision, be it the award or a procedural decision. A valid reason for not participating could be the factual or legal inability to participate,
cf. 1038 (1) sentence1 ZPO. If one of the arbitrators is only temporarily hindered from
participating but nevertheless willing to participate in general, subsection2 does not apply.24
If the arbitrator who refuses to vote resigns from his position during the deliberations, the remaining arbitrators cannot continue with the proceedings.25 Subsection2 draws a distinction
between deliberations and voting because this provision only applies if the deliberations have
been concluded and the arbitrator refuses to participate in the voting.26 In practise, however,
it can be difficult to draw a clear distinction; an arbitrator may abstain from participating in
the deliberations, thereby trying to block any further progress of the arbitral tribunals work.
In such instance, a formal meeting of the arbitral tribunal should be organised and a note or
minutes should be made to state the time at which the deliberations were concluded (with
or without the participation of the arbitrator concerned) and at which point in time the nonparticipating arbitrators behaviour resulted in a refusal to vote.27
13 Whenever a decision on an award is to be taken with an arbitrator refusing to participate
in the vote, the law requires that the parties to the proceedings must be informed before a
decision is made. No similar obligation is contained in the UNCITRAL Model Law. The
purpose of this requirement is to give the parties sufficient opportunity to take action affecting the arbitrator concerned, such as persuading the arbitrator to cooperate or terminating
20
21
22
23
24
25
26
27
RG 18.12.1896, RGZ 38, 410 (412); id. 16.05.1930, RGZ 129, 15 (17); BGH 23.01.1957, BGHZ 23,
138 (140); MnchKommZPO-Mnch (2013), 1052 para.4; Schwab/Walter (2005), Ch.19 para.5;
Prtting, FS-Schwab (1990), p.409 (417).
BGH 23.01.1957, BGHZ 23, 138 (141); Baumbach/Lauterbach (2014), 1052 para.5; MnchKommZPO-Mnch (2013), 1052 para.5; Musielak-Voit (2013), 1052 para.3.
RG 16.05.1930, RGZ 129, 15 (18); Lachmann (2008), para.1695; MnchKommZPO-Mnch (2013),
1052 para.4; Schwab/Walter (2005), Ch.19 para.5; Thomas/Putzo-Reichold (2013), 1052 para.2;
Wieczorek/Schtze-Schtze (1995), 1038 para.2; Lionnet/Lionnet (2005), p.457 consider the secrecy
of the deliberations and the voting as a right of the arbitrator, which secures his independent different
opinion; Prtting, FS-Schwab (1990), p.409 (419) argues that even with the consent of all participants
none of the arbitrators may be heard as witness.
Peltzer (1999) p.60; cf. Schtze, FS-Nakamura (1996), pp.525 (535 et seq.) to the former 1041 ZPO;
dissenting Schlosser (1989), para.497.
Schtze, SchiedsVZ 2008, 10 (13). According to Schtze, ibid., subsection2 does not apply either if the
refusing arbitrator is of the opinion that further evidence needs to be taken or that the applicable law
needs to be clarified in more detail before the case can be decided.
323
the arbitrators mandate pursuant to 1038, 1039 ZPO.28 Thus, the period of time between
the advance notice of the intention to make the award without the arbitrator refusing to
participate in the vote and the issuance of the award must be sufficiently long enough to
enable the parties to take appropriate steps.29 In all other cases, i.e. where the decision to be
taken does not concern the award to be issued, it is not mandatory to notify the parties in
advance of any refusal of an arbitrator to participate in the vote. According to the commentary accompanying the parliamentary bill, it is even deemed to be admissible to include such
notification in the final award without giving the parties any prior notice.30 Any failure to
inform the parties according to subsection2 provides a reason for setting aside the award
if the refusal of an arbitrator to participate in the voting potentially influenced the decision
rendered in the award, 1059 (2) No.1 (d) ZPO.31
VI. Authorisation of the Presiding Arbitrator to Decide on Individual Questions

of Procedure (1052(3) ZPO)
A.
Basis of Authority to Decide
The authority of the presiding arbitrator to decide on procedural matters may be granted to 14
him by individual agreement of the parties (1029 (1) ZPO), by way of agreement of the
parties on the applicable arbitration rules (1042 (3) ZPO) or by a unanimous decision of
all arbitrators.
B.
Restriction on Procedural Questions
It is presumed by the German legislator32 and widely recognised that it is the presiding 15
arbitrators prerogative to organize the proceedings in an expedient manner.33 The explicit
authorisation of the chairman under subsection3 goes beyond this, but is strictly limited
to decisions concerning the formal structuring of the proceedings, which according to
the commentary accompanying the parliamentary bill includes decisions on time delays,
language of the proceedings, appointment of experts, order of hearing of witnesses, etc.34
However, it is doubtful that decisions as fundamental as the language of the proceedings35
28
29
30
31
32
33
34
35
OLG Saarbrcken 29.10.2002 (4 Sch 02/02) = (2003) Int.A.L.R. N-60 = SchiedsVZ 2003, 92 (93);
In OLG Saarbrcken 29.10.2002 (4 Sch 02/02), the award was set aside because the notice of the intention to make the award without the arbitrator who refused to participate had not reached the parties
when the award was issued. The decision also illustrates the importance to explicitly inform the parties
about the intention to make the award without the unwilling arbitrator. According to the court, it was not
sufficient that, prior to the issuance of the award, the parties were informed about the arbitrators refusal
to participate and the party who had nominated the arbitrator attempted to persuade him to cooperate.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.54; Thomas/Putzo-Reichold (2013), 1052
para.3; dissenting MnchKommZPO-Mnch (2013), 1052 para.17; Baumbach/Lauterbach (2014),
1052 para.7 (the parties should be notified immediately rather than in the award).
OLG Saarbrcken 29.10.2002 (4 Sch 02/02); Baumbach/Lauterbach (2014), 1052 para.9.
Weigand-Wagner (2002), Germany, para.160. Cf. also BeckOKZPO/Markert (2013), 1052 para.25
(the purpose of 1052 (3) ZPO is to expedite the proceedings).
Dissenting Schlosser, SchiedsVZ 2003, 1 (9) who argues that it should be possible to authorise the presiding arbitrator to decide alone upon the language of the arbitral proceedings.
324
or the appointment of experts could still be covered by such authorisation.36 Certainly, such
authority cannot extend to substantive decisions on the merits or on jurisdictional issues, or
to any interim measures (1041 ZPO) to be taken. Although an order of an arbitral tribunal
pursuant to 1056 (2) ZPO is not considered to concern any substantive issues, in view of
the fundamental importance of such an order it is nevertheless agreed that it requires a joint
decision of all arbitrators to be passed by a majority vote.37 The same applies to the decision
of the arbitral tribunal as to the place of arbitration.38
C.
Restriction on Individual Procedural Questions
16 This rule determines that each authorisation has to refer to a particular issue a limitation
that is not found in Article29 sentence2 ML. Neither the parties nor the other members
of the tribunal may defer power en bloc to the presiding arbitrator on all procedural issues.39
Background for this restriction on individual procedural issues is that almost all decisions
except the award itself and the decision on jurisdiction concern procedural questions and
that, therefore, the German lawmaker wanted this point to be clarified.40 The authorisation
under 1052 (3) ZPO is not subject to any requirement of form, but it would be advisable to
record it in a note for evidentiary purposes.41
36
37
38
39
40
41

Zller-Geimer (2014), 1052 para. 7; MnchKommZPO-Mnch (2013), 1052 para. 14; dissenting
Weigand-Wagner (2002), Germany, para.160 who considers this decision to be a minor detail of an
arbitrators work.
However, MnchKommZPO-Mnch (2013), 1052 para.14 argues that a general authorisation, which is
not limited to individual questions, should be possible.
Stein/Jonas-Schlosser (2002), 1052 para.5. For a discussion if and to what extent an authorisation may
be given impliedly or retroactively see BeckOKZPO/Markert (2013), 1052 para.32. Cf. also WeigandHanefeld (2010), Germany, para.7.69 (regarding fundamental procedural decisions, the chairman needs
specific authority to act individually).
325
1053 Settlement
(1) If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal
shall terminate the proceedings. If requested by the parties, it shall record the settlement in the form of an award on agreed terms, unless the contents are in violation of
public policy (ordre public).
(2) An award on agreed terms shall be made in accordance with 1054 and shall state
that it is an award. Such an award has the same effect as any other award on the
merits of the case.
(3) If notarial certification is required for a declaration to be effective, it will be substituted, in the case of an award on agreed terms, by recording the declaration of the
parties in the award.
(4) An award on agreed terms may, upon agreement by the parties, also be declared
enforceable by a notary whose notarial office is in the district of the court competent for the declaration of enforceability according to 1062 (1) No.2. The notary
shall refuse the declaration of enforceability, if the requirements of subsection1,
sentence2 are not complied with.
Short Bibliography: Berger, Das neue Schiedsverfahrensrecht in der Praxis Analyse und aktuelle
Entwicklungen, RIW 2001, 7; Bilda, Beendigung des Schiedsverfahrens durch Vergleich: Probleme
des Schiedsspruchs mit vereinbartem Wortlaut, DB 2004, 171; Bredow, Schiedsspruch mit vereinbartem Wortlaut Form und Inhalt, SchiedsVZ 2010, 295; Busse, Der Schiedsvergleich als verfahrensrechtliche Falle, SchiedsVZ 2010, 57; Eidenmller, Hybride ADR-Verfahren bei internationalen
Wirtschaftskonflikten, RIW 2002, 1; Gerstenmaier, Beendigung des Schiedsverfahrens durch Beschluss nach 1056ZPO, SchiedsVZ 2010, 281; Grziwotz, Mediationsvergleich Nachgeformter
Schiedsvergleich?, MDR 2001, 305; Henn, Schiedsverfahrensrecht, Heidelberg 2000; Holtzmann/
Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration, Deventer 1989; Kreindler, Settlement Agreements and Arbitration in the Context of the ICC Rules, (1998)
9(2) ICC ICArb. Bull. 22; Lachmann, Handbuch fr die Schiedsgerichtspraxis, Kln 2008; Lionnet/
Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit, Stuttgart Berlin
2005; Lrcher, Mediation. Rechtskraft ber Schiedsspruch mit vereinbartem Wortlaut?, DB 1999,
789, Lrcher, Schiedsspruch mit vereinbartem Wortlaut Notizen zur Vollstreckbarkeit im Ausland,
RPS 2/2000, 2; Mack, Vollstreckungsabwehrklage und 1053 Abs. 4 ZPO. Zur Zustndigkeit fr
Vollstreckungsabwehrklagen bei notarieller Vollstreckbarerklrung eines Schiedsspruchs mit vereinbartem Wortlaut, IDR 2006, 36; Mankowski, Der Schiedsspruch mit vereinbartem Wortlaut, ZZP
2001, 37; Raeschke-Kessler, Der Vergleich im Schiedsverfahren, in: Plantey/Bckstiegel/Bredow
(eds), FS-Glossner, 1994, p.255; Raeschke-Kessler/Berger, Recht und Praxis des Schiedsverfahrens,
Kln 1999; Rtzel/Wegen/Wilske, Commercial Dispute Resolution in Germany, Mnchen 2005;
Saenger, Die Vollstreckung aus Schiedsvergleich und Schiedsspruch mit vereinbartem Wortlaut,
MDR 1999, 662; Schroeter, Der Schiedsspruch mit vereinbartem Wortlaut als Formquivalent zur
notariellen Beurkundung, SchiedsVZ 2006, 298; Schtze, Ausgewhlte Probleme des deutschen
und internationalen Schiedsverfahrensrechts, Kln 2006; Schtze/Tscherning/Wais, Handbuch des
Schiedsverfahrens Praxis der deutschen und internationalen Schiedsgerichtsbarkeit, Berlin 1990;
Spohnheimer, berlegungen zur Dogmatik des schiedsgerichtlichen Vergleichs und des Schiedsspruchs mit vereinbartem Wortlaut, in: Geimer/Schtze (eds), FS-Kaissis, 2012, p.933; Trittmann/
Merz, Die Durchsetzbarkeit des Anwaltsvergleiches gem 796a ff. ZPO im Rahmen des EuG-
326
V/Lug, IPRax 2001, 178; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005; Wagner, in:
Weigand (Hrsg.), Practitioners Handbook on International Arbitration, Mnchen/Copenhagen
2002; Wieczorek/Schtze, Zivilprozessordnung und Nebengesetze, Berlin 1995.
Para.
A. UNCITRAL Model Law Provisions . . 2
B. Former Provisions of the German
Arbitration Law . . . . . . . . . . . . . . . . . . . . . . 5
III. Means of Termination . . . . . . . . . . . . . . . . . . . 6
A. Termination of the Proceedings
Pursuant to 1053 (1)
sentence1, 1056(2) ZPO . . . . . . . . . . . . 7
1. Settlement between the Parties . . . . 8
2. Termination of the Proceedings . . 16
B. Award on Agreed Terms Pursuant
to 1053 (2) sentence1 ZPO . . . . . . . 19
1. Ratio of Award on Agreed Terms . 19
2. Form and Content of an Award
on Agreed Terms. . . . . . . . . . . . . . . . . 20
I.
II.
I.
Para.
3. Procedure of Rendering an
Award on Agreed Terms. . . . . . . . . . 30
4. Effect of an Award on Agreed
Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
IV. Award on Agreed Terms in Lieu of
Notarial Certification . . . . . . . . . . . . . . . . . . . 38
V. Authority of Notaries to Declare an
Award on Agreed Terms Enforceable . . . . 40
A. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
B. Procedural Issues . . . . . . . . . . . . . . . . . . . 41
C. Admissibility of Appeal against the
Notarial Declaration . . . . . . . . . . . . . . . . 44
D. Competent Court for Opposing
Execution of Notarial Declaration . . . 47
VI. Setting Aside an Award on Agreed
Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
1 This provision addresses the issue of termination of arbitral proceedings by settlement. A

settlement may be entered into by the parties in the form of a contract concluded outside of
the arbitral proceedings or in the special form of an award on agreed terms. The provision
also provides specific rules facilitating the enforcement of such awards by allowing for the
possibility of a notarial declaration of enforceability. As arbitral proceedings are frequently
terminated by settlement though reliable figures are hardly available2 the practical significance of this provision should not be underestimated.
II.
Legislative History
A.
UNCITRAL Model Law Provisions
2 Subsection1 corresponds to Article30 (1) of the UNCITRAL Model Law on International

Commercial Arbitration (ML). However, in contrast to the Model Law, 1053 (1) Code of
Civil Procedure (Zivilprozessordnung ZPO) stipulates that the arbitral tribunal may only
refuse the parties request to render an award on agreed terms if the content of the recorded
1
2
Upon request, the authors received the following information from the German Institution of Arbitration
(DIS): In 2012, approximately 21% of all terminated DIS cases ended in an award on agreed terms/settlement (2011: approx. 17%; 2010: approx. 24%; 2009: approx. 29%). Cf. also Bredow, SchiedsVZ 2010,
295 (approx. 30% of DIS cases each year are terminated by an award on agreed terms); Dendorfer, Aktives
Vergleichsmanagement Best Practice oder Faux pas (sic!) schiedsrichterlicher Ttigkeit, SchiedsVZ
2009, 276 (277) (50% or less of all arbitration proceedings are terminated by settlement); Bckstiegel,
Germany, in: Sanders/Paulsson (eds), ICCA Handbook on Commercial Arbitration, National Reports
and Basic Legal Texts, The Hague 1998, p.1 (22) (two-thirds of domestic arbitrations in Germany are
terminated by settlement); Eidenmller, RIW 2002, 1 (2) (50%); Raeschke-Kessler, FS-Glossner (1994),
p.255 (257) (more than 50%).
327
settlement is in violation of public policy. In contrast to this restrictive provision, Article30

(1) ML gives the arbitral tribunal the power to refuse such confirmation without any further
stipulations on how such far-reaching discretional power should be exercised. In the opinion
of the German legislator, this approach to defining the powers of an arbitral tribunal was held
to be too extensive and too vague.3 However, it is to be noted that all criteria discussed in this
respect during the UNCITRALs and the Working Groups deliberations on Article30 ML
concerned considerations of public policy.4 The difference in the wording between Article30
(1) ML and 1053 (1) ZPO is therefore unlikely to be of material relevance in practice.
Subsection2 of 1053 ZPO is a verbatim adoption of Article30 (2) ML.
Subsections3 and 4 on the enforcement of arbitral awards relate to specific aspects of the 4
notarial function under German law and do not find any counterpart in the Model Law.5
Subsection3 is based on 127a Civil Code (Brgerliches Gesetzbuch BGB), whereas subsection4 modelled after 796c (1) ZPO intends to facilitate the enforcement of awards
on agreed terms, albeit the practical usefulness of this provision is uncertain.6
B.
Former Provisions of the German Arbitration Law
Pursuant to the former 1044a ZPO pre-1998, a settlement concluded in the context of 5
arbitral proceedings was akin to a settlement negotiated by lawyers or a court settlement. In
other words, such settlements were only enforceable if the parties had previously agreed to
this7 and had deposited8 the settlement agreement with the appropriate judicial authorities.
This procedure had several disadvantages, especially as it rendered international enforcement
almost impossible. Consequently, the main reason for replacing 1044a ZPO pre-1998 was
to ensure that a settlement negotiated between the parties and laid down in an award on
agreed terms could be more easily enforced in foreign jurisdictions.9 Under the rules laid
down in the 10th Book of the ZPO after the law reform, the procedure set out in the former
1044a ZPO pre-1998 has been completely abolished, as now all awards on agreed terms are
enforceable like any other award.10
III. Means of Termination

If the parties settle their dispute during the arbitral proceedings, they have two different 6
alternatives as to how the arbitral proceedings can be terminated. The parties can either request the arbitral tribunal to terminate the proceedings pursuant to 1053 (1) sentence1,
1056(2) ZPO, or, alternatively, to render an award pursuant to 1053 (1) sentence2 ZPO
confirming the settlement.
3
4
5
6
7
8
9
10

MnchKommZPO-Mnch (2013), 1053 para.1; see also infra, paras40 et seq.
See former 1044a (1) sentence1 ZPO pre-1998.
See former 1044a (1) sentence2 ZPO pre-1998.
OLG Frankfurt 28.06.1999, OLGR 1999, 294; consenting Krll, Das neue deutsche Schiedsrecht vor
staatlichen Gerichten, NJW 2001, 1173 (1180).
328
A.
Termination of the Proceedings Pursuant to 1053 (1) sentence1, 1056(2) ZPO
7 The arbitral proceedings can be terminated pursuant to 1053 (1) sentence1 ZPO only
if the parties have agreed on a settlement which resolves their dispute and if the additional
requirements of 1056 (2) ZPO (e.g. agreement by the parties to terminate the proceedings)
are fulfilled. 1053(1) sentence1 ZPO is not, by itself, a legal basis for the termination of the
proceedings. This is because this provision does not state in which manner the termination
shall be effected. Rather, 1056 ZPO conclusively regulates the procedural requirements
under which arbitral proceedings can be terminated, for example by an order of the arbitral
tribunal pursuant to the requirements of 1056 (2) ZPO.11
1.
Settlement between the Parties
8 It remains unclear from the wording of 1053 (1) ZPO which requirements a valid settlement must meet.
9 Opinion is divided as to whether the provision is to be construed to the effect that a settlement necessarily means that both sides make concessions. According to the only ruling
of a higher court dealing with this issue so far, which enjoys support amongst some legal
commentators, this question should be answered in the affirmative because the existence of
mutual concessions is considered a prerequisite for a valid settlement under German civil law
pursuant to 779(1)BGB.12 Other legal writers who disagree rightly emphasize the fact that
the term settlement within the meaning of 1053 ZPO must be interpreted autonomously
and not according to the requirements of domestic German civil law.13 The legislative history
of Article30 ML, on which 1053 ZPO is based, does not provide any indication of the
sort that a settlement requires concessions by both parties.14 To insist on this rather formal
prerequisite of substantive German law would prevent the parties from either acknowledging a claim in the form of an enforceable award or to terminate the arbitral proceedings on
this basis. In view of the decision of the Higher Regional Court (Oberlandesgericht OLG)
Mnchen and as a practical matter in order to avoid any risk whatsoever, it might nonetheless
11
12
13
14
Busse, SchiedsVZ 2010, 57 (58 seq.); cf. also BeckOKZPO/Markert (2013), 1053 para.6; HK-ZPOSaenger (2013), 1053 para. 2; Gerstenmaier, SchiedsVZ 2010, 281 (284). This also means that the
arbitral tribunal has to continue the proceedings if the atypical case arises that the parties reach a settlement, but fail to agree on how the proceedings shall be terminated, see Busse, ibid., (59 et seq.). Thus,
1053 (1) sentence 1 ZPO only describes the typical situation that the parties, next to substantively
settling the dispute, have agreed on ending their dispute also in terms of procedure pursuant to 1056
(2) ZPO.
OLG Mnchen 26.07.2005, GmbHR 2005, 1568 with consenting comment by Korte, EWiR 2006, 95;
MnchKommZPO-Mnch (2013), 1053 para. 9; Henn (2000), para. 400; Schtze/Tscherning/Wais
(1990), para.499; Schwab/Walter (2005), Ch.23 para.7; Spohnheimer, FS-Kaissis (2012), pp. 933 (935
seq.); regarding the old law of the ZPO: Wieczorek/Schtze-Schtze (1995), 1044a para.7; stricter Bilda,
DB 2004, 171 (173 et seq.). Musielak-Voit (2013), 1053 para.4 argues that it would depend on the
applicable substantive law whether mutual concessions were a prerequisite for a valid settlement. The
author alleges that German substantive law would require at least minor concessions.
Lachmann (2008), para.1807; Schtze (2006), p.201 (203); Saenger, MDR 1999, 662 (663); Mankowski, ZZP 2004, 37 (66); Schroeter, SchiedsVZ 2006, 298 (302 et seq.); HK-ZPO-Saenger (2013), 1053
para.2; Stein/Jonas-Schlosser (2002), 1053 para.2, who intends to grant the parties the possibility to
agree on a diplomatic settlement instead of having to acknowledge or waive the claim.
Bredow, SchiedsVZ 2010, 295 (297); Holtzmann/Neuhaus (1989), pp.822 et seq.
329
be advisable in particular if the settlement might one day have to be enforced in Germany
to have both parties to agree on concessions, even if they are of a most minor nature only.15
As to other requirements for a settlement as a basis for the termination of the arbitral pro- 10
ceedings, the following applies:
As regards the parties involved, the settlement must be entered into between the parties to 11
the proceedings. In case of a multi-party arbitration, however, it is not required that all parties
to the arbitral proceedings enter into a settlement. In such case, the tribunal terminates the
proceedings for the parties that sign the settlement and continues the proceedings with the
remaining parties.
A third party that is not a party to the arbitral proceedings may become a party to the set- 12
tlement agreement. The reason for this is that pursuant to 1053 (1) sentence1 ZPO, the
arbitral tribunal does not hand down a ruling on the merits of the case, but merely resolves
to terminate the arbitral proceedings. This does not affect any party, which is a party to the
settlement agreement without being a party to the arbitral proceedings.16
The temporal limitation requires that the settlement must be reached at some point dur- 13
ing the arbitral proceedings, in other words after their commencement, which pursuant to
1044 ZPO occurs on the date the request for arbitration is received by the respondent,17
but before their termination in accordance with 1056 ZPO, i.e. either by way of a final award
or by an order pursuant to 1056 (2) ZPO.18
It is essential that the settlement agreement actually relates to the subject matter in dispute 14
in the arbitral proceedings, albeit it is not a requirement that the settlement covers all issues
disputed in the arbitral proceedings.19 In the latter instance, however, in the absence of an
agreement between the parties stipulating otherwise, the arbitral tribunal must proceed with
the arbitration with respect to any issues outstanding. The parties are not restricted to include
only those issues in their settlement that have been the subject of the arbitral proceedings.20
If the arbitral tribunal finds that there is no valid settlement between the parties, it can declare 15
the arbitral proceedings terminated only on the basis of an agreement pursuant to 1056 (2)
No.2 ZPO or due to the parties failure to pursue the proceedings pursuant to 1056 (2)
No.3 ZPO.
2.
Termination of the Proceedings
As already stated above,21 the termination of the proceedings itself is subject to 1056 (2) 16
ZPO. Usually, while settling the dispute in substantive terms the parties will agree on the
termination of the proceedings (1056 (2) No.2 ZPO) or the claimant will withdraw his
claim ( 1056 (2) No.1(b) ZPO). If neither these requirements nor the requirements of
15
16
17
18
19
20
21

Musielak-Voit (2013), 1053 para.5; HK-ZPO-Saenger (2013), 1053 para.2.
Cf. s.6.1 DIS Rules pursuant to which the arbitral proceedings commence upon receipt of the statement
of claim by the DIS Secretariat.
Cf. s.39.1 DIS Rules which contains an almost identical provision.
MnchKommZPO-Mnch (2013), 1053 para.16; Mankowski, ZZP 2001, 37 (62 et seq.).
MnchKommZPO-Mnch (2013), 1053 para.17; cf. BGH 28.06.1961, NJW 1961, 1817 concerning a
settlement in court.
Cf. supra, para.7.
330
1056 (2) No.3 ZPO are fulfilled, the arbitral proceedings continue taking into account the
agreement reached of the substance of the matter.22
17 If the parties agree to settle their dispute without requesting an award on agreed terms, the
settlement agreement will not be enforceable under 1060 ZPO or the New York Convention 1958 respectively.23 If in such cases the special requirements under German law of a
settlement negotiated by lawyers are fulfilled, enforcement of such settlement can be sought
in accordance with the procedure laid down by 796a ZPO. However, the international
enforcement of such settlement raises issues even in the European context. For instance,
if the settlement has been previously declared enforceable by a court or a notary public in
one Member State, opinion is divided as to whether such a settlement negotiated by lawyers
is enforceable within the Member States of the European Union pursuant to Article 57
Regulation (EC) No 44/200124 in connection with Articles38 et seq. Regulation (EC) No
44/2001 or pursuant to Article25 Regulation (EC) No 805/2004 of 21 April 2004, creating
a European enforcement order for uncontested claims.25 The only certain way of enforcing a
settlement on the international level, therefore, is the existence of a bilateral treaty allowing
for its enforcement.26
18 Unless the parties expressly stipulate otherwise in the settlement agreement, the arbitral tribunal may apply by analogy the rule on cost allocation for settlements in court stipulated in
98 ZPO. According to this provision, the fees and disbursements of the arbitral tribunal are
to be split equally between the parties, while each of the parties shall bear its own legal costs
incurred by it in connection with the arbitral proceedings.27 Otherwise, the arbitral tribunal
allocates the costs of the proceedings pursuant to 1057 ZPO in conjunction with 1056
(2) No.2 ZPO.
B.
Award on Agreed Terms Pursuant to 1053 (2) sentence1 ZPO
1.
Ratio of Award on Agreed Terms
19 The main advantage of an award on agreed terms, compared to a settlement agreement, is

that an arbitral award on agreed terms can be enforced on the international level under the
New York Convention 1958 (NYC) like any other award. The parties can thereby avoid
uncertainties and complications as to the subsequent enforcement of the award.
22
23
24
25
26
27
Busse, SchiedsVZ 2010, 57 (59 et seq.); Gerstenmaier, SchiedsVZ 2010, 281 (284).
OLG Mnchen 12.02.2007 (unpublished); OLG Frankfurt 14.03.2003, SchiedsVZ 2003, 288.
Council Regulation No.44/2001 on Jurisdiction and the Recognition and the Enforcement of Judgements in Civil and Commercial Matters of 22 December 2000. This regulation will be replaced by
Regulation (EU) No 1215/2012 on 10 January 2015.
Cf. Musielak-Voit (2013), 796a para.1; MnchKommZPO-Wolfsteiner (2012), 796a para.1; Leutner/
Hacker, Zu Unrecht verschmht: Der vollstreckbare Anwaltsvergleich, SchiedsVZ 2012, 1318 (1322);
Stein/Jonas-Mnzberg (2002), 796a para.15; Trittmann/Merz, IPRax 2001, 178.
See for example Art. 12 (2) of the Convention between Germany and Austria on the Reciprocal
Recognition and Enforcement of Judgments, Settlements and Authentic Instruments in Civil and
Commercial Matters, signed at Vienna on 6 June 1959. However, according to Article 69 Regulation
(EC) No 44/2001, the regulation supersedes the convention between Germany and Austria to a large
extent. Cf. concerning the recognition and enforcement of an Austrian settlement in Germany BayObLG
05.07.2004, BayObLGR 2004, 381.
Musielak-Voit (2013), 1053 para. 6; MnchKommZPO-Mnch (2013), 1053 para. 43; HK-ZPOSaenger (2013), 1053 para.2; Lionnet/Lionnet (2005), p.405.
2.
331
Form and Content of an Award on Agreed Terms
a. Form: As to the form of an award on agreed terms, it is to be noted that 1053(2) sen- 20
tence1 ZPO refers to the general requirements for awards set out in 1054 ZPO. Hence,
just as in the case of any other award, an award on agreed terms must be in writing, signed by
the arbitral tribunal and specify the place and date of arbitration. The only difference is that
pursuant to 1054 (2) ZPO, an award on agreed terms does not need to contain a statement
of the reasons upon which the award is based.
In accordance with 1053 (2) sentence1 ZPO, it should be expressly stated in any award 21
on agreed terms that it is an award. Otherwise, difficulties might arise if the award can be
declared enforceable.28 Moreover, it is recommended to expressly specify an award on agreed
terms as such, since this may avoid confusion at a later stage.29
In contrast to the former 1044a ZPO pre-1998, pursuant to which an arbitral settlement 22
must be signed by the parties and the arbitrators,30 1053 (2) sentence1 ZPO avoids any
such special requirement and refers only to the general requirements for awards as stipulated
in 1054 ZPO. An award on agreed terms should therefore only be signed by the arbitrators.31 Otherwise doubts might arise as to whether or not the document has to be construed
as an award.
b. Contents: The rendering of an award on agreed terms requires an agreement by the parties to 23
mutually settle their dispute.32 However, the following specific aspects are worth mentioning.
As regards third parties involved, it is important to note that they may only become a party 24
to the settlement to be recorded in the form of an award on agreed terms if they also become a party to the arbitral proceedings.33 It is recommended to record the relevant partys
accession to the arbitration agreement and its joining the proceedings in the minutes of the
proceedings.
Opinion is sharply divided among German and international legal scholars on the issue of 25
whether it is possible for parties to mediation proceedings to have the settlement agreement
reached in such proceedings transformed into an enforceable award.34 It is suggested that
this can be done by appointing the mediator as arbitrator after a settlement agreement has
been reached and this arbitrator could then render an award on agreed terms. However, this
28
29
30
31
32
33
34

Zller-Geimer (2014), 1053 para. 6; HK-ZPO-Saenger (2013), 1053 para. 4; MnchKommZPOMnch (2013), 1053 para.31.
Cf. Wieczorek/Schtze-Schtze (1995), 1044a para.7.
MnchKommZPO-Mnch (2013), 1053 para.31; Bilda, DB 2004, 171 (176); Raeschke-Kessler, FSGlossner (1994), p.255 (265); dissenting Stein/Jonas-Schlosser (2002), 1053 para.6 it is admissible
and very appropriate for the parties or their lawyers to sign the award.
In respect of the requirements of a valid settlement see supra, paras8 et seq.
Lachmann (2008), para.1809; Musielak-Voit (2013), 1053 para.5; MnchKommZPO-Mnch (2013),
1053 para.12.
Consenting Stein/Jonas-Schlosser (2002), 1053 para.9; Musielak-Voit (2013), 1053 para.3; Thomas/
Putzo-Reichold (2013), 1053 para.1; Httler, Das fingierte Schiedsverfahren: Schiedsgerichtsbarkeit
zwischen Autonomisierung und Missbrauch, Kln 2007, pp. 22 et seq.; Lrcher, DB 1999, 789; Eidenmller, RIW 2002, 1 (6); Kraft, Mediation im Bereich des Wirtschaftsrechts, VersR 2000, 935 (939); sceptical Grziwotz, MDR 2001, 305; Berger, RIW 2001, 7 (16 et seq.); dissenting MnchKommZPO-Mnch
(2013), 1053 paras13 seq.; BeckOKZPO/Markert (2013), 1053 para.3; Bredow, SchiedsVZ 2010,
295 (297).
332
procedure appears to be incompatible with the wording of 1053 ZPO, which requires that
the parties settle the dispute during the arbitral proceedings, which is obviously not the case
if the parties agree on a settlement in the course of mediation proceedings and only subsequently commence arbitral proceedings for the sole purpose of obtaining an enforceable
award. Furthermore, such procedure appears to be in contradiction to ArticleII (1) NYC,
which provides for the recognition of an arbitration agreement under which the parties
undertake to submit to arbitrate any differences, which have arisen or which may arise in
respect to a defined legal relationship and that concerns a matter capable for settlement
by arbitration. Thus, a member state is obliged under the New York Convention 1958 to
recognise and enforce only such awards which have been rendered in proceedings where the
arbitral tribunal had jurisdiction to decide on a contentious matter, i.e. if the dispute was still
unsettled (difference) when the arbitral tribunal was appointed.35
26 Nevertheless, for practical reasons it is argued that the parties should be allowed to obtain an
award on agreed terms even in cases where the settlement agreement is finalized before the
request for arbitration is filed.36 Otherwise, the parties might consider themselves obliged to
conduct mock arbitral proceedings over a dispute that has already been settled. One way of
avoiding the problem of reaching a settlement prior to the arbitral proceedings would be to
subject the parties initial settlement agreement to the condition precedent of the initiation
of the arbitral proceedings.37 The settlement would, thereby, only become effective after the
commencement of the arbitral proceedings. Another approach which has been proposed in
order to avoid this issue would be to initiate arbitration proceedings as the primary dispute
resolution method and then integrate a mediation window into it.38 However, apart from
the practicability of such an approach, in view of the unambiguous wording of 1053 (1)
sentence 1 ZPO and Article II (1) NYC, it remains uncertain even under this approach
whether the courts will accept the transformation of a mediation settlement into an award
on agreed terms.
27 As regards its contents, an award on agreed terms may also cover issues that have not been
the subject of the arbitral proceedings. If an award on agreed terms is requested by the parties
with respect to those issues, this must be understood as an implied extension of the initial
arbitration agreement.39 Even though arbitration agreements must generally be concluded in
writing, the non-compliance of an implied extension with the form requirements is cured by
the parties entering into argument on the substance of the dispute pursuant to 1031(6)
ZPO.
28 It remains unclear from the wording of 1053 (2) sentence1 ZPO whether the parties may
request an award on agreed terms on a matter that may be the subject of arbitration pursuant to 1030 ZPO, but not of a settlement agreement. For example, the claim for damages
35
36
37
38
39
Sessler, The arbitral award on agreed terms a tool for enforcing a mediated settlement?, available at
<www.cils.net>.
Eidenmller, RIW 2002, 1 (6).
Newmark/Hill, Can a mediated Settlement become an enforceable Arbitration Award?, Arb.Int. 2000,
81 (85seq.); Eidenmller, RIW 2002, 1 (5seq.); cf. Berger, Integration of Mediation Elements into Arbitration: Hybrid Procedures and Intuitive Mediation by International Arbitrators, Arb.Int. 2003, 387;
Horvath, Schiedsgerichtsbarkeit und Mediation Ein glckliches Paar?, SchiedsVZ 2005, 292.
Stein/Jonas-Schlosser (2002), 1053 para.4; MnchKommZPO-Mnch (2013), 1053 para.17; Musielak-Voit (2013), 1053 para.4; Thomas/Putzo-Reichold (2013), 1053 para.3; Schtze (2006), p.201
(203); Lrcher, RPS 2/2000, 2 (4).
333
by a corporation against its founders, third persons, members of the board of directors or
members of the supervisory board can, according to 50 German Stock Corporation Act
(Aktiengesetz AktG), only be settled if three years have passed since the registration of the
company in the commercial register and if the general assembly has given its consent to the
settlement.40 It would be contradictory if parties could obtain an award on agreed terms on
a matter in relation to which they are not allowed to conclude a settlement agreement. To
the extent that the prohibition of agreeing on a settlement is motivated for reasons of public
policy, the arbitral tribunal may at the same time be prevented from rendering an award
because of the award violating public policy. Therefore, such an award may only be rendered
if its subject matter may also be the object of a settlement between the parties.41
Sometimes parties even include an arbitration agreement in their award on agreed terms 29
concerning disputes that may arise out of the settlement.42
3.
Procedure of Rendering an Award on Agreed Terms
At first glance, it may appear that the arbitral tribunal, upon being requested to render an 30
award on agreed terms, is merely required to examine whether the settlement is in compliance with public policy. The fact is, however, that in addition to this, the tribunal must also
satisfy itself that the parties have actually entered into a settlement agreement which can be
recorded as an award and that all further requirements for rendering an award are met. This
requires that there is a valid arbitration agreement (which can in case of doubt be deemed
to have been concluded by the parties via their joint request for an award on agreed terms),
that the claims to be dealt with are arbitrable and that the parties have legal capacity.43 In most
cases, the arbitral tribunal will have conducted a check prior to the commencement of the
arbitral proceedings that all such requirements are met.
It is not possible to authorise the presiding arbitrator to decide alone on a request for such 31
an award.44
a. Request by the/all Parties: The issue of whether a request for an award on agreed terms 32
must be made by all parties or may also be made by only one party was hotly debated in the
discussion on Article30 (1) ML. The main argument advanced in favour of permitting a request by one party was that frequently only one party has an interest in having the settlement
transformed into an award.45 However, it was also argued that the requirement of the request
being made by both parties reduces the risk of injustice as the settlement may be ambiguous
or subject to conditions that might not be apparent to the arbitral tribunal.46 Therefore, the
UNCITRAL Commission finally resolved that such requests may only be made by both
parties, although this does not necessarily mean that a request supported by both parties
40
41
42
43
44
45
46
Further examples for provisions of German corporate law establishing special requirements for valid
settlements are 302 (3) AktG or 9b Act on Limited Liability Companies (Gesetz betreffend die Gesellschaft mit beschrnkter Haftung GmbHG).
Musielak-Voit (2013), 1053 para.1; Mankowski, ZZP 2001, 37 (61 et seq.); Bilda, DB 2004, 171 (175);
cf. also Kreindler, (1998) 9(2) ICC ICArb. Bull. 22 (24); MnchKommZPO-Mnch (2013), 1053
para.26; dissenting Lachmann (2008), para.1806; Weigand-Wagner (2002), Germany, para.384 (an
award on agreed terms is an award, and not a settlement).
See OLG Mnchen 22.02.2006, SchiedsVZ 2006, 165.
MnchKommZPO-Mnch (2013), 1053 para.28; Bilda, DB 2004, 171.
Second Working Group Report A/CN.9/232, para.174.
Second Working Group Report A/CN.9/232, para.175.
334
could not be filed by only one of the parties.47 The German lawmaker has adopted the same
solution in 1053 (1) sentence2 ZPO. Thus, it is not necessary that both parties apply for an
award on agreed terms; rather, they may bring such a request successively, e.g. by one partys
request being accepted by the other party.48 The making of such a request should nevertheless be clearly recorded. This helps to avoid subsequent disputes regarding the question of
whether the necessary requests have actually been made.49
33 A request made by only one party is, as such, not sufficient.50 Despite the unambiguous
wording of 1053 (1) sentence2 ZPO, this requirement is nevertheless sometimes misunderstood.51 It is certainly not admissible to argue that by entering into a settlement agreement
the parties demonstrate that it is also their intention to apply for an award on agreed terms to
facilitate the enforcement of the settlement.52 It might thus be advisable in practice to subject
the effectiveness of the settlement to the joint request for an award on agreed terms in order
to prevent the other party from refusing to file such a request after the settlement has been
reached. Additionally, it is preferable if the parties formulate their request in as much detail
as possible instead of agreeing on a general framework to be subsequently filled with detailed
rules, as the latter procedure might give rise to problems when the arbitral tribunal is called
upon to formulate the award on agreed terms.
34 If two or more of the parties to multi-party arbitral proceedings agree on a partial settlement,
a request for an award on agreed terms may only be brought forward by the parties to the
settlement, but not by the other parties to the arbitration.53
35 An arbitral tribunal may not render an award on agreed terms if the settlement is still subject
to procedural conditions, such as the condition that no party withdraws from the settlement
within a given time period.54 This would not be compatible with the fact that an award on
agreed terms has the same legal effects as a final and binding court judgement.
36 b. The Tribunals Right to Refuse a Request for an Award on Agreed Terms: Pursuant to 1053
(1) sentence2 ZPO, an arbitral tribunal is required to refuse a request for rendering an award
on agreed terms if the contents of the settlement are in violation of public policy. In the
context of 1053 ZPO, the term public policy covers all cases where a request for an award
on agreed terms should be denied in accordance with 1059 (2) No.2 ZPO.55 The tribunal
must examine ex officio whether any of these cases apply.56
47
48
49
50
51
52
53
54
55
56
Commission Report A/40/17, para.250.

Stein/Jonas-Schlosser (2002), 1053 para.5; Musielak-Voit (2013), 1053 para.8; MnchKommZPOMnch (2013), 1053 para.20; Mankowski, ZZP 2001, 37 (70 et seq.); Lachmann (2008), para.1813.
OLG Saarbrcken 16.09.2005, OLGR 2006, 220; Lachmann (2008), para.1811.
Spohnheimer, FS-Kaissis (2012), p. 933 (937); Weigand-Wagner (2002), Germany, para.383.
Zller-Geimer (2014), 1053 para.2; Mankowski, ZZP 2001, 37 (74).
Stein/Jonas-Schlosser (2002), 1053 para.5; MnchKommZPO-Mnch (2013), 1053 para.21; MusielakVoit (2013), 1053 para.10; Zller-Geimer (2014), 1053 para.3; Mankowski, ZZP 2001, 37 (69, 73);
Bilda, DB 2004, 171 (175); Schtze (2006), p.201 (203); Lachmann (2008), paras1816 seq.
See infra, Krll/Kraft, 1059 paras 81 et seq.
Musielak-Voit (2013), 1053 para.10; MnchKommZPO-Mnch (2013), 1053 para.26; Lachmann
(2008), paras1803 et seq.; dissenting Mankowski, ZZP 2001, 37 (43 et seq.). Cf. further von Schlabrendorff,
Geldwsche in internationalen Schiedsverfahren, in: Bachmann et al. (eds), FS-Schlosser (2005), p.851
(861) also with regard to awards on agreed terms based on the one-sided acknowledgement of the claim
by the debtor.
4.
335
Effect of an Award on Agreed Terms
Pursuant to 1053 (2) sentence2 ZPO, an award on agreed terms has the same effect as any 37
other award on the merits of the case. This provision implicitly refers to 1055 ZPO, where it
is stated that awards have the same effects between the parties as a final and binding court decision. Consequently, an award on agreed terms represents res judicata as regards any dealings
between the parties contained therein. The rendering of an award automatically terminates
the proceedings pursuant to 1056 (1) ZPO, provided the award on agreed terms covers all
the issues at stake in the proceedings.
IV. Award on Agreed Terms in lieu of Notarial Certification

Pursuant to 1053 (3) ZPO, an award on agreed terms is sufficient to satisfy the requirement 38
of notarial certification if the declaration of the parties is recorded in the award.57 It is insufficient if the award merely refers to such declarations.58 However, an award on agreed terms is
not a substitute for registration in any public register, such as the land register; a court order
must be obtained for the enforcement of an award on agreed terms in these cases.59
Even though considerable financial savings may be achieved, the OLG Mnchen has decided 39
that the rule that an award on agreed terms replaces a notarial certification may not be misused by initiating arbitral proceedings for the sole purpose of evading the requirement to
have a transaction officially recorded by a notary public.60 The sole purpose of this provision
is to facilitate a settlement by obtaining an award on agreed terms. The parties are to be spared
the inconvenience of having to interrupt their dispute resolution efforts in view of the need to
comply with official authentication requirements.
V.
Authority of Notaries to Declare an Award on Agreed Terms Enforceable
A.
General
As regards the enforcement of an award on agreed terms, the parties can seek enforcement 40
not only by the competent court,61 but leave to enforce may also be granted by a notary
public of the district of the competent court pursuant to 1053 (4) sentence1 ZPO. This
additional possibility, however, is not available for foreign awards on agreed terms, as 1053
(4) sentence 1 ZPO is not applicable if the place of arbitration is outside Germany (cf.
1025 (2) ZPO). A further prerequisite for the enforcement of an award on agreed terms
57
58
59
60
61
Cf. OLG Stuttgart 04.10.2000, MDR 2001, 595, concerning the substitution of the form requirement
pursuant to 1031 ZPO.
Baumbach/Lauterbach (2014), 1053 para.6 (the parties declarations must be recorded verbatim in the
award); MnchKommZPO-Mnch (2013), 1053 para.49.
para.6; HK-ZPO-Saenger (2013), 1053 para.6; Saenger, MDR 1999, 662 (663); Schtze (2006), p.201
(207); Lachmann (2008), para. 1822; Raeschke-Kessler/Berger (1999), para. 817; for a different view
see infra, Krll, 1060 paras 9 seq.; Zller-Geimer (2014), 1053 para.7; Musielak-Voit (2013), 1053
para.13; Spohnheimer, FS-Kaissis (2012), p. 933 (938 seq.); differentiating MnchKommZPO-Mnch
(2013), 1053 para.50.
OLG Mnchen 26.07.2005, EWiR 2006, 95 with consenting comment by Korte, EWiR 2006, 95 (96); cf.
Schroeter, SchiedsVZ 2006, 298. In the case before the OLG Mnchen the parties had agreed to pay the
arbitrator the amount of EUR10 for the whole proceeding.
See concerning the enforcement of an award on agreed terms through the ordinary courts: BGH
02.11.2000, NJW 2001, 373 = (2002) Int.A.L.R. N-12; BayObLG 05.07.2004, BayObLGR 2004, 381.
336
by a notary public is that the parties must have agreed on this procedure. Thus, there must
be an agreement by and between both parties as to the availability of this option. Otherwise,
enforcement can only be granted by the competent court. 1053 (4) sentence1 ZPO is generally intended to conserve judicial resources and to expedite the enforcement procedure.62
B.
Procedural Issues
41 For the parties, it can be more attractive to agree on this form of enforcement of the award
because the fees involved are much lower.63 However, there are still a number of procedural
uncertainties connected with this procedure that also must be considered.
42 The time limit for the filing of applications to set aside an award, as stipulated in 1059 (3)
sentence4 ZPO, does not apply in cases where the award is declared enforceable by a notary
public. Hence, an application to set aside the award may always be made by the party facing
enforcement within the regular time period of three months after the rendering of the award,
regardless of whether a notary public has already granted leave to enforce it or not.64
43 When agreeing on the possibility to have the award declared enforceable by a notary public,
some legal commentators are of the opinion that a notary is not obliged to accept the request
for granting a leave of enforcement, but rather may refer the case to the competent Higher
Regional Court via a binding order in applying 281 ZPO mutatis mutandis.65 However, such
referral would deprive the parties of their right to ask another notary in the same district for
such leave. Therefore, a referral by the notary to the Higher Regional Court is not admissible
and should not be applied merely because the notary public may be uncertain whether to
grant leave of enforcement or not.66
C.
Admissibility of Appeal against the Notarial Declaration
44 Whilst the wording of the provision does not mention any possibility to challenge the notarys decision, the issue of whether such an appeal should be admissible is contentious. Two
different situations need to be distinguished in connection therewith.
45 Firstly, there are cases where the notary refuses to grant leave to enforce. Although it is
possible for the parties to request the leave from another notary or the competent Higher
Regional Court, some legal authors suggest allowing an appeal to a Higher Regional Court
or even the Federal Court of Justice (Bundesgerichtshof BGH) in such cases, by applying
796c (2) sentence2ZPO mutatis mutandis.67 If one were to allow such an appeal, the BGH
62
63
64
65
66
67

MnchKommZPO-Mnch (2013), 1053 para. 52; Weigand-Wagner (2002), Germany, para. 387;
Lachmann (2008), para.1833; cf. 148a (1) sentence1 Cost Register (Kostenordnung KostO) and
No.1620 Costs Index, Court Fees Act (Kostenverzeichnis KV, Gerichtskostengesetz GKG).
Musielak-Voit (2013), 1053 para.14; Stein/Jonas-Schlosser (2002), 1053 para.8; HK-ZPO-Saenger
(2013), 1053 para. 8; MnchKommZPO-Mnch (2013), 1053 para. 52; Weigand-Wagner (2002),
Germany, para. 387; Rtzel/Wegen/Wilske (2005), p. 144; Lachmann (2008), para. 1833; dissenting
and demanding an application of 1059 (3) sentence4 ZPO mutatis mutandis Baumbach/Lauterbach
(2014), 1053 para.10; Mack, IDR 2006, 36 (40 et seq.).
KG Berlin 15.05.2006 (20 Sch 20/05); Zller-Geimer (2014), 1053 para.10; Schwab/Walter (2005),
Ch.29 para.3.
Lachmann (2008), para.1838; Schtze (2006), pp.201 (209 et seq.).
Stein/Jonas-Schlosser (2002), 1053 para.8; Schtze (2006), p.201 (210); Mack, IDR 2006, 36 (40 et
seq.); dissenting Baumbach/Lauterbach (2014), 1053 para.12; Musielak-Voit (2013), 1053 para.14;
337
would seem to be the appropriate forum as the notary is on the same level as the Higher
Regional Court in respect of the power to declare an award enforceable.68 However, it is
questionable whether it is necessary to allow the aggrieved party to file an appeal against
the notarys negative decision. The party seeking enforcement of an award on agreed terms
has every possibility to refer the matter to another notary or to the Higher Regional Court69
because the decision by the first notary does not have any res judicata effect.
The second group of cases is where the notary grants an execution clause. Some legal authors 46
suggest allowing an appeal to the BGH in these cases as well, arguing that the parties would
also have a right to appeal if the Higher Regional Court had granted leave for enforcement.70
The admissibility of such appeal, however, appears to be questionable. The main motive of
the German lawmaker behind including the possibility of having an award on agreed terms
declared enforceable by a notary public in the 10th Book of the ZPO after the law reform
was the notion to create a parallel to the situation regarding the enforcement of a settlement
negotiated by lawyers.71 Such a settlement can also be declared enforceable by a notary public
pursuant to 796c (1) ZPO, whereas an appeal against the decision to grant enforcement
is not admissible pursuant to 796b (2) sentence2, 796c(1) sentence1 ZPO. Therefore,
the German lawmaker may have deliberately not provided for an appeal against the notarys
decision.
D.
Competent Court for Opposing Execution of Notarial Declaration
Another uncertainty in cases where leave to enforce an award on agreed terms is given by a 47
notary is the question of which court has jurisdiction for an action to oppose execution filed
pursuant to 767 ZPO. Generally, this would be the court of first instance according to 767
(1) ZPO, given that this is also the court which issued the title for execution.72 Consequently,
the prevailing opinion is that if a Higher Regional Court grants leave for enforcement, that
court also has jurisdiction for any claim pursuant to 767 ZPO.73 However, if a notary grants
leave for enforcement there is no court of first instance. Applying 797 (5) ZPO, pursuant
to which the general place of jurisdiction is at the seat of the debtor, might spring into mind.
However, as leave for enforcement by the notary has the same effect between the parties as a
binding court decision,74 the document by which such leave is granted cannot be a notarial
deed within the meaning of 797 (2) ZPO. Thus, this provision is not applicable. Consequently, the Higher Regional Courts must be regarded as the courts having jurisdiction in
such cases, even though various legal commentators are of the opinion that the Local Court
(Amtsgericht AG) or Regional Court (Landgericht LG) at the seat of the notary is the
competent forum.75
68
69
70
71
72
73
74
75
Zller-Geimer (2014), 1053 paras19 seq.

Schtze (2006), p.201 (210).
Zller-Geimer (2014), 1053 para.20; Schtze, Die gerichtliche berprfung von Entscheidungen des
Schiedsgerichts, SchiedsVZ 2009, 241 (245); Schwab/Walter (2005), Ch.29 para.6.
OLG Hamm 20.06.2001, NJW-RR 2001, 1362; OLG Stuttgart 04.10.2000, MDR 2001, 595; OLG Dresden 20.04.2005, SchiedsVZ 2005, 211; but for a different view see infra, Krll, 1061 paras 160 et seq.
Mack, IDR 2006, 36 (40 et seq.).
338
VI. Setting Aside an Award on Agreed Terms

48 An application for setting aside an award on agreed terms may be filed as soon as the award
is rendered. The settlement agreement alone cannot be the subject of such an application.76
76
339
1054 Form and Contents of Award

(1) The award shall be made in writing and shall be signed by the arbitrator or arbitrators. In arbitral proceedings with more than one arbitrator, the signatures of the
majority of all members of the arbitral tribunal shall suffice, provided that the
reason for any omitted signature is stated.
(2) The award shall state the reasons upon which it is based, unless the parties have
agreed that no reasons are to be given or the award is an award on agreed terms
under 1053.
(3) The award shall state its date and the place of arbitration as determined in accordance with 1043 (1). The award shall be deemed to have been made on that date
and at that place.
(4) A copy of the award signed by the arbitrators shall be delivered to each party.
Short Bibliography: Baker/Greenwood, Dissent But Only if You REALLY Feel You Must. Why
Dissenting Opinions in International Commercial Arbitration Should Only Appear in Exceptional
Circumstances, (2013) DRI Vol 7 No 1, 31; Berger, Empfiehlt sich die Bekanntgabe abweichender Meinungen berstimmter Richter?, NJW 1968, 961; Bckstiegel, Zur Vollstreckung eines
Schiedsspruchs nach der Schiedsordnung der Internationalen Handelskammer, IPRax 1982, 137;
Craig/Park/Paulsson, International Chamber of Commerce Arbitration, New York 2000; Derains/
Schwartz, A guide to the ICC Rules of Arbitration, The Hague 2005; Hanefeld, Country Report
Germany, in: Weigand (Hrsg.), Practitioners Handbook on International Commercial Arbitration,
Oxford 2010; von Hoffmann, Die Novellierung des deutschen Schiedsverfahrensrechts von 1986,
IPRax 1986, 337; Holtzmann/Neuhaus, A Guide to the UNCITRAL Model Law on International
Commercial Arbitration, Deventer 1989; Krll, Die Entwicklung des Rechts der Schiedsgerichtsbarkeit 2001/2002, NJW 2003, 791; Lachmann, Handbuch fr die Schiedsgerichtspraxis, Kln 2008;
Lew/Mistelis/Krll, Comparative International Commercial Arbitration, Hague/London/New York
2003; Liebscher, The Healthy Award. Challenge in International Commercial Arbitration, The Hague
2003; Lionnet/Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit, Stuttgart Berlin 2005; Lrcher/Lrcher, Das Schiedsverfahren national/international nach deutschem
Recht, Heidelberg 2001; Peltzer, Die Dissenting Opinion in der Schiedsgerichtsbarkeit, Frankfurt
2000; Raeschke-Kessler/Berger, Recht und Praxis des Schiedsverfahrens, Kln 1999; Schtze, Dissenting Opinions im Schiedsverfahren, in: Heldrich (ed.), FS-Nakamura, 1996, p.525; Schwab/Walter,
International Arbitration, Mnchen/Copenhagen 2002; Wieczorek/Schtze, Zivilprozessordnung
und Nebengesetze, Berlin 1995.
I.
II.
III.
IV.
V.
Para.
Mandatory Requirements . . . . . . . . . . . . . . . . 3
Applicability Limited to Awards . . . . . . . . . . 4
General Elements of Awards . . . . . . . . . . . . . 5
A. Written Form Requirement . . . . . . . . . . 5
B. Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
C. Procedural History . . . . . . . . . . . . . . . . . . . 7
D. Facts of the Case . . . . . . . . . . . . . . . . . . . . . 8
1.
Para.
E. Reasons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
F. Dispositive Section. . . . . . . . . . . . . . . . . . 12
G. Place and Date . . . . . . . . . . . . . . . . . . . . . . 13
1. Relevance of Stating the Place
and the Date . . . . . . . . . . . . . . . . . . . . . 13
2. Place of Arbitration . . . . . . . . . . . . . . 15
3. Date of Award . . . . . . . . . . . . . . . . . . . 16
H. Signature of the Arbitrators . . . . . . . . . . 17
Requirement of Signature . . . . . . . . . . . . . . . 17
340
Para.
2. Omission of Signature. . . . . . . . . . . . 18
I. Dissenting Opinion . . . . . . . . . . . . . . . . . 19
I.
Para.
VI. Delivery of the Award . . . . . . . . . . . . . . . . . . . 21
VII. Changes to the Award before Delivery . . . 22
1 1054 Code of Civil Procedure (Zivilprozessordnung ZPO) provides for minimum requirements of form that must be met by all awards. The issuance of a final arbitral award
meeting these requirements of form marks the end of the arbitral proceedings (cf. 1056
ZPO).2 Only an award made in accordance with the statutory requirements can dispose of
the matter with the effect of res judicata, can be declared enforceable and can be the object of
challenge proceedings.3
II.
Legislative History
2 1054 ZPO was designed to meet the standards of international arbitration and to comply
with Article31 of the UNCITRAL Model Law on International Commercial Arbitration
(ML). It replaces the former 1039ZPO. Following the Model Law, the German legislator
decided to restrict the formal requirements to a minimum. There is no requirement for an
award to be registered or deposited. 1054 (3) sentence2 ZPO goes beyond Article31ML
insofar as it establishes a legal fiction not only as to the place where the award has been made,
but also as to its date.
III. Mandatory Requirements

3 The requirements of form established in subsections1 and 2 are mandatory, i.e. the parties are
not free to deviate from these by agreement.4 The requirement that an award shall state the
reasons on which it is based, however, is explicitly stated to be subject to an agreement of the
parties dispensing with such requirement.
IV. Applicability Limited to Awards

4 The requirements of form of 1054 ZPO apply only to awards, but not to procedural orders
or interim measures.5 Therefore, decisions other than awards can also gain validity through
oral communication by the arbitral tribunal and, if in written form, need to be signed only
by the presiding arbitrator if not agreed otherwise by the parties. A decision of an arbitral
tribunal denying jurisdiction is an award that is binding in accordance with 1055 ZPO and
1
2
3
4
5
Schwab/Walter (2005), Chap.20 para.1.
BGH 23.05.1985, NJW-RR 1986, 61; for the characteristics of an award and the differentiation between
the various types of decisions by an arbitral tribunal see infra, von Schlabrendorff/Sessler, 1055 paras7
et seq.; cf. also Kremer/Weimann, Die Aufhebbarkeit von Schiedssprchen, insbesondere Zwischen- oder
Teilschiedssprchen ber den Anspruchsgrund Widerspruch zu Prinzipien der Prozesskonomie,
SchiedsVZ 2007, 238.
Musielak-Voit (2013), 1054 para.2; Baumbach/Lauterbach (2014), 1054 para.1; Stein/Jonas-Schlosser
(2002), 1041 para.12 and 1054 para.3 (the decisive criteria is not the binding effect according to
1055ZPO but rather if it is supposed to bind the arbitral tribunal); dissenting Zller-Geimer (2014),
1054 para.3 who is of the opinion that 1054 ZPO applies mutatis mutandis to interim measures. Cf.
for special form requirements in labour law 108 (2) Act governing the Employment Courts (Arbeitsgerichtsgesetz ArbGG).
341
must therefore comply with 1054 ZPO.6 An award must meet all requirements of 1054
ZPO even if it is issued subject to the provision that the claims awarded by it may be set-off
against other claims on which the tribunal did not decide, e.g. holding that these fall within
the jurisdiction of the courts.7 The label award merely is an indication that the decision at
hand actually is an award.8 Any additional award or interpretation/correction of an award
(1058 (5) ZPO)), as well as any award on agreed terms, must also comply with 1054
ZPO criteria of form to be valid.9
V.
General Elements of Awards
A.
Written Form Requirement
An arbitral award is to be issued in writing in accordance with 1054 (1) ZPO. The written 5
form requirement stipulates that the award may not be issued orally.10 In line with 1045
ZPO, the award should be rendered in the language of the proceedings unless agreed otherwise by the parties.11
B.
Recitals
German law does not expressly require that information is given in the award on the parties 6
to the proceedings and the arbitrators. However, such information is necessary with a view
to allow the enforcement of the award.12 As it is a contractual obligation of the arbitrators
towards the parties to render an award, which if possible should also be enforceable, the
parties can expect that the award will contain recitals with the names and other identifying
details of the parties and the arbitrators involved. The date of the last oral hearing does not
have to be mentioned, but it is still recommended that the arbitrators do so in view of possible enforcement proceedings. In Germany for example, according to 767 ZPO, only a
claim coming into existence after the conclusion of the oral hearing may be set-off against the
award in enforcement proceedings.
C.
Procedural History
It is common practice to provide a summary of the procedural history of the proceedings 7

in the award including, inter alia, the dates of the proceedings, the requests for relief made
by the parties, the dates of the memoranda and the terms of reference (if applicable). These
details can be helpful information for the courts as to whether the right to be heard has been
observed in the arbitral proceedings.
7
8
9
10
11
12
Cf. BGH 06.06.2002, CLOUT case No.560 = SchiedsVZ 2003, 39; cf. supra, Huber/Bach, 1040 paras30 seq.; dissenting Musielak-Voit (2013), 1054 para.2.
Cf. infra, von Schlabrendorff/Sessler, 1055 paras11 et seq.
Krll, Die schiedsrechtliche Rechtsprechung 2007 (Teil 2), SchiedsVZ 2008, 112 (113). Cf. also infra,
von Schlabrendorff/Sessler, 1055 para.8 with further references.
Stein/Jonas-Schlosser (2002), 1054 para.3; MnchKommZPO-Mnch (2013), 1054 paras3 seq.
MnchKommZPO-Mnch (2013), 1054 paras5 seq. Mnch, ibid., also argues that the written form may
not be replaced by electronic form in the sense of 126 (3), 126a Civil Code (Brgerliches Gesetzbuch
BGB) because 1054 ZPO would disallow such replacement. Rather, the award would have to be set
out in corporeal form. For a discussion of the requirement of signature, see infra, paras17 seq.
342
D.
Facts of the Case
8 It is not mandatory to give an account of the facts of the dispute,13 even though it seems
that it is too obvious to be expressly stated in the law that this should be an integral part
of the award.14 The account of the facts of the case is left to the arbitrators discretion and
can be substituted by reference to the parties written submissions.15 On the other hand, the
award should mention the relief requested by the parties. The requests for relief determine
the matter in dispute in the arbitral proceedings and, thereby, the res judicata effect of the
award (1055ZPO). It is also certainly appropriate, though not mandatory as a matter of
law, to specify whether the award is a partial or final award.
E.
Reasons
9 Pursuant to 1054 (2) ZPO, an arbitral award must state the reasons of the award, provided
the parties have not dispensed with this requirement or have agreed on an award by consent.
A waiver can usually not be inferred from the parties agreement that there shall be no further review of the award.16 If the parties do not waive the requirement that the award to be
rendered should be reasoned, the complete or partial absence of the reasons may provide
grounds for setting aside the award pursuant to 1059 (2) No.1 (d) ZPO.17
10 The purpose of giving the reasons in the award is to allow the parties to follow the arbitral
tribunals considerations. Even though the standard with which the reasoning has to comply is not defined by the law, it can be said to correspond generally in practice to what is
internationally required as well. It is, however, not as high as the standard which applies to
court decisions in Germany.18 The arbitrators are neither expected to deliver a profound legal
reasoning, nor can the parties demand a complete and exhaustive account of all relevant considerations. The only requirements are that the reasons do not contradict the decision of the
award and that they are not self-contradictory. The tribunal should comment at least briefly,
but not necessarily comprehensively, on the substance of the claims asserted and the defences
raised.19 Nevertheless, many arbitral awards include exhaustive and detailed reasoning.
11 It is necessary to distinguish between cases where an award contains an incomplete statement of reasons and cases where part of the claims brought forward in the proceedings have
been disregarded (infra petita). In the latter case, the only possible remedy is the rendering
of an additional award.20 Usually, the presiding arbitrator is in charge of drafting the reasons,
13
14
15
16
17
18
19
20

BGH 26.09.1985, NJW 1986, 1436 (1437); Schwab/Walter (2005), Chap.19 para.13; Musielak-Voit
(2013), 1054 para.4; Baumbach/Lauterbach (2014), 1054 para.4 (an agreement that there shall be
no further review of the award may amount to a waiver of the reasoning requirement).
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, pp.59 et seq.; Lachmann (2008), para.2281;
Liebscher (2003), p.133; dissenting Musielak-Voit (2013), 1054 para.5.
BGH 26.09.1985, NJW 1986, 1436 (1437); id. 23.04.1959, NJW 1959, 1438 (1439); Stein/JonasSchlosser (2002), 1054 para.9.
BGH 26.09.1985, NJW 1986, 1436 (1437); id. 29.09.1983, WM 1983, 1207 (1208); OLG Hamburg
15.12.1998; OLG Stuttgart 06.12.2001, Yearbook XXIX (2004), 742; OLG Hamburg 14.05.1999,
CLOUT case No.457 = Yearbook XXVIII (2003), 265 (irrelevant arguments by the parties must not be
mentioned in the reasons).
MnchKommZPO-Mnch (2013), 1054 para.19; cf. infra, Krll/Kraft, 1059 para.68 on the issue of
setting aside the award due to inadequate reasoning.
343
although this need not be the case. According to the German Federal Court of Justice (Bundesgerichtshof BGH), it may even be possible to assign this task to a third party, as long as
it is the arbitral tribunal that makes the decision (cf. also supra, von Schlabrendorff/Sessler,
1052 paras7 et seq.).21
F.
Dispositive Section
The law does not require the arbitrators to draft a separate dispositive section summarizing 12
all the decisions taken by the arbitral tribunal. It should nevertheless be self-evident that
an award must contain the pronouncement of one decision or several decisions in order to
qualify as an award. To facilitate the enforcement of the award and its comprehension by
the parties, it is therefore a practical necessity to summarize the decisions taken in a separate
section.22 If the arbitral tribunal includes its decisions in the reasoning or elsewhere in the
award, the decision must be expressed in a sufficiently specific form.23 In cases of ambiguity,
this part of the award is subject to interpretation/correction pursuant to 1058 (1) No.2
ZPO or 1058 (1) No.4 ZPO.24 Alternatively, a court of enforcement may provide for a
clarification of the contents of the award in the declaration of enforceability (1060 ZPO).25
G.
Place and Date
1.
Relevance of Stating the Place and the Date
An award shall specify the date and place where it has been rendered. This information is not 13
only helpful for identifying an award, but according to some commentators forms part of
the formal requirements for an award to be valid.26 However, while this approach may be in
accordance with a grammatical interpretation of 1054 (3) sentence 1, it is too strict in our
opinion. It neither reflects the case law of the majority of German Higher Regional courts27
nor does it correspond to the intentions of the legislator to facilitate form requirements.28
Thus, if the arbitrators fail to specify the place and date in the award, this omission is rectifiable in practice and does not lead to the invalidity of the award.29
21
22
23
24
25
26
27
28
29
BGH 22.05.1957, ZZP 1958, 427 (435); id. 18.01.1990, NJW 1990, 2199; OLG Dsseldorf 27.10.1975,
BB 1976, 251 (252).
BGH 31.01.1980, KTS 1980, 241 (242).
BGH 05.04.1990, NJW 1990, 3084 (3085); id. 06.11.1985, JZ 1987, 203 (204) concerning the enforcement of a foreign judgement.
Stein/Jonas-Schlosser (2002), 1054 para.14; MnchKommZPO-Mnch (2013), 1054 paras36 seq.
OLG Mnchen 25.02.2013, SchiedsVZ 2013, 230 (233) with dissenting comment by Mnch, ibid.
(235seq.); OLG Mnchen 02.03.2011 (34 Sch 6/11) (the lack of stating the place of arbitration is without
consequence as long as the place can be determined via interpretation of the facts); id. 24.08.2010, NJOZ
2011, 413 (415). Cf. also Lachmann (2008), paras1763 et seq. with further references as to decisions of
German Higher Regional Courts.
OLG Stuttgart 04.06.2002, NJW-RR 2003, 1438 (1439); Baumbach/Lauterbach (2014), 1054 para.5;
Musielak-Voit (2013), 1054 para.7 (stating the date and place is dispensable because the legislator did
not intend to increase the form requirements of the rather lenient old German Arbitration law before
1998); Thomas/Putzo-Reichold (2013), 1054 paras 8 et seq. (omission of stating the date and the
place can be rectified); Zller-Geimer (2014), 1054 paras9 seq.; Weigand-Hanefeld (2010), Germany,
para.7.170; Lachmann (2008), paras1759 and 1767 (for an award to be valid, neither the date nor the
place have to be stated).
344
14 The parties may agree on further formal requirements, which go beyond the statutory requirements.30 Non-compliance with these requirements may constitute a reason for setting
aside an award pursuant to 1059 (2) No.1 (d) ZPO, but such motion can only be successful
if it can be proven that the award presumably was affected by the non-compliance of these
requirements.31
2.
Place of Arbitration
15 The law requires stating the place of arbitration, with such place being determined according
to 1043 (1) ZPO. The legal fiction that the award shall be deemed to have been made at
this place serves to provide legal certainty. Should the award be signed as stated in the award
by the arbitrators at a location different from the place of arbitration agreed in accordance
with 1025 (1), 1043 (1) ZPO, it prevents any doubts as to the nationality of the award.
The nationality determines the jurisdiction of the courts for setting aside the award or on the
proceedings to be followed for its enforcement as a national or foreign award.32 However, if
the arbitrators instead of stating the place of arbitration merely refer in the award to the place
of the hearings or the place of the signing of the award, German courts recognise that such
reference is not to be understood as an indication of the place of arbitration.33
3.
Date of Award
16 1054 (3) sentence2 ZPO requires stating the date on which the award has been made. In
this case, a legal fiction is also provided for, namely that the award is deemed to have been
made on the date stated. While there is no such provision to be found in the Model Law, the
German legislator found it useful in order to create legal certainty as to the conditions under
which the award has been made. This additional legal fiction can be of relevance in disputes
as to when an award has actually been made, if it is signed by the arbitrators on different
dates or jointly on a date different from the one stated in the award.34 As the signing of an
award by all arbitrators has the effect that they are (internally) bound by the award,35 the
fiction of the law can be considered to provide certainty in this regard. As far as the entering
into effect of the award is concerned, however, it is not the date of the award but the date of
its communication to the parties which is decisive.36 The time period provided for filing a
motion for an award to be set aside (1059 ZPO), for example, commences on the day the
award was delivered to a party, not the day on which it was made. The date of rendering of the
award may be included in the award even after it has been made.
30
31
32
33
34
35
36
Cf. OLG Karlsruhe 14.06.2000.

OLG Karlsruhe 14.06.2000; stricter Lachmann (2008), para.1768 (the award must have been affected by
the non-compliance).
Lachmann (2008), paras1761 seq.; Lionnet/Lionnet (2005), p.392.
OLG Mnchen 22.06.2005, SchiedsVZ 2005, 308 (309); OLG Dsseldorf 23.03.2000, EWiR 2000, 795
with note by Krll.
Schwab/Walter (2005), Chap.20 para.13. The practical habit that the award is more frequently circulated
among the arbitrators for signature after it has been checked by the ICC Court gave reason for the similar
regulation in the former Art.25 (3) ICC Rules (= Art.31 (3) 2012 ICC Rules); cf. Craig/Park/Paulsson
(2000); p.147; Derains/Schwartz (2005), p.310.
Stein/Jonas-Schlosser (2002), 1054 para.13; Musielak-Voit (2013), 1054 para.10; Wieczorek/SchtzeSchtze (1995), 1039 para.15.
Stein/Jonas-Schlosser (2002), 1054 para. 13; Weigand-Wagner (2002), Germany, para. 346; cf. Lew/
Mistelis/Krll (2003), para.24-63 for the necessity of such regulation in other jurisdictions.
H.
Signature of the Arbitrators
1.
Requirement of Signature
345
The award must be signed to be valid.37 In general, arbitral awards must be signed by all arbi- 17
trators to document that the award contains the arbitral tribunals decision and reflects the
result of its deliberations.38 The signatures must be handwritten and may not be substituted
by electronic signatures or the signature of a representative, be it under the representatives
own name or in the name of the arbitrator.39 Any signature must cover the whole award and
is therefore to be placed at the end of the document.40 Subsection 1 implies that all arbitrators
place their signatures on one document; nonetheless, it is admissible that the arbitrators sign
individual copies separately, which only together contain all necessary signatures.41 Once the
award has been sent to the parties, it can then only be altered in accordance with 1058
ZPO.42
2.
Omission of Signature
The requirement that the award must bear the signatures of the majority of the members of 18
the arbitral tribunal is mandatory.43 However, the parties may agree on stricter requirements,
e.g. the requirement of all signatures, if they have agreed on the award to be rendered unanimously as expressly permitted by 1052 (1) ZPO. The reason for the omission of a signature
must be stated in the award (1054 (1) sentence 2 ZPO). Otherwise, there would remain
uncertainty whether the award is the final decision or merely a draft. The reason given for
an arbitrator not signing an award is not subject to scrutiny by the courts in any subsequent
challenge or enforcement proceedings. Therefore, the validity of the award is not affected
even if the reason given in the award subsequently proves to be inaccurate.44 Omission of the
signature means that the missing signature could not be obtained, e.g. due to the arbitrator
having died, having become incapacitated or having refused to sign.45 All of the above also
applies to the presiding arbitrator.46 It is sufficient if the reason for an arbitrator not having
signed an award is included in the reasons for the award, although it is recommendable to
37
38
39
40
41
42
43
44
45
46
OLG Karlsruhe 14.06.2000; Lachmann (2008), para.1746.

Baumbach/Lauterbach (2014), 1054 para. 3; MnchKommZPO-Mnch (2013), 1054 para.7.
MnchKommZPO-Mnch (2013), 1054 para.8; Schwab/Walter (2005), Chap.20 para.4, cf. Holtzmann/Neuhaus (1989), p.847.
Lachmann (2008), para.1745; Stein/Jonas-Schlosser (2002), 1054 para.6.
OLG Mnchen 25.02.2013, SchiedsVZ 2013, 230 (234); OLG Frankfurt 06.09.2001; Krll, NJW 2003,
791 (794); dissenting Lachmann (2008), paras1750 seq.; Musielak-Voit (2013), 1054 para.6.
Lachmann (2008), para.1749; Thomas/Putzo-Reichold (2013), 1054 para.9.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.56; Lachmann (2008), para.1752; Bckstiegel, IPRax 1982, 137 (138) regarding 1038 ZPO pre-1998.
BGH 21.05.1980, NJW 1980, 1849 (1850) concerning 315 ZPO; Stein/Jonas-Schlosser (2002), 1054
para.7; MnchKommZPO-Mnch (2013), 1054 para.15.
Weigand-Wagner (2002), Germany, para.333; Musielak-Voit (2013), 1054 para.6 is of the opinion that
with regard to the secrecy of the deliberations, the given reason for the lack of the signature may not state
that the relevant arbitrator was overruled. Yet, this assumption is based on a very restrictive view on the
extent of the secrecy of the deliberations. According to 888 ZPO, the arbitrator who refuses to sign
the award may be urged to do so by the competent court upon corresponding petition, cf. Baumbach/
Lauterbach (2014), 1054 para. 3.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 56; Raeschke-Kessler/Berger (1999),
para.875; Lachmann (2008), para.1752; Lrcher/Lrcher (2001), para.298, this issue was controversial
under the old law, 1039 ZPO pre-1998.
346
state it at or near the place of the signatures of the other arbitrators. A missing signature can
be subsequently added, even in the course of enforcement or setting aside proceedings.47
I.
Dissenting Opinion
19 Whether an arbitrator has a right to issue a dissenting opinion or should refrain from doing
so is a subject of controversy, since it is viewed by some legal writers as being potentially
in conflict with the fundamental principle of the secrecy of deliberations.48 The German
legislator, however, held dissenting opinions to be admissible even under the former law and
therefore did not deem an express regulation to be necessary.49
20 In international arbitral practise, it is widely accepted for arbitrators to write dissenting opinions.50 Another question is whether the issuance of dissenting opinions is in the interest of
the parties. An arbitrator should, in any case, refrain from issuing a dissenting opinion that
might mislead a party into commencing forlorn proceedings to set aside the award.51 Also, in
our opinion, differing views of facts or of the law should preferably be included in the award
itself.52 Notwithstanding this, the dissenting arbitrator is certainly not allowed to make his
dissenting opinion the place of unveiling the course of the arbitral tribunals internal deliberations to the parties. This would represent a misuse of the right to write a dissenting opinion.
Likewise, it should be in the hands of the majority of the arbitrators to decide whether the
dissenting opinion is to be communicated to the parties, provided that the award itself should
always make clear that it is a majority award and should deal with the issues raised in the
dissenting opinion. The prevailing opinion recognises that the issue of a dissenting opinion,
which results in the unjustified disclosure of secret deliberations, does not constitute a reason
for setting aside an award. However, it may lead to claims of the parties against the arbitrator
concerned.53
47
48
49
50
51
52
53
Stein/Jonas-Schlosser (2002), 1054 para.6; Zller-Geimer (2014), 1054 para.4; dissenting Lachmann
(2008), para.1753.
Cf. for discussion: MnchKommZPO-Mnch (2013), 1054 paras 22 seq.; Berger, NJW 1968, 961;
Federer, Die Bekanntgabe der abweichenden Meinung des berstimmten Richters, JZ 1968, 511; Lionnet/Lionnet (2005), pp.395 et seq.; Peltzer (2000), pp.103 et seq.; Weigand-Wagner (2002), Germany,
para.331; cf. Werner, Dissenting opinions, beyond fears, (1992) 9(4) J.Int.Arb.23 et seq. With regard to
1042 (3) ZPO the majority of the arbitral tribunal can decide whether to mention dissenting opinions
in the award, see Stein/Jonas-Schlosser (2002), 1054 para.11; requiring explicit authorisation by the parties Baumbach/Lauterbach (2014), 1054 para.4; Peltzer (2000), p.57; Schtze, FS-Nakamura (1996),
p.525 (535); Zller-Geimer (2014), 1052 para.5; cf. Holtzmann/Neuhaus (1989), p.856; Wieczorek/
Schtze-Schtze (1995), 1038 para.2; Lachmann (2008), para.1775 (additionally requires the consent
by all arbitrators).
Cf. Hunter, Final Report on Dissenting and Separate Opinions, (1991) 2(1) ICC ICArb. Bull. 32; Lew/
Mistelis/Krll (2003), paras24-45.
Baker/Greenwood (2013), DRI Vol 7 No 1, 31 (36 seq.); cf. also Westermann, Das dissenting vote im
Schiedsverfahren, SchiedsVZ 2009, 102 (107).
Baker/Greenwood (2013), DRI Vol 7 No 1, 31 (38); Rees/Rohn, Dissenting Opinions: Can they Fulfil
a Beneficial Role?, Arb.Int. 2009, 329 (335); Schtze, Das Zustandekommen des Schiedsspruchs,
SchiedsVZ 2008, 10 (14).
Stein/Jonas-Schlosser (2002), 1054 para.11; MnchKommZPO-Mnch (2013), 1054 para.22; dissenting Schtze, FS-Nakamura (1996), pp.525 (535 seq.), who is of the opinion that the award can be set
aside.
347
VI. Delivery of the Award

The award must be delivered to each party. The delivery of a copy of the original is sufficient, 21
as long as such copy bears the necessary original signatures.54 The award may be sent to the
legal counsel of a party instead of to the party itself.55 The parties may even authorize a third
party to accept service of process of an award.56 Yet, such delivery must be in compliance
with the requirement of delivery under 1054 (4) ZPO, i.e. the parties must have agreed that
such form of delivery is deemed to be delivery to the parties concerned.57 An award may be
delivered by post or otherwise. The wording of the law is silent as to whether it is mandatory
to use any special form of delivery. In any case, in view of the time limits set out in 1059 (3)
sentence2, 1060 (2) sentence3 ZPO, a form of delivery that can give evidence on the exact
date of delivery should always be selected.58
VII. Changes to the Award Before Delivery

After the votes on the award have been cast, the arbitral tribunal may resume its deliberations 22
only by a majority decision, which can be taken at any time until the award is signed.59 If the
reasoning was not subject to the deliberations and to the voting, the arguments of the reasoning must be discussed in new deliberations.60 Once the arbitrators have signed the award, it
has a binding effect on the arbitrators (inter se). It can then only be altered by a unanimous
decision of the arbitral tribunal. If an arbitrator sends back the signed award with the comment that some particular points should be changed, the arbitrators signature becomes valid
only if the changes are actually made or if he consents to the final version of the award.61 As
soon as it is served upon any of the parties, an award becomes externally binding (in relation
to all parties involved in the proceedings)62 and can therefore no longer be changed by the
arbitrators.
With regard to the requirements of form set out in 1054 ZPO, any non-compliance will be 23
considered ex officio in subsequent challenge proceedings according to 1059, 1060 ZPO.63
Nevertheless, any such deficiencies of form may still be cured during challenge proceedings.64
54
55
56
57
58
59
60
61
62
63
64
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.56; Zller-Geimer (2014), 1054 para.11;
HK-ZPO-Saenger (2013), 1054 para. 7; Lachmann (2008), para. 1777; Schwab/Walter (2005),
Chap.20 para.9; dissenting Baumbach/Lauterbach (2014), 1054 para.6; MnchKommZPO-Mnch
(2013), 1054 para.41.
MnchKommZPO-Mnch (2013), 1054 para.42; von Hoffmann, IPRax 1986, 337 (339).
Lachmann (2008), paras1780 seq.; Stein/Jonas-Schlosser (2002), 1054 para.20; Musielak-Voit (2013),
1054 para.10.
BGH 11.10.1979, NJW 1980, 1284; Thomas/Putzo-Reichold (2013), 1054 para.10.
BGH 11.11.1982, NJW 1983, 867.
348
1055 Effect of Arbitral Award

The arbitral award has the same effect between the parties as a final and binding court
judgment.
Short Bibliography: Bandel, Einstweiliger Rechtsschutz im Schiedsverfahren, Mnchen 2000; Bosch,
Rechtskraft und Rechtshngigkeit im Schiedsverfahren, Tbingen 1991; Gaul, Die Rechtskraft und
Aufhebbarkeit des Schiedsspruchs im Verhltnis zur Verbindlichkeit des staatlichen Richterspruchs,
in: Berger/Ebke/Elsing (eds), FS-Sandrock, 2000, p.285; Hanefeld, Country Report Germany, in:
Weigand (Hrsg.), Practitioners Handbook on International Commercial Arbitration, Oxford 2010;
Henn, Schiedsverfahrensrecht, Heidelberg 2000; Holtzmann/Neuhaus, A Guide to the UNCITRAL
Model Law on International Commercial Arbitration, Deventer 1989; Huber, Das Verhltnis von
Schiedsgericht und staatlichen Gerichten bei der Entscheidung ber die Zustndigkeit, SchiedsVZ
2003, 73; Krll, Recourse against Negative Decisions on Jurisdiction, Arb.Int. 2004, 55; Krll, Die
schiedsrechtliche Rechtsprechung 2004, SchiedsVZ 2005, 139; Krll, Die schiedsrechtliche Rechtsprechung des Jahres 2009, SchiedsVZ 2010, 213; Lachmann, Handbuch fr die Schiedsgerichtspraxis, Kln 2008; Lindacher, Schiedsspruch und Parteidisposition, KTS 1966, 153; Lionnet/Lionnet,
Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit, Stuttgart Berlin 2005; Loritz,
Probleme der Rechtskraft von Schiedssprchen im deutschen Zivilprozessrecht, ZZP 1992, 1; Plameier, Vollstreckung nicht endgltiger Schiedssprche, SchiedsVZ 2004, 234; Raeschke-Kessler/
Berger, Recht und Praxis des Schiedsverfahrens, Kln 1999; Rosenberg/Schwab/Gottwald, Zivilprozessrecht, Mnchen 2010; Rtzel/Wegen/Wilske, Commercial Dispute Resolution in Germany,
Mnchen 2005; Schreiber, Schiedsgericht und Verjhrung, in: Geimer (ed.), FS-Schtze, 1999,
p.807; Schroeder, Zur Auslegung von Scheinschiedssprchen und anderen formellen Schiedssprchen durch staatliche Gerichte Ein Beitrag zur Auslegung des Begriffs Schiedsspruch in 1059
ZPO, SchiedsVZ 2005, 244; Schtze, Schiedsgerichtsbarkeit und Schiedsverfahren, Mnchen 2012;
Schtze/Tscherning/Wais, Handbuch des Schiedsverfahrens Praxis der deutschen und internationalen Schiedsgerichtsbarkeit, Berlin 1990; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005;
Triebel/Coenen, Parallelitt von Schiedsverfahren und staatlichem Gerichtsverfahren, IDR 2003,
2; Trittmann, When should arbitrators issue interim or partial awards and or procedural orders?,
(2003) 20(3) J.Int.Arb. 255; Wagner, in: Weigand (Hrsg.), Practitioners Handbook on International
Arbitration, Mnchen/Copenhagen 2002; Walter, Die Vollstreckbarerklrung als Voraussetzung
bestimmter Wirkungen des Schiedsspruchs, in: Waldner/Knzl (eds), FS-Schwab, 1990, p. 539;
Wieczorek/Schtze, Zivilprozessordnung und Nebengesetze, Berlin 1995.
Para.
I. Purpose of the Provision . . . . . . . . . . . . . . . . . 1
III. Effect of Awards . . . . . . . . . . . . . . . . . . . . . . . . . 3
A. Procedural res judicata . . . . . . . . . . . . . . . . 5
B. Substantive res judicata . . . . . . . . . . . . . . . 7
1. Types of Awards and Their Effects . 7
2. Effects of an Award on Other
Proceedings. . . . . . . . . . . . . . . . . . . . . . 17
3. Binding Effect Restricted on the
Subject Matter . . . . . . . . . . . . . . . . . . . 18
4. Binding Effect Restricted to the
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Para.
5. Differences Between the Effects
of Arbitral Awards and Court
Judgements . . . . . . . . . . . . . . . . . . . . . . 22
6. Effect of Awards on
Enforcement Proceedings . . . . . . . . 27
C. Exceptions from the Binding Effect
Due to Applications for Reopening
the Proceedings . . . . . . . . . . . . . . . . . . . . . 28
D. Nullification of an Award . . . . . . . . . . . . 29
E. Foreign Awards . . . . . . . . . . . . . . . . . . . . . 30
I.
349
1055 ZPO is intended to give German2 arbitral awards the same effect as court judgments. 1
The decisions contained in final court judgements that cannot be appealed against anymore
become both res judicata in the procedural (705 Code of Civil Procedure (Zivilprozessordnung ZPO)) and in the substantive (322 ZPO) sense. The concept of procedural
res judicata describes the situation in which no appeal is admissible against a decision, while
the concept of substantive res judicata describes the effect that the parties and the courts are
bound by a decision with respect to the matter in dispute, thereby preventing the same or
a different court from rendering a dissenting or contradictory decision on the same issue.
According to German procedural law, procedural res judicata is a mandatory prerequisite for
substantive res judicata.
II.
Legislative History
The current 1055 ZPO has been kept unchanged compared to the previous 1040 ZPO. 2
It does not find its equivalent in the UNCITRAL Model Law (ML). The statutory binding
effect of arbitral awards, which applies automatically according to 1055 ZPO unless the
award is set aside, stands in contrast to the Model Laws approach, which, pursuant to its
Article35 (1) ML, requires recognition of the award by a national court before the award
gains such effect.
III. Effect of Awards

An arbitral award becomes automatically binding once it fulfils all mandatory form require- 3
ments set out in 1054 ZPO3 and has been delivered to the parties.4 Although the award becomes effective as of the point in time it is received by one of the parties to the proceedings,5
the award must be sent to all parties as a matter of principle.6 Oral promulgation is generally
not sufficient. Further requirements, as found in the former German arbitration law such as
deposition of the award, are no longer necessary for the award having binding effect.7
The term award within the meaning of 1055 ZPO comprises only those decisions of the 4
arbitral tribunal which are final with respect to any claims or parts of claims that are being
asserted by a party. Consequently, partial awards and awards on agreed terms fall under the
scope of application of 1055 ZPO, but procedural orders and preliminary awards do not,
as the latter do not finally settle an issue (cf. infra, paras7 et seq. for the typology of awards).8
It has to be emphasized that the arbitral tribunal generally has a wide discretion during the
1
2
3
4
6
7
8
Concerning the application of this provision to foreign awards cf. infra, para.30.
See supra, von Schlabrendorff/Sessler, 1054 para.3.
para.2; Stein/Jonas-Schlosser (2002), 1055 para.1; MnchKommZPO-Mnch (2013), 1055 para.4;
Zller-Geimer (2014), 1055 para.5; Gaul, FS-Sandrock (2000), p.285 (289).
Lachmann (2008), para.1780; MnchKommZPO-Mnch (2008), 1055 para.4; dissenting MusielakVoit (2013), 1055 para.3.
BGH 07.10.1953, NJW 1953, 1913; Stein/Jonas-Schlosser (2002), 1055 para.13; MnchKommZPOMnch (2013), 1055 para.6; Musielak-Voit (2013), 1055 para.2; Zller-Geimer (2014), 1055 para.6.
350
proceedings when choosing the proper form in which it renders a decision.9 For example,
when faced with the question of rendering either a partial award or a procedural order, the
tribunal has to consider, inter alia, that only awards have a binding effect pursuant to 1055
ZPO and can be enforced through the state courts10 and only awards can be set aside pursuant to 1059 ZPO, while no such possibility exists with regard to procedural orders.
A.
Procedural res judicata
5 An award becomes formally effective upon delivery to the parties. The possibility of setting
aside an award according to 1059 ZPO is not to be considered as an ordinary means of
recourse preventing the award from becoming res judicata from a procedural point of view.11
6 The only cases in which the issue of formal effectiveness has to be viewed differently are
those rare situations where the parties have agreed on an appellate arbitral tribunal.12 In these
circumstances, the award becomes formally effective only after the decision of the appellate
arbitral tribunal or, alternatively, after the means of this recourse has expired. In contrast,
German arbitration law does not provide the parties with the possibility to contractually
agree on an appeal to the ordinary courts of law.13 In such cases, the underlying agreement
simply does not fulfil the requirements of an arbitration agreement pursuant to 1029 ZPO
as the parties actually did not agree on arbitral proceedings with the aim of achieving a final
decision.14
B.
Substantive res judicata
1.
Types of Awards and Their Effects
7 An arbitral award represents a binding decision on the merits of the dispute (cf. 322 ZPO).15
The reasons given in the award for the decision may serve as means of interpretation to determine the scope of the res judicata.16 Generally, only decisions that at least partially conclude a
9
10
11
12
13
14
15
16
Cf. Trittmann, (2003) 20(3) J.Int.Arb. 255.

The only orders that can be enforced through the state courts are orders for interim measures of protection pursuant to 1041 ZPO. However, the prevailing opinion denies the possibility of enforcement on
the international level according to the provisions of the New York Convention. Cf. Supreme Court of
Queensland 29.10.1993, Yearbook XX (1995), 628; Bandel (2000), pp.340 et seq.
Schwab/Walter (2005), Chap.21 para.4; MnchKommZPO-Mnch (2013), 1055 para.3.
Cf. Weber, Fr und wider eine Berufungsinstanz im Schiedsverfahren, in: Schtze (ed.), FS-Geimer,
2002, p.1445 giving a very profound overview on recourse actions in arbitral proceedings.
OLG Frankfurt 20.12.2005, BauR 2006, 738; MnchKommZPO-Mnch (2013), 1055 para.3; Stein/
Jonas-Schlosser (2002), 1055 para.2.
Schwab/Walter (2005), Chap.22 para.4; Zller-Geimer (2014), 1029 para.6; Musielak-Voit (2013),
1029 para.20.
322 ZPO reads: (1) Judgements have legal force only to such extent as they decide the demand raised
by the complaint or counterclaim. (2) In the event that the defendant asserted the set-off of a counterdemand, the decision that the counter-demand does not exist shall be legally valid up to the amount for
which the set-off was asserted.
OLG Mnchen confirmed that the scope of the subjective res judicata effect is determined by the operative
part of the arbitral award; but the grounds for the award may be used to determine this scope, OLG
Mnchen 14.12.2009, unpublished but annotated by Krll, SchiedsVZ 2010, 213 (213 seq.). Regarding
the interpretation of the operative part of an award, BGH 13.01.2009 held that an arbitral award does not
have res judicata effect if it is not apparent which requests for relief or which parts of a request have been
decided, id. SchiedsVZ 2009, 122 (122, 124). The term motion comprises the procedural claim as well
351
dispute can become res judicata, while it is irrelevant whether or not any claim awarded by the
award is conditional or not.17 In order to determine the scope of the substantive res judicata, it
is essential to differentiate between the various types of awards.
The wide range of different types of awards is primarily due to the broad discretion of arbitral 8
tribunals regarding the means of conducting and concluding proceedings. Article 32 (1)
of the UNCITRAL Arbitration Rules explicitly mentions final, interim, interlocutory and
partial awards as possible ways for the arbitral tribunal to render a decision. But there exists
no generally accepted definition of these various types of awards, neither in the UNCITRAL
Arbitration Rules nor in German law. However, in German law, this lack of conceptional
clarity might be overcome by reference to 300 et seq. ZPO, which deal with the comparable classification of state court judgements. Accordingly, in order to determine whether a
decision actually constitutes an award and may therefore be treated as such in subsequent
proceedings (e.g. 1059, 1060 et seq. ZPO), the contents of the decision are to be regarded
as the crucial criterion, whereas the designation of an arbitral decision as an award or order
can merely serve as an indication, but does not determine the issue.18
a. Final Awards: German law does not define the term award or the term final award.19 9
However, according to the deliberations in connection with the drafting of the Model Law20
and relying on the corresponding provisions in German civil procedure as regards court
judgements,21 a final award may be defined as an award that disposes of all the yet undecided
issues presented in the proceedings.22 Consequently, such an award has the effect of res judicata with regard to all claims and counterclaims that have been decided in the award.
b. Partial Awards: The arbitral tribunal has complete discretion in deciding whether to render 10
a partial award prior to the final award.23 Generally, partial awards are considered to be those
that do not dispose of the entire dispute, but only divisible parts thereof, e.g. one of several
claims or a certain part of a specific claim.24 They have binding effect to the extent that the
award finally concludes a claim and fulfils all formal requirements pursuant to 1054 ZPO.25
Furthermore, partial awards can be subject to recourse and enforcement proceedings independently from the issue of a further award.26
17
18
19
20
21
22
23
24
25
26
as its underlying facts as submitted by the claimant and reproduced in the award, cf. BGH 13.01.2009, 122
(124).
MnchKommZPO-Mnch (2013), 1055 para.6; Baumbach/Lauterbach (2014), 1055 para.3.
BGH 27.05.2004, NJW 2004, 2226 et seq.; id. 06.06.2002, NJW 2002, 3031; cf. also Krll, SchiedsVZ
2005, 139 (143) regarding decisions of the arbitral tribunal that are labelled as award but not considered
as such by the courts; Schroeder, SchiedsVZ 2005, 244 et seq. suggests to apply 1059 ZPO on such
quasi-awards.
Weigand-Wagner (2002), Germany, para.314; cf. Holtzmann/Neuhaus (1989), p.154 on Art. 2 ML.
Cf. 300 ZPO.
Weigand-Wagner (2002), Germany, para.314; Weigand-Hanefeld (2010), Germany, para. 7.155.
Lachmann (2008), para. 1720; Raeschke-Kessler/Berger (1999), para. 847; Weigand-Wagner (2002),
Germany, para.319.
Lachmann (2008), para.1719; Lionnet/Lionnet (2005), p.401; Schtze (2012), para.440; cf. 302 ZPO
concerning the equivalent of a German Teilurteil.
MnchKommZPO-Mnch (2013), 1056 para.7; Weigand-Wagner (2002), Germany, para.319; Lionnet/
Lionnet (2005), p.401; Schtze (2012), para.440.
352
11 A special type of partial award is an award that is being rendered subject to the proviso that
a decision is still to be made on a set-off, if the decision on the set-off claim falls into the
jurisdiction of a court or another arbitral tribunal.27 Such an award is final and binding within
the jurisdiction of the arbitral tribunal and must therefore be issued in accordance with the
formal requirements set out in 1054 ZPO.28 In contrast, a preliminary or partial award
issued subject to such a proviso, but to be followed by another award of the same arbitral
tribunal as concerning the set-off, is only binding upon the tribunal itself without being an
independently enforceable award.29
12 c. Interim/Interlocutory Awards: While it is disputed whether the terminology interim
award or interlocutory award is preferable,30 there is general agreement on the common
characteristics of such a decision by the arbitral tribunal. Unlike partial awards, an interim/
interlocutory award does not constitute a decision that finally disposes of a separate part of
a dispute, but rather decides on a specific issue raised in connection with the claims, e.g. the
limitation of a claim or an individual prerequisite for a claims admissibility.31 These awards
generally do not have res judicata character, as they do not constitute a final decision disposing of a dispute or parts of a dispute.32 Consequently, interim/interlocutory awards cannot be
declared enforceable.33 Nevertheless, they bind the arbitral tribunal as regards its subsequent
(final) decision with respect to the issues that have been decided in the interim award.34
13 i. Decision on Jurisdiction: One special partial award is the preliminary ruling of the arbitral
tribunal on its own jurisdiction pursuant to 1040 (3) ZPO. This decision can either be
communicated to the parties as a separate award or as part of the final arbitral award. If the tribunal finds that it has jurisdiction and renders a ruling, this ruling is subject to review by the
courts if the respondent files a motion to this effect within one month, according to 1040
(3) sentence1 ZPO. If the court approves the tribunals decision or the respondent does not
file a motion within the relevant time period, the jurisdiction of the tribunal can no longer be
disputed. Therefore, it might be recommendable to render a decision on jurisdiction in the
27
28
29
30
31
32
33
34
Rtzel/Wegen/Wilske (2005), p. 145; Weigand-Wagner (2002), Germany, paras 321 et seq.; WeigandHanefeld (2010), Germany, para.7.153.
Lachmann (2008), para. 1710; Stein/Jonas-Schlosser (2002), 1054 para. 4; Schwab/Walter (2005),
Chap.18 para.8.
Stein/Jonas-Schlosser (2002), 1054 para.4; Zller-Geimer (2014), 1054 para.3; cf. under the previous
1054 ZPO: BGH 07.10.1953, NJW 1953, 1913.
Stein/Jonas-Schlosser (2002), 1055 para.13; Weigand-Wagner (2002), Germany, para.315; Lionnet/
Lionnet (2005), p.403 (interim and partial awards are identical and they are both names for the German Teilschiedsspruch, and an interlocutory award is the German Zwischenschiedsspruch).
Raeschke-Kessler/Berger (1999), para. 851; Rtzel/Wegen/Wilske (2005), p. 145; Weigand-Wagner
(2002), Germany, para.315; Weigand-Hanefeld (2010), Germany, para.7.151; Lionnet/Lionnet (2005),
p.401; Rosenberg/Schwab/Gottwald (2010), 180 I 3 e.
BGH 07.10.1953, NJW 1953, 1913 (interim award with the reservation on the decision of the set-off
claim); Lionnet/Lionnet (2005), p.401; Stein/Jonas-Schlosser (2002), 1055 para.17; MnchKommZPOMnch (2013), 1055 para.8; in difference to Article32 (2) UNCITRAL Arbitration Rules, explicitly
stating the final and binding effect; cf. Weigand-Trittmann/Duve, UNCITRAL Arbitration Rules, Article32 para.2.
Rtzel/Wegen/Wilske (2005), p.145; Weigand-Wagner (2002), Germany, para.316; Weigand-Hanefeld
(2009), Germany, para.7.151; Rosenberg/Schwab/Gottwald (2010), 180 I 3 e; Lionnet/Lionnet (2005),
p.401; Schwab/Walter (2005), Chap.18 para.10.
Stein/Jonas-Schlosser (2002), 1055 para.17; Weigand-Wagner (2002), Germany, para.316; WeigandHanefeld (2009), Germany, para.7.151.
353
form of a separate award in order to obtain certainty as to this issue at an early stage of the
proceedings.
By contrast, it is disputed whether any decision by an arbitral tribunal declining its jurisdic- 14
tion can be rendered in the form of an award. There is a court decision as well as there are
some writers who argue that, in such cases, the arbitral tribunal is not competent to render
an award and, thus, the proceedings must be terminated by an order according to 1056 (2)
No.3 ZPO.35 However, the Federal Court of Justice (Bundesgerichtshof BGH) decided
in 2002 that a decision by an arbitral tribunal denying its jurisdiction constitutes a final
procedural award and can therefore be the subject of an application to be set aside pursuant
to 1059 ZPO.36 Otherwise, the claimant would have no means to take recourse against a
decision by the arbitral tribunal declining its jurisdiction. Consequently, such a decision by
an arbitral tribunal must constitute a final award,37 which may be reviewed in proceedings
according to 1059 ZPO and which also should include a decision on costs.38
ii. Award on the Grounds of the Claim: Another special type of interim/interlocutory deci- 15
sions are those where an arbitral tribunal decides on whether there is a basis for a claim, but
reserves its decision on the amount of the claim.39 Such decisions are undisputedly regarded
as final awards if the arbitral tribunal does not have jurisdiction to decide on the amount
of the claim, or at least is of the opinion that it lacks jurisdiction.40 On the other hand, it is
disputed whether a decision on the existence of a claim can become res judicata if the same
arbitral tribunal intends to decide on the amount of the claim in subsequent proceedings.
While some authors are of the opinion that such a decision is only binding upon the arbitral
tribunal itself,41 others42 rightfully point out that the arbitral tribunal has also the possibility
to render a declaratory award on the existence of a claim, which decision certainly would
have the effect of res judicata. Therefore, an award on the grounds of a claim has binding effect
not only on the arbitral tribunal, but also on the parties. 303, 304 ZPO, which regulate the
binding effect of interim judgements, should be applied in analogy.43
d. Measures of Interim Relief: From the wording of 1041 ZPO it might be deduced that an 16
interim measure of protection cannot be the subject of an arbitral award, but rather must be
35
36
37
38
39
40
41
42
43
OLG Hamburg 04.09.1998, Yearbook XXVIII (2003), 262 = CLOUT case No. 455; Musielak-Voit
(2013), 1040 para.8.
BGH 06.06.2002, SchiedsVZ 2003, 39 = CLOUT case No.560; cf. Krll, Arb.Int. 2004, 55; now consenting Thomas/Putzo-Reichold (2013), 1040 para.9.
Baumbach/Lauterbach (2014), 1040 para. 4; Lionnet/Lionnet (2005), p. 402; Stein/Jonas-Schlosser
(2002), 1055 para.17; Raeschke-Kessler/Berger (1999), para.563; Schwab/Walter (2005), Chap.21
para.1; Lachmann (2008), para.1721.
Raeschke-Kessler/Berger (1999), para.889; cf. Lachmann (2008), paras1725, 1727.
Rtzel/Wegen/Wilske (2005), p.145; cf. MnchKommZPO-Mnch (2013), 1055 para.6, 1056, para.8;
Musielak-Voit (2013), 1055 para.4; Schwab/Walter (2005), Chap.18 para.12; Zller-Geimer (2014),
1052 para.4; dissenting Lachmann (2008), para.1708.
Stein/Jonas-Schlosser (2002), 1055 para.15; MnchKommZPO-Mnch (2013), 1055 para.6; Schwab/
Walter (2005), Chap.18 para.12; Henn (2000), para.364.
Stein/Jonas-Schlosser (2002), 1055 para.15; Schtze/Tscherning/Wais-Wais (1990), para.526; Baumbach/Lauterbach (2014), 1055 para.3; MnchKommZPO-Mnch (2013), 1055 para.6; Musielak-Voit
(2013), 1055 para.4.
354
issued as an order.44 However, there might be cases where an arbitral tribunal could render
an interim/interlocutory award instead of issuing an interim measure of protection. Such an
interim/interlocutory award would constitute a binding preliminary decision for a limited
period of time, e.g. the arbitral tribunal could declare the authority of a managing director
valid for the duration of the proceedings.45
2.
Effects of an Award on other Proceedings
17 If an arbitral award deals with issues that are of relevance to subsequent proceedings, it has
the same precluding effect as a court judgment on any subsequent arbitral or court decision.46
Such effect, however, can only exist with regard to the dispositive part taken in the award, not
with regard to its reasoning. To the extent there are awards without a separate dispositive
section, it is necessary to determine by means of interpretation the extent to which the award
shall be binding.47 In order to avoid any uncertainties about the extent of the binding effect,
the parties should formulate their motions for relief as precisely as possible. Likewise, the
award should state what the legal consequences of the decision taken will be (cf. supra, von
Schlabrendorff/Sessler, 1054 para.12). It is disputed as to whether, in subsequent proceedings before a court dealing with the identical claim(s), an arbitral award has the effect of res
judicata, i.e. that the action can no longer be brought in this court.48
3.
Binding Effect Restricted on the Subject Matter
18 The binding effect of an arbitral award is restricted to the claims (and counterclaims) that
have been the subject of the arbitral proceedings and are decided in the award. The parties
are free to restrict the arbitral tribunals competence on specific claims, with the consequence
that the binding effect is restricted accordingly and, further, that other claims even those
based on the same facts can be decided by a court.49 Therefore, a set-off claim can only fall
into the scope of the binding effect of an award to the extent the arbitral tribunal actually
makes a decision on the set-off claim irrespective of whether the set-off claim exists or not.50
If the arbitral tribunal has decided on a claim that was not the subject of the arbitral proceedings, the award will nevertheless become binding in its entirety, irrespective of the possibility
of the award being subsequently set aside (1059 ZPO).51
4.
Binding Effect Restricted to the Parties
19 The inter partes effect of 1055 ZPO corresponds to what is stipulated in 322(1) ZPO
with regard to court judgements and, furthermore, has the effect of matching the outcome
44
45
46
47
48
49
50
51
Baumbach/Lauterbach (2014), 1041 para.3; Thomas/Putzo-Reichold (2013), 1041 para.2; Lachmann

(2008), paras1713 et seq.; Bandel (2000), p.73.
Zller-Geimer (2014), 1041 para.6; Stein/Jonas-Schlosser (2002), 1041 para.8; Bandel (2000), p.60.
Weigand-Wagner (2002), Germany, para. 369; Stein/Jonas-Schlosser (2002), 1055 para. 8; cf. infra,
para.23 concerning the issue whether an award has to be considered ex officio by the courts.
In favour of a ne bis in idem effect MnchKommZPO-Mnch (2013), 1055 para. 9; Schwab/Walter
(2005), Chap.21 paras5 et seq.; Schtze/Tscherning/Wais-Wais (1990), para.526; against such an effect,
but demanding an obligation to decide correspondingly instead Stein/Jonas-Schlosser (2002), 1055
para.6; Bosch (1991), pp.85 et seq.
Schwab/Walter (2005), Chap.21 para.9; MnchKommZPO-Mnch (2013), 1055 para.20.
BGH 27.02.1961, BGHZ 34, 337 (339).
355
of arbitral proceedings with their legal basis, i.e. the arbitration agreement.52 Although the
wording of this provision may appear to be quite clear, the meaning of the term between the
parties is disputed.
The core issue in dispute is whether the binding effect of an arbitral award extends to third 20
parties. In general, this raises the question of whether the legislator intended to restrict the
effect of arbitral awards in a manner that does not allow for an erga omnes effect, as applies to
some court judgements, e.g. claims based on 248 (1) sentence1, 249 (1) German Stock
Corporation Act (Aktiengesetz AktG) that extend the effect of a judgment concerning the
(in)validity of a resolution at the shareholders meeting to all shareholders, all members of
the board of directors and all members of the supervisory board.53
Further problems occur in cases of legal succession, where it is disputed whether the rules for 21
court judgements laid down in 325 et seq. ZPO54 apply to arbitral awards as well. While
some authors55 answer this question in the affirmative, the prevailing opinion56 rejects the
application of these provisions. According to the latter view, the binding effect of an award
should be determined exclusively on the basis of the arbitration agreement since 1055 ZPO
refers only to the parties of the arbitration agreement. The determination of who is to be
regarded as a party to the arbitration agreement is to be carried out in accordance with the
provisions of substantive law.57 All of the above-mentioned legal writers, however, agree that
an arbitral award is binding on anyone who is also bound by the contractual relationship
forming the basis of the arbitration proceedings.58
5.
Differences Between the Effects of Arbitral Awards and Court Judgements
The wording of 1055 ZPO may give rise to certain ambiguities, given that the actual effects 22
of an arbitral award do not go quite as far as those of court judgments in a number of respects.
The main differences between the equal effect of arbitral awards and court judgements are of
course the enforcement proceedings (cf. 1060, 1061 ZPO) and the set-aside proceedings,
which only apply to awards (cf. 1059 ZPO). There are, however, further issues that may
arise in this context.
52
53
54
55
56
57
58
Stein/Jonas-Schlosser (2002), 1055 para.21; Lachmann (2008), para.1786; dissenting Bosch (1991),
pp.129 et seq.
Zller-Geimer (2014), 1055 para.4 for applicability of these provisions, if the affected third parties have
the opportunity to participate in the arbitral proceedings; dissenting under the previous 1040 ZPO pre1998 BGH 29.03.1996, NJW 1996, 1753; cf. MnchKommZPO-Mnch (2013), 1055 para.21; Stein/
Jonas-Schlosser (2002), 1055 para.18. For further details see Part IV, Duve, Arbitration of Corporate
Law Disputes in Germany, paras23 et seq.
325 ZPO reads: (1) The final judgement is effective for and against the parties and the persons who
became legal successors of the parties after the occurrence of pendency of the action or acquired possession of a thing involved in the litigation in such a manner that one of the parties or his legal successor
became the indirect possessor..
Bosch (1991), p.124; Schwab/Walter (2005), Chap.21 para.2; Zller-Geimer (2014), 1055 para.7 (unless otherwise agreed by the parties); differentiating Stein/Jonas-Schlosser (2002), 1055 paras18 et seq.
Baumbach/Lauterbach (2014), 1055 para. 6; MnchKommZPO-Mnch (2013), 1055 para. 21;
Schtze/Tscherning/Wais-Wais (1990), para.526; Thomas/Putzo-Reichold (2013), 1055 para.3; BGH
17.03.1975, NJW 1975, 1121 (1122 et seq.) plainly states that 325 ZPO is not applicable to awards.
Cf. MnchKommZPO-Mnch (2013), 1029 paras27 etseq.
Lachmann (2008), para. 1786; MnchKommZPO-Mnch (2013), 1055 para. 22; Schwab/Walter
(2005), Chap.21 para.2 (under the conditions of 325 ZPO); Stein/Jonas-Schlosser (2002), 1055
para.18.
356
23 a. Binding Effect and Parties Autonomy: Legal writers debate to what extent the binding effects of an arbitral award are subject to the parties autonomy. Like the issue of the pendency
of arbitral proceedings (lis pendens arbitri), the question is whether the courts consider the
binding effect of an award ex officio. The prevailing opinion answers this question in the negative.59 Thus, the courts will only dismiss a case brought before them as being inadmissible
if one of the parties invokes that an arbitral award has already been rendered on the same
subject matter.
24 A further question is whether the parties may (implicitly) dispose of the award. Since an
arbitral award is not a sovereign act like a court judgment, there is no public interest in restricting the parties ability to dispose of the award. Therefore, the parties are free to set aside
the binding effect of the award.60 If court proceedings are instituted after the arbitral award
was issued and neither of the parties mentions in the court proceedings that the subject matter of these proceedings has already been decided in a binding arbitral award, this means by
implication that the parties unanimously abandon the binding effect of the award; given that
this conclusion corresponds with the obligation to raise an objection according to 1032
ZPO in the court proceedings.61 However, this may lead to difficulties in cases where third
parties are also affected by the binding effects of an award.62
25 b. Special Cases: Although it is jus cogens that an award becomes effective as soon as the requirements of 1054 ZPO are fulfilled and the award has been delivered to the parties,63 it is
disputed whether this also holds true for an award establishing or altering a legal relationship,
e.g. awards concerning the (in)effectiveness of a termination or the renewal of a contract.
Some legal writers are of the opinion that such awards do not take effect until the moment at
which the declaration of enforceability becomes final and binding.64 This view appears justified on the basis that, until an award is declared enforceable, the award may be set aside by
an agreement between the parties or according to 1059 ZPO. However, this view confuses
the issue of the binding effect with the issue of enforcement. It cannot be assumed that the
declaration of enforceability should have any additional effect other than that of an exequatur
rendering an award enforceable. This means that an award establishing or altering a legal rela-
59
60
61
62
63
64
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.56; BGH 11.04.1958, NJW 1958, 950; Baumbach/Lauterbach (2014), 1055 para.4; Stein/Jonas-Schlosser (2002), 1055 para.5; Weigand-Wagner
(2002), Germany, para.370; Lachmann (2008), para.1785; Schreiber, FS-Schtze (1999), pp.807 (818
et seq.); Triebel/Coenen, IDR 2003, 2 (6); dissenting Bosch (1991), pp.82 et seq.; Lindacher, KTS 1966,
153 (155); Loritz, ZZP 1992, 12; Musielak-Voit (2013), 1055 para.5; Schwab/Walter (2005), Chap.21
para.6; Wieczorek/Schtze-Schtze (1995), 1040 para.4; Zller-Geimer (2014), 1055 para.8.
Consenting BayObLG 24.02.1984, MDR 1984, 496; OLG Bremen 14.12.1956, NJW 1957, 1035 (1036);
Baumbach/Lauterbach (2014), 1055 para.4; Weigand-Wagner (2002), Germany, para.370; Schreiber,
FS-Schtze (1999), p.807 (818); Stein/Jonas-Schlosser (2002), 1055 para.4; Thomas/Putzo-Reichold
(2013), 1055 para.2; Zller-Geimer (2014), 1055 para.9; dissenting Gaul, FS-Sandrock (2000),
p.285 (322); Loritz, ZZP 1992, 12; Walter, FS-Schwab (1990), p.539 (550); Schwab/Walter (2005),
Chap.21 para.7.
Cf. supra, paras3 et seq.
Baumbach/Lauterbach (2014), 1055 para.7; cf. concerning the previous 1040 ZPO pre-1998 see
BayObLG 24.02.1984, MDR 1984, 496; Wieczorek/Schtze-Schtze (1995), 1042 para.9.
357
tionship is not to be considered differently to any other award in this respect and, therefore,
also becomes binding as soon as the requirements stipulated in 1054 ZPO are met.65
An award may oblige a party to issue a legally relevant declaration of intent, e.g. consent to 26
an assignment of property. The enforcement of a judgment providing for such a statement
is governed by 894 ZPO, which stipulates that a final court decision substitutes for any
such acts or statements that are otherwise necessary, e.g. for an assignment of property. It is
disputed whether this rule can be applied in the same way to an arbitral award, i.e. whether
the arbitral award or the declaration of enforceability automatically stands for any declaration
of intent to be made according to the award.66 According to most legal writers, the award itself
does not suffice, but a declaration of enforceability is required (at least in cases of any entries
to be made in the land register or any other public register).67
6.
Effect of Awards on Enforcement Proceedings
An award may also have implications in other enforcement proceedings not involving the 27
enforcement of the award as such. For instance, pursuant to 775(1) No.4 ZPO, enforcement must be stayed if the debtor can show that he has satisfied the creditor or the creditor
has approved deferment of the claim, e.g. if the arbitral tribunal has decided that the claim
and the counterclaim are to be set-off against each other. Furthermore, any action opposing
execution filed pursuant to 767 ZPO can only be based on those grounds that occurred
after the end of the oral hearings of the arbitral proceedings.68 An arbitral award can have an
effect in these situations only if this is stipulated in the relevant dispositive decision, because
contrary to court judgments, which are accepted as evidence of the facts described in them,69
arbitral awards do not have a comparable function.70
C.
Exceptions from the Binding Effect Due to Applications for Reopening the Proceedings
The exceptions of setting aside the effects of a final court judgment due to the reopening of 28
the proceedings or due to materially changed circumstances can be applied by analogy to
arbitral awards.71 For example, an application for reopening the arbitral proceedings would
be admissible if one party has obtained the arbitral award by fraud. Furthermore, the request
65
66
67
68
69
70
71
Lachmann (2008), para.1787; Schwab/Walter (2005), Chap.21 para.12; Walter, FS-Schwab (1990),
p.539 (554); Zller-Geimer (2014), 1055 para.2; different view BayObLG 24.02.1984, MDR 1984,
496; Baumbach/Lauterbach (2014), 1055 para.7 subjecting the binding effect to the declaration of
enforceability.
In favour of the declaration of enforcement: Baumbach/Lauterbach (2014), 1055 para.7; Schwab/Walter (2005), Chap.28 para.18; MnchKommZPO-Mnch (2013), 1055 para.33; Zller-Geimer (2014),
1055 para.2; in favour of the arbitral award OLG Dresden 08.05.2001, Yearbook XXVIII (2003), 257 =
CLOUT case No.444; Loritz, ZZP 1992, 14 et seq.
Baumbach/Lauterbach (2014), 1055 para.7; Stein/Jonas-Schlosser (2002), 1042 para.2; dissenting
Loritz, ZZP 1992, 18 et seq.; Schwab/Walter (2005), Chap.28 para.19; Zller-Geimer (2014), 1055
para.2.
BGH 13.12.1994, WM 1995, 634; id. 07.01.1965, NJW 1965, 1138; Lachmann (2008), paras1793 seq.;
Musielak-Voit (2013), 1055 para.12; Wieczorek/Schtze-Schtze (1995), 1040 para.9.
Cf. 415, 418 ZPO.
MnchKommZPO-Mnch (2013), 1055 para.30; Zller-Geimer (2014), 1055 para.10; Lachmann
(2008), para.1795; Schwab/Walter (2005), Chap.21 para.10.
358
for alteration or amendment of a court judgment as set out in 323 ZPO72 and 324 ZPO73
can also be applied to arbitral awards by analogy, e.g. if the award is about the lease of business
premises and changed circumstances according to these provisions occur. The tribunal that
rendered an award does not have jurisdiction to decide motions to reopen the proceedings
since its assignment is terminated with the award, 1056 (3) ZPO.74 Therefore, the parties
have to appoint a new tribunal which decides on the possible amendment of the first decision or the supplementary claim.75 The decision on motions according to 323, 324 ZPO
is to be rendered as a separate award that must meet the requirements of form provided for in
1054 ZPO. It is independently enforceable (1060 ZPO) and can be challenged like any
other award (1059 ZPO).
D.
Nullification of an Award
29 Generally, deficiencies in the arbitral proceedings or any reasons of 1059 ZPO do not affect
the res judicata function of an award.76 The binding effect of an award exists until it is set aside
by a court decision according to 1059 ZPO or 1060 (2) ZPO. However, an exception to
this principle is the situation where the arbitral award is null and void ab initio and does not
even have to be set aside, i.e. if the award has not been signed by the arbitrators or is contrary
to a final and binding decision by a state court.77
E.
Foreign Awards
30 Foreign arbitral awards are also considered res judicata in Germany from the moment they
become binding, according to the procedural law that applies to the arbitral award.78 Thus, it
is the applicable lex fori to the award (cf. 1061 para.10) that determines the extent and the
commencement of the binding effect. There is no additional prerequisite of recognition of
foreign arbitral awards comparable to that applying to foreign judgements pursuant to 328
(1) No. 5 ZPO (principle of reciprocity).79 The binding effect of foreign arbitral awards
results from the obligation to recognize these awards under 1061 ZPO, and respectively
ArticleV New York Convention 1958.80 Thus, the question whether a foreign arbitral award
72
73
74
75
76
77
78
79
80
323 ZPO reads: (1) If, in case of a judgement imposing recurring payments falling due in the future,
there is a material change in those circumstances, which were determinant for the judgement imposing
the payments, for fixing the amounts or the duration of their disbursements, each party is entitled to
demand, by way of a claim, a corresponding amendment of the judgement..
324 ZPO reads: If an annuity payment imposed by a judgement pursuant to 843 to 845 or 1569
to 1586b of the German Civil Code does not provide for the giving of security, the person entitled may
nevertheless demand the giving of security if the financial situation of the debtor has substantially deteriorated; under the same condition he/she may demand that the security fixed by the judgement be
increased..
Stein/Jonas-Schlosser (2002), 1059 para.7; Zller-Geimer (2014), 1059 para.17; Huber, SchiedsVZ
2003, 73 (74).
BGH 07.01.1971, NJW 1971, 986 (987); cf. MnchKommZPO-Mnch (2013), 1061 para.1; MusielakVoit (2013), 1061 para.1; Zller-Geimer (2014), 1061 para.24.
Stein/Jonas-Schlosser (2002), 1055 para.25; MnchKommZPO-Mnch (2013), 1061 para.1; MusielakVoit (2013), 1061 para.1; Loritz, ZZP 1992, 1 (2).
Stein/Jonas-Schlosser (2002), 1055 para. 25; Zller-Geimer (2014), 1055 para. 14; cf. BayObLG
22.11.2002, SchiedsVZ 2003, 142 with note by Plameier, SchiedsVZ 2004, 234.
359
has binding effect in Germany is decided implicitly in the course of the recognition and
enforcement procedure.81
81
360
1056 Termination of Proceedings

(1) The arbitral proceedings are terminated by the final award or by an order of the
arbitral tribunal in accordance with subsection 2 of this section.
(2) The arbitral tribunal shall issue an order for the termination of the arbitral proceedings when
1.
the claimant
a) fails to state his claim according to 1046 (1) and 1048 (4) does not apply, or
b) withdraws his claim, unless the respondent objects thereto and the arbitral tribunal recognizes a legitimate interest on his part in obtaining a final settlement
of the dispute, or
2.
the parties agree on the termination of the proceedings, or
3.
the parties fail to pursue the arbitral proceedings in spite of being so requested
by the arbitral tribunal or when the continuation of the proceedings has for any
reason become impossible.
(3) The mandate of the arbitral tribunal terminates with the termination of the arbitral
proceedings, subject to the provisions of 1057 (2), 1058 and 1059 (4).
Short Bibliography: Haas, Aufhebungsklage und Beendigungsbeschluss nach 1056 Abs.2ZPO,
SchiedsVZ 2010, 286; Holtzmann/Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration, Deventer 1989; Lachmann, Handbuch fr die Schiedsgerichtspraxis,
Kln 2008; Lrcher/Lrcher, Das Schiedsverfahren national/international nach deutschem
Recht, Heidelberg 2001; Raeschke-Kessler/Berger, Recht und Praxis des Schiedsverfahrens, Kln
1999; Rtzel/Wegen/Wilske, Commercial Dispute Resolution in Germany, Mnchen 2005; Schtze,
Schiedsgerichtsbarkeit und Schiedsverfahren, Mnchen 2012; Schtze/Tscherning/Wais, Handbuch
des Schiedsverfahrens Praxis der deutschen und internationalen Schiedsgerichtsbarkeit, Berlin
1990; Wagner, in: Weigand (Hrsg.), Practitioners Handbook on International Arbitration, Mnchen/Copenhagen 2002.
I.
II.
III.
IV.
V.
I.
Para.
Mandatory/Optional Nature. . . . . . . . . . . . . 3
Termination by Final Award . . . . . . . . . . . . . . 4
Order for Termination . . . . . . . . . . . . . . . . . . . 5
A. Default in Filing the Statement of
Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Para.
Withdrawal of Claim . . . . . . . . . . . . . . . . . 8
Termination by Agreement . . . . . . . . . . . 9
Failure to Pursue the Proceedings . . . . 11
Impossibility of Continuation of
Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 12
VI. Continuity of the Arbitral Tribunals
Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
B.
C.
D.
E.
1 1056Code of Civil Procedure (Zivilprozessordnung ZPO) regulates the termination of

arbitral proceedings and thus represents the counterpart to 1044ZPO, which defines the
commencement of arbitral proceedings.
II.
361
Legislative History
The German arbitration law prior to the law reform in 1998 did not contain a provision 2
similar to 1056 ZPO. This provision is modelled after Article32 of the UNCITRAL Model
Law (ML),2 albeit with slight but noteworthy deviations. Thus, subsection2 No.1 (a) has
been added in view of 1048 (4) ZPO, which does not have a counterpart in the Model Law.
Furthermore, Article32 (2) (c) ML stipulates that the arbitral tribunal can issue an order
for termination if it finds that the continuation of the proceedings has become unnecessary
or impossible, whereas 1056 (2) No.3 ZPO expressly sets out that such order can also be
issued in case the parties fail to pursue the arbitral proceedings.
III. Mandatory/Optional Nature

The parties cannot derogate from the necessity of a formal termination of proceedings pursu- 3
ant to 1056 ZPO.3
IV. Termination by Final Award

Pursuant to 1056 (1) ZPO, a final award results in the termination of the proceedings. 4
Since 1056 ZPO is primarily an adoption of Article32 ML, the definition of the term final
award has to be interpreted in the sense of the latter provision. The deliberations on the
draft of Article32 ML show that a final award comprises an award which constitutes or
completes the disposition of all claims submitted to arbitration, in contrast to partial and
interim/interlocutory awards.4 Therefore, an award that represents the complete and definite
answer to all requested relief by the parties, by disposing of all issues of the dispute or denying jurisdiction terminates the proceedings pursuant to 1056(1)ZPO.5 The termination
automatically occurs as soon as the final award becomes effective when rendered according
to the formal requirements set out in 1054 ZPO and has been delivered to the parties.6
V.
Order for Termination
Besides the termination of the proceedings by a final award, 1056(2)ZPO provides for 5
the possibility of the arbitral tribunal rendering an order for termination in certain situations.
Such an order does not constitute an award (even if the arbitral tribunal names its decision
as such)7 and therefore cannot be set aside according to 1059 ZPO.8 The order should
specify the applicable reason set out in subsection2 for the termination of the proceedings.9
A termination order puts an end to the pendency of the proceedings and the suspension of
2
3
4
5
6
7
8

Stein/Jonas-Schlosser (2002), 1056 para.9; MnchKommZPO-Mnch (2013), 1056 para.1; dissenting
Cf. MnchKommZPO-Mnch (2013), 1056 para. 4, Rtzel/Wegen/Wilske (2005), p. 145, WeigandWagner (2002), Germany, para.314.
Baumbach/Lauterbach (2014), 1056, para. 7; more specifically Haas, SchiedsVZ 2010, 286 (295);
Lachmann (2008), para.1867; MnchKommZPO-Mnch (2013), 1056 para.9; dissenting, with reference to OLG Kln 26.11.2002, 9Sch20/02; Schtze, Die gerichtliche berprfung von Entscheidungen
des Schiedsgerichts, SchiedsVZ 2009, 241 (247).
Lrcher/Lrcher (2001), para.330; Lachmann (2008), para.1865.
362
the running of the period of limitation (cf. 204 (2) sentence1 Civil Code (Brgerliches Gesetzbuch BGB)).10 It also renders the arbitrators payment due (cf. 614 sentence1 BGB).
6 The order does not annul the arbitration agreement.11 Yet, the reopening of proceedings based
on such an arbitration agreement before the same tribunal that terminated the proceedings
depends on the approval of the arbitrators whose mandate terminated pursuant to 1056
(3) ZPO.12 In addition, the parties are free to agree on the commencement of new arbitral
proceedings before other arbitrators. The only situations in which the parties have to enter
a new arbitration agreement are the cases where the proceedings have been terminated due
to legal impossibility, i.e. because no effective arbitration agreement existed at that point in
time. As regards the grounds for an order of termination 1056ZPO provides five reasons.
A.
Default in Filing the Statement of Claim
7 Non-compliance with the formal requirements and time limits for filing the statement of
claim, as stipulated in 1046 (1) ZPO, gives ground for the termination of the proceedings. When the time period for stating the claim has expired, the tribunal can in principle
terminate the proceedings without any further warning as to the consequences of the noncompliance.13 However, the proceedings may not be terminated if the claimants default is
justified (1048(4) sentence1 ZPO) or if the parties agree otherwise on the consequences
of default (1048 (4) sentence2 ZPO). In practice, it is rather uncommon that a claimant
fails to state his claim at this early point in time.
B.
Withdrawal of Claim
8 If the claimant withdraws his claim, this request should first be communicated to the
respondent and the tribunal shall set a time period in which the respondent may raise objections and submit them to the tribunal.14 In determining whether a legitimate legal interest in
obtaining a final award on the part of the respondent constitutes an obstacle to the proceedings being terminated, the tribunal should consider the respondents interest in not again
having to defend himself in arbitral proceedings on the same matter that may be instituted
by the claimant on a later occasion.15 However, if the claimant waives his claim or enters into
a binding undertaking not to raise the claim again in subsequent proceedings, the respondent does not have a legitimate legal interest in the proceedings being continued.16 The mere
wish to obtain reimbursement of the costs of the proceedings is not a sufficient reason for
continuing the proceedings because a decision on costs will be rendered in any case (1057
(2) sentence2 ZPO).17
10
11
12
13
14
15
16
17

HK-ZPO-Saenger (2013), 1056 para.10; MnchKommZPO-Mnch (2013), 1056 para.24; dissenting
Stein/Jonas-Schlosser (2002), 1056 para.4; cf. Holtzmann/Neuhaus (1989), p.887.
Lachmann (2008), para.1851; Raeschke-Kessler/Berger (1999), para.914; Schtze/Tscherning/Wais-Wais
(1990), para.387.
Lachmann (2008), para.1849; Thomas/Putzo-Reichold (2013), 1056 para.4.
C.
363
Termination by Agreement
An agreement by both parties to terminate the proceedings is not subject to any require- 9
ments of form and neither does it oblige the parties to state the reasons why the agreement is
made.18 The need for such an agreement may arise in case of performance by the respondent
or in case the parties reach an amicable settlement, which does not necessarily have to be
rendered as an award on agreed terms.19 In such a situation, a termination of the proceedings
may be agreed by way of joint declarations.20 However, the termination of the proceedings
may also result from a provision in the arbitration agreement limiting the duration of the
proceedings.21
When agreeing on the termination of the proceedings, the parties may also wish to agree on 10
the costs of arbitration.22 Such cost arrangements can then be made enforceable by means
of an award on agreed terms.23 If the termination agreement does not annul the arbitration
agreement, the parties have the possibility of commencing new proceedings at a later point
in time.24
D.
Failure to Pursue the Proceedings
An unwillingness of both parties to pursue the proceedings can be expressed by non-payment 11

of the advance on the arbitrators fees,25 by non-appearance in the proceedings26 or by general
inactivity.27 In all of these cases, the tribunal should not automatically terminate the proceedings but rather inquire if the parties merely wish to stay the proceedings for a certain period of
time.28 This should be done by requesting the pursuit of proceedings in a notification, setting
a deadline for the continuation of the proceedings and alerting the parties that the proceedings may be terminated if this deadline is not met.29
E.
Impossibility of Continuation of Proceedings
The tribunal may order the termination of the proceedings if their purpose cannot be 12
achieved due to legal or factual reasons.30 Whereas Article32 (2)(c) ML provides that an
18
19
20
21
22
23
24
25
26
27
28
29
30
Baumbach/Lauterbach (2014), 1056 para.5; Musielak-Voit (2013), 1056 para.5; HK-ZPO-Saenger

(2013), 1056 para.12.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.57; Thomas/Putzo-Reichold (2013), 1056
para.5; Zller-Geimer (2014), 1056 para.5; Lachmann (2008), para.1857; MnchKommZPO-Mnch
(2013), 1056 para.28.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.57; Schtze (2012), para.419; Zller-Geimer
(2014), 1056 para.5.
Stein/Jonas-Schlosser (2002), 1056 para.5; cf. MnchKommZPO-Mnch (2013), 1056 paras32 seq.
However, deadlines in institutional arbitration rules concerning the duration of arbitral proceedings are
not to be regarded as a limitation of the arbitration agreement.
Raeschke-Kessler/Berger (1999), para.920; Stein/Jonas-Schlosser (2002), 1056 para.5.
MnchKommZPO-Mnch (2013), 1056 para.26; Raeschke-Kessler/Berger (1999), para.921; Lachmann
(2008), para.1868.
Lachmann (2008), para.1861; Schtze (2012), para.420.
Baumbach/Lauterbach (2014), 1056 para.6; Stein/Jonas-Schlosser (2002), 1056 para.6.
HK-ZPO-Saenger (2013), 1056 para.13; Musielak-Voit (2013), 1056 para.6.
364
arbitral tribunal can issue an order for termination if the continuation of the proceedings has
become unnecessary or impossible, 1056 (2) No.3 ZPO limits the admissibility of such
an order to cases where the continuation has become impossible. This criterion does not
leave the arbitral tribunal much room for discretion, but obliges it to apply rather objective
criteria.31 Cases of factual impossibility include deadlock in the voting of the tribunal32 or
war-like situations that prevent a partys participation.33 The cases of legal impossibility of
continuation of the proceedings have to be distinguished from cases of legal inadmissibility
of the proceedings. Legal inadmissibility may arise, e.g. if a non-appealable court ruling as to
the issues dealt with in the arbitral proceedings is handed down. In such cases, the arbitral
tribunal must reject the claim as inadmissible by award.34 If it is decided that the arbitral
tribunal does not have jurisdiction (either because the arbitration agreement is invalid ab
initio or because it has been cancelled),35 this is not considered a case of impossibility falling
under this provision. Such a decision by the arbitral tribunal on its own jurisdiction pursuant
to 1040 (3) ZPO constitutes an award according to 1055 ZPO.36
VI. Continuity of the Arbitral Tribunals Assignment

13 The termination of the proceedings terminates the arbitral tribunals assignment since the
conduct of the proceedings is the principal task of the tribunal. According to 1056 (3) ZPO,
there are three exceptions to this rule. Firstly, there are the cases where the tribunals decision
regarding the correction and interpretation of awards and the making of additional awards
is still pending (1058 ZPO). The second exception concerns cases in which a court37 or an
appellate arbitral tribunal remits a case to the arbitral tribunal after having set aside an award
(1059 (4) ZPO).38 Thirdly, the assignment of an arbitral tribunal does not end while the
tribunals decision on costs is still pending (1057 (2) 2 ZPO).
31
32
33
34
35
36
37
38

para.6; cf. MnchKommZPO-Mnch (2013), 1056 para.33; Lachmann (2008), para.1863.
In light of Haas, SchiedsVZ 2010, 286 (293 seq.); Stein/Jonas-Schlosser (2002), 1056 para.6.; Wagner,
Bindung des Schiedsgerichts an Entscheidungen anderer Gerichte und Schiedsgerichte, in: Bckstiegel/
Berger/Bredow (eds), Die Beteiligung Dritter an Schiedsverfahren, 2005, p.7 (11), we now regard the
handing down of a non-appealable court ruling on the same issue also as a case of legal inadmissibility,
and not as a case of legal impossibility; in so far still dissenting MnchKommZPO-Mnch (2013), 1056
para. 33.
In light of Haas, SchiedsVZ 2010, 286 (293) regarding BGH 06.06.2002, NJW 2002, 3031 seq., we do
not consider the cancelation of an arbitration agreement as a case of legal impossibility anymore (see
however Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.57.), but as a case of lack of jurisdiction; see also MnchKommZPO-Mnch (2013), 1056 para.33.
Cf. supra, von Schlabrendorff/Sessler, 1055 para.13.
Lachmann (2008), para.1870; Musielak-Voit (2013), 1056 para.9; MnchKommZPO-Mnch (2013),
1056 para.35.
In OLG Hamburg 30.05.2008, 11 Sch 9/07, available at <www.juris.de>, the court confirms this but
opines that the issue is controversial and that, referring to OLG Frankfurt 02.11.2007, NJW-RR 2008,
590 (591) and Baumbach/Lauterbach (2014), 1059, para.20, there is also the position that, in the event
of remittal, a new arbitral tribunal has to be constituted. In our view, no such controversy exists. The
decision of the OLG Frankfurt states explicitly that it does not concern a matter falling under 1059 (4)
ZPO. Baumbach/Lauterbach speaks of the necessity of constituting a new arbitral tribunal with reference
to 1059 (5), not with reference to 1059 (4) ZPO. See also Bill of the Arbitration Law Reform Act,
BT-Drs. 13/5274, p.57.
365
1057 Decision on Costs

(1) Unless the parties agree otherwise, the arbitral tribunal shall allocate, by means of
an arbitral award, the costs of the arbitration as between the parties, including those
incurred by the parties necessary for the proper pursuit of their claim or defence.
It shall do so at its discretion and take into consideration the circumstances of the
case, in particular the outcome of the proceedings.
(2) To the extent that the costs of the arbitral proceedings have been fixed the arbitral
tribunal shall also decide on the amount to be borne by each party. If the costs have
not been fixed or if they can only be fixed once the arbitral proceedings have been
terminated, the decision shall be taken by means of a separate award.
Short Bibliography: Bischof, RVG: Erste Gebhrenprobleme fr Schiedsverfahren und Mediation,
SchiedsVZ 2004, 252; Craig/Park/Paulsson, International Chamber of Commerce Arbitration,
New York 2000; Derains/Schwartz, A guide to the ICC Rules of Arbitration, The Hague 2005;
Gerold/Schmidt et al., Rechtsanwaltsvergtungsgesetz, Mnchen 2012; Hanefeld, Country Report
Germany, in: Weigand (Hrsg.), Practitioners Handbook on International Commercial Arbitration,
Oxford 2010; Hartung/Rmmermann/Schons, Praxiskommentar zum Rechtsanwaltsvergtungsgesetz, Mnchen 2006; Henn, Schiedsverfahrensrecht, Heidelberg 2000; Holtzmann/Neuhaus, A
Guide to the UNCITRAL Model Law on International Commercial Arbitration, Deventer 1989;
Kreindler/Schfer/Wolff, Schiedsgerichtsbarkeit: Kompedium fr die Praxis, Frankfurt 2006; Krll,
Schiedsrechtliche Rechtsprechung 2003, SchiedsVZ 2004, 113; Lachmann, Handbuch fr die
Schiedsgerichtspraxis, Kln 2008; Lew/Mistelis/Krll, Comparative International Commercial
Arbitration, Hague/London/New York 2003; Lionnet/Lionnet, Handbuch der internationalen und
nationalen Schiedsgerichtsbarkeit, Stuttgart Berlin 2005; Mayer/Kroi, Rechtsanwaltsvergtungsgesetz, Baden-Baden 2013; Mller, Schiedsverfahrensrecht Leitfaden fr die betriebliche Praxis,
Berlin 1998; Mnnikes, Die Reform des deutschen Schiedsverfahrensrechts Das neue 10. Buch der
ZPO, Hamburg 2000; Raeschke-Kessler/Berger, Recht und Praxis des Schiedsverfahrens, Kln 1999;
Risse/Altenkirch, Kostenerstattung im Schiedsverfahren: fnf Probleme aus der Praxis, SchiedsVZ
2012, 5; Rtzel/Wegen/Wilske, Commercial Dispute Resolution in Germany, Mnchen 2005; Sandrock,
Schiedsort in Deutschland, Gerichtskosten in den USA: Sind Letztere hier erstattungsfhig?, IDR
2004, 106; Schtze, Schiedsgerichtsbarkeit und Schiedsverfahren, Mnchen 2012; Schwab/Walter,
International Arbitration, Mnchen/Copenhagen 2002; Wolff, Streitwertfestsetzung bei streitwertabhngiger Schiedsrichtervergtung Schiedsrichter in eigener Sache?, SchiedsVZ 2006, 131.
I.
II.
III.
IV.
Para.
Mandatory/Optional Nature. . . . . . . . . . . . . 3
General Principles . . . . . . . . . . . . . . . . . . . . . . . 4
A. Costs of the Arbitration . . . . . . . . . . . . . . 5
1. Costs of the Arbitral Tribunal/
Arbitral Institution . . . . . . . . . . . . . . . . 6
2. Costs Incurred by the Parties . . . . . 16
B. Decision on the Allocation of
Costs Pursuant to 1057 (1) ZPO . . 32
Para.
C. Decision on the Amount of Costs
Pursuant to 1057 (2) ZPO. . . . . . . . . 37
D. Legal Consequences of the
Decision on Costs. . . . . . . . . . . . . . . . . . . 40
1. Consequences for the Parties . . . . . 40
2. Consequences for Third Parties. . . 41
E. Recourse Against the Decision on
Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
366
I.
1 In order to finally settle a dispute, it is not only essential to make a decision on the merits of
a case, but also to decide which party shall bear the costs of the proceedings. The authority
of an arbitral tribunal to render such a decision on costs is laid down in 1057 Code of
Civil Procedure (Zivilprozessordnung ZPO). Despite the high relevance of costs, especially
in international arbitration, the provision of 1057 ZPO has no counterpart in the UNCITRAL Model Law (ML) or the earlier versions of the ZPO. The German legislator drew
upon Articles3841 UNCITRAL Arbitration Rules in this respect.2
II.
Legislative History
2 The drafters of the Model Law did not consider it necessary to regulate the cost issue because
an agreement between the parties relating to costs and fees in institutional arbitral proceedings is frequently implicitly established by way of reference to institutional arbitration rules,
as most of these rules contain provisions about the costs of the proceedings including the
arbitrators fees.3 In case of ad hoc arbitration, in the absence of an explicit agreement, it is the
practice of the tribunals to read an implied rule into the arbitration agreement that customary
fees are owed to the arbitrators.
III. Mandatory/Optional Nature

3 1057 (1) sentence1 ZPO expressly states that the entire provision shall apply unless the
parties agree otherwise. Therefore, the parties can deviate from that provision in full or in
part with regard to both the allocation and/or the assessment of the amount of costs. As
a consequence, 1057 ZPO merely serves as a subsidiary clause in the absence of such an
agreement.
IV. General Principles

4 In rendering a decision on costs, the arbitral tribunal is required to follow a two-step approach. Firstly, the arbitral tribunal shall allocate the costs of the arbitration pursuant to
1057 (1) ZPO and, secondly, render a decision on the amount of these costs pursuant to
1057 (2) ZPO, unless the amount of costs was fixed by the parties. In applying the provision, it is essential to determine first what is covered by the term cost of the arbitration and
therefore eligible for reimbursement under 1057 ZPO.
A.
Costs of the Arbitration
5 First and foremost, one has to differentiate between the costs of arbitration, which are
incurred by the arbitral tribunal, and the costs that are incurred by the parties. While it is
sufficient for the former to be compensated if they are caused by the proceedings,4 the latter
are only reimbursable pursuant to 1057(1) sentence1 ZPO if they were necessary for
the proper pursuit of the claim, or respectively the defence, which establishes an additional
threshold to be overcome.
1
2
3
4
Holtzmann/Neuhaus (1989), pp.1118 et seq.
MnchKommZPO-Mnch (2013), 1057 para.18; HK-ZPO-Saenger (2013), 1057 para.3.
1.
367
Costs of the Arbitral Tribunal/Arbitral Institution
a. General Expenses: The costs incurred by the arbitral tribunal or the arbitral institution 6
encompass all expenses that result directly from the execution of the arbitral proceedings,
such as costs for translators, court reporters, rental of facilities, hearing costs, costs of taking
of evidence, travelling expenses, etc. These costs are only reimbursed if they have actually
been incurred.
b. Arbitrators Fees: It is not disputed that arbitrators fees are in principle part of the costs 7
of arbitration and, thus, can be reimbursed. The determination of a quota for the allocation
of costs including the arbitrators fees represents a decision by the arbitral tribunal covered
by 1057 ZPO.5 Under the doctrine of the prohibition of in rem suam decisions, another
issue is the question to what extent an arbitrator may fix the amount of costs in the award, in
particular his own fees. Until recently, in cases where the arbitrators fees are calculated as a
percentage of the amount at stake, a decision on the amount at stake was seen by the German
courts to interfere with the prohibition of rendering a decision in rem suam, as such decision indirectly determinates the amount of the fees due to the arbitrator. As a consequence,
an award directly or indirectly containing a decision on the arbitrators fees was viewed as
unenforceable pursuant to 1059 (2) No.2 (b) ZPO (violation of public policy).6 However,
as a decision on costs often requires a determination of the amount in dispute, this jurisprudence was criticized as being hardly compatible with the provision of 1057ZPO.7 Recently,
the Federal Court of Justice (Bundesgerichtshof BGH), in a decision regarding a national
arbitration case, clarified that an arbitral tribunals decision on the amount in dispute, even
if it may affect the amount of fees due to the arbitrators, is not an improper decision in the
arbitrators interest and therefore does not interfere with the prohibition of rendering a decision in rem suam.8
i. No Violation of the Prohibition of Rendering a Decision in rem suam: According to the former 8
jurisprudence of the BGH, an arbitral tribunal could only render a decision on costs with
implications as to the amount of its own fees, without thereby violating the prohibition of
rendering a decision in rem suam, if the arbitrators fees had been fixed and paid in advance
by the parties.9 In its decision of 28March 2012, the BGH recognized that 1057ZPO binds
the arbitral tribunal to render a decision on costs, which often supposes a determination on
the amount in dispute, including a decision on arbitrators fees. With regard to the prohibition to render a decision in rem suam, the BGH points out that such a determination on the
amount in dispute only binds the parties (1055ZPO) and, from the arbitrators point of
view, does not therefore constitute a decision in rem suam.10 In the event of dispute with the
parties, an arbitrator cannot use the arbitral award as a title to enforce its right to remuneration, and must turn to the courts instead.11
5
6
7
8
9
10
11
Cf. BGH 25.11.1976, WM 1977, 319 (320).

Cf. the leading case BGH 25.11.1976, WM 1977, 319 (320).
Cf. von Schlabrendorff/Sessler (2007), 1057, paras 12, 14.
BGH 28.03.2012, SchiedsVZ 2012, 154.
BGH 25.11.1976, WM 1977, 319 (320); id. 07.03.1985, BGHZ 94, 92 = NJW 1985, 1903; cf. also OLG
Hamburg 14.05.1964, MDR 1965, 54 (55) and OLG Celle 27.11.2003.
BGH 28.03.2012, SchiedsVZ 2012, 154 (155).
Cf. BGH 28.03.2012, SchiedsVZ 2012, 154 (156).
368
9 The jurisprudence, as now clarified by the decision of the BGH of 2012, is in line with the
international standard.12 OLG Mnchen recently held that this jurisprudence applies a fortiori
to international arbitration.13
10 If an arbitral tribunal renders a decision on costs and thereby indirectly fixes the amount of
its own fees by determining the amount in dispute, this decision has to be understood as
a declaration pursuant to 315 (1) Civil Code (Brgerliches Gesetzbuch BGB).1415 The
declaration may merely serve as the basis for the arbitrators claim against a party failing to
pay its share and can only be enforced by the arbitrator by taking court action.16 According
to 315 (3) BGB, the courts can review the determination in order to decide whether it was
performed in an equitable manner. Thus, arbitrators could not determine the amount of their
own fees arbitrarily.17 If the arbitrators decision on the costs is not equitable (the costs were
set too high), the parties may claim for reimbursement of the overpaid amount of arbitrators
fees on the basis of 315 (3) BGB before an ordinary court of law.18
11 ii. The Arbitrators Right to Advances: Arbitrators are generally entitled under customary law
to claim advance payments19 and pursuant to 273 (1) BGB may suspend their activities
until such payment has been effected (273 (1) BGB grants a right of retention as long as
the other party has not yet rendered performance).20 By contrast, arbitrators are not entitled
to exercise this right of retention with regard to one party only, e.g. to refuse the taking of
evidence for the sole reason that that party has not paid its share of the arbitrators fees in
advance.21
12 It is disputed whether arbitrators are authorized under German law to decide upon the
request by one party to order the defaulting party to pay its share of the advance payment.
While there is jurisprudence22 indicating that such a claim has to be filed with the ordinary
courts of law, there is an emerging opinion according to which an arbitral tribunal could
render a partial award ordering one party to pay its share of the advance payments.23 Such
a partial award resembles an enforcement of the other partys right to pay only its half of the
arbitrators fees. This view is supported by a comparison with the practice of several arbitral
12
13
14
15
16
17
18
19
20
21
22
23
See for example for the Swiss Law Weigand-Karrer/Straub (2009), Switzerland, para.12.184.
315 (1) BGB reads: If the performance is to be determined by one of the contracting parties, it is to be
presumed, in case of doubt, that the determination is to be made in an equitable manner..
BGH 28.03.2012, SchiedsVZ 2012, 154 (156); HK-ZPO-Saenger (2013), 1057 para.7.
Stein/Jonas-Schlosser (2002), 1057 para.1; MnchKommZPO-Mnch (2013), 1057 para. 9; HK-ZPOSaenger (2013), 1057 para.7; Zller-Geimer (2014), 1057 para.5; Krll, SchiedsVZ 2004, 113 (119);
cf. BGH 25.11.1976, WM 1977, 319 (321).
Cf. BGH 28.03.2012, SchiedsVZ 2012, 154 (156).
BGH 28.03.2012, SchiedsVZ 2012, 154 (156).
LGOldenburg 10.06.2008, 2S274/08, available at <www.juris.de>, paras7, 12 regarded the arbitrators
order to each party to pay an equal share of the estimated arbitrators fees in advance as appropriate
conduct according to 1042 (4) ZPO.
BGH 22.02.1971, BGHZ 55, 344 = NJW 1971, 888; id. 10.04.1980, BGHZ 77, 65 = NJW 1980, 2136; id.
07.03.1985, BGHZ 94, 92 = NJW 1985, 1903; LGOldenburg 10.06.2008, 2S274/08, available at <www.
juris.de>, para.8.
BGH 07.03.1985, BGHZ 94, 92 = NJW 1985, 1903.
OLG Oldenburg 31.03.1971, NJW 1971, 1461; AG Dsseldorf 17.06.2003, SchiedsVZ 2003, 240.
Stein/Jonas-Schlosser (2002), 1057 para.16; Sandrock, Claims for Advances on Costs and the Power of
Arbitral Tribunals to Order their Payment, in: Aksen et al. (eds), FS-Briner, 2005, p. 707.
369
tribunals conducting arbitral proceedings under the International Chamber of Commerce

(ICC) Rules of Arbitration, which have rendered such awards.24
As a matter of course, payments made in advance are subject to later review and may there- 13
fore be subject to change. If, for example, the advance payments exceed the amount of the
fees actually owed, the parties are entitled to take court action to enforce their claim for
reimbursement of the balance.25
iii. Amount of Fees in Absence of an Agreement: It should also be noted that, in the absence of 14
an agreement with the parties, German law contains no provision regulating the amount of
fees to be charged by arbitrators. In particular, the Lawyers Fees Act (Rechtsanwaltsvergtungsgesetz RVG) is expressly not applicable pursuant to 1 (2) RVG in the event that a
lawyer acts as an arbitrator.26 Therefore, the fees are then to be charged in accordance with
612BGB or 632 BGB, depending on whether the contract between the parties and the
arbitrator is regarded as a service contract or a contract for work.27 These provisions lay down
the general principle that, in the absence of an agreement between the parties, the usual
remuneration is deemed to have been agreed if the performance owed is commonly not free
of charge. In the past, the statute regulating attorneys fees (Bundesrechtsanwaltsgebhrenordnung BRAGO), the predecessor of the RVG, has been used as an appropriate guideline for
assessing the standard remuneration.28 This has become questionable, as the fees determined
by the RVG do not adequately reflect the task of an arbitrator.
c. Costs of the Arbitral Institution: Furthermore, costs of the arbitral institution, such as 15
registration fees or administrative charges, are also to be reimbursed as part of the costs of
arbitration in the amount incurred.
2.
Costs Incurred by the Parties
The costs incurred by the parties must only be reimbursed if they were necessary for the 16
proper pursuit of the claim or the defence. This requirement in 1057ZPO is in line with
the wording of 91 (1) sentence1 ZPO,29 which governs the allocation of costs in German
court proceedings. Therefore, it is appropriate to refer to the case law and literature on this
provision in order to interpret 1057 ZPO.
a. General Expenses: Necessary costs within the meaning of 91 ZPO include, inter alia, 17
expenses incurred by the parties for attending hearings, such as travelling costs and expendi24
25
26
27
28
29
ICC Interim Award 27.03.01, (2001) 19 ASA Bulletin 285; ICC Interim Award 26.03.2002, (2003) 21
ASA Bulletin 802; cf. Craig/Park/Paulsson (2000), pp.267 et seq.; Derains/Schwartz (2005), pp.342 et
seq.; Fadlallah, Payment of the Advance to Cover Costs in ICC Arbitration, (2003) 14 ICC Bulletin53.
BGH 28.03.2012, SchiedsVZ 2012, 154 (156); Baumbach/Lauterbach (2014), 1057 para.5; MnchKommZPO-Mnch (2013), 1057 para. 9; HK-ZPO-Saenger (2013); Rtzel/Wegen/Wilske (2005),
p.147; Lachmann (2008), para.1890.
Cf. Stein/Jonas-Schlosser (2002), 1057 para.15; HK-ZPO-Saenger (2013), 1057 para.10.
Henn (2000), para.463; Hartung/Rmermann/Schons-Rmermann (2006), 1 RVG para.230; Gerold/
Schmidt-Mller-Rabe (2012), 1 RVG para.346; cf. Mayer/Kroi-Mayer (2013), 1 RVG para.197 (if
German substantive law is applicable, the contract between parties and arbitrators is often classified as a
service contract); Bischof, SchiedsVZ 2004, 252.
Cf. OLG Schleswig 05.07.1994, SchlHA 1994, 270.
91 (1) ZPO reads: The failing party shall bear the costs of the lawsuit; in particular he must compensate
the opponent for his expenses to such extent as they were necessary for the proper pursuit of the claim or
the defence..
370
ture of time.30 Regarding the costs of preparatory work, a distinction has to be made as these
expenses are only reimbursable if they possess a direct link to the actual proceedings and were
necessary for its execution.31 This may include, inter alia, expenses for private investigations
for obtaining evidence32 or expenses for experts who provide a legal or factual opinion.33
However, costs for standard preparations by the party itself, such as reading the materials34
or drafting memoranda,35 are in accordance with the jurisprudence not to be reimbursed.36
18 Pursuant to 91 (1) sentence2 ZPO, the calculation of the reimbursement for general expenses is subject to the provisions of the ZSEG concerning the compensation of witnesses,
which applies mutatis mutandis to costs incurred by the parties.
19 b. Lawyers Fees: It is common practice for lawyers fees to be reimbursable under 1057
ZPO, as one cannot expect a party to conduct arbitral proceedings without professional legal
assistance.37 There might, however, be cases where lawyers fees are not regarded as necessary
costs of the arbitration, e.g. because the proceedings are part of a specialized dispute resolution mechanism in a certain industry with specific customs and the issues involved do not
necessarily require judicial skills.38 However, it must be emphasized that these situations are
clearly an exception.
20 By contrast, costs for in-house counsel are generally not reimbursable according to the German courts. These lawyers are treated like any other employee of the party to the arbitration
and their salaries or other expenses cannot be recovered.39 Nevertheless, there may also
be good arguments in favour of reimbursing costs incurred for in-house counsel in certain
cases. For example, in the event that a party decides to use its in-house counsel instead of an
external lawyer whose fees could be reimbursed, in order to keep the arbitration costs down,
it seems somewhat unfair if such party is not entitled to recover those expenses. 40
21 It has become common practice in Germany to agree on an hourly rate for lawyers fees, at
least in international commercial arbitral proceedings. However, as the RVG may be applied
30
31
32
33
34
35
36
37
38
39
40
Musielak-Lackmann (2013), 91 para.8; MnchKommZPO-Schulz (2013), 91 para.55; Stein/JonasBork (2004), 91 paras47 et seq.
BGH 23.05.2006, NZV 2006, 469; id. 17.12.2002, NJW 2003, 1398; OLG Nrnberg 17.04.2002, NJWRR 2002, 1725; OLG Hamburg 29.09.1999, MDR 2000, 53; OLG Dresden 18.12.1996, NJW-RR 1997,
573; OLG Bamberg 02.04.1991, JurBro 1992, 335; OLG Koblenz 24.10.1990, NJW-RR 1991, 894;
Stein/Jonas-Bork (2004), 91 paras39 et seq. with further references.
OLG Dresden 18.12.1996, NJW-RR 1997, 573; OLG Koblenz 24.10.1990, NJW-RR 1991, 894.
BGH 23.05.2006, NZV 2006, 469; id. 17.12.2002, NJW 2003, 1398.
OLG Koblenz 13.02.2003, Rpfleger 2003, 384; OLG Koblenz 02.06.1995, AnwBl 1996, 412; OLG Schleswig 15.07.1980, JurBro 1981, 122; OVG Lneburg 09.05.1969, NJW 1969, 1923.
OLG Koblenz 02.06.1995, AnwBl 1996, 412; OVG Lneburg 09.05.1969, NJW 1969, 1923; OLG Nrnberg 31.05.1966, MDR 1966, 1012; Stein/Jonas-Bork (2004), 91 para.35.
BGH 09.03.1976, NJW 1976, 1256; Lachmann (2008), para.1991; MnchKommZPO-Schulz (2013),
91 para. 38; Musielak-Lackmann (2013), 91 paras10 and 38; Weigand-Wagner (2002), Germany,
para.397.
BGH 21.11.1968, BGHZ 51, 79.
Cf. Award of the arbitral tribunal at the chamber of commerce Hamburg 21.06.1996, NJW 1997, 613;
Baumbach/Lauterbach (2014), 1057 para.3; MnchKommZPO-Mnch (2013), 1057 para.21.
BGH 18.12.2003, NJW-RR 2004, 856; Rtzel/Wegen/Wilske (2005), p.147; Weigand-Wagner (2002),
Germany, para.397; Stein/Jonas-Bork (2004), 91 paras35 et seq.
Risse/Altenkirch, SchiedsVZ 2012, 5 (12 et seq.); Rtzel/Wegen/Wilske (2005), p. 147; cf. Kreindler/
Schfer/Wolff (2006), para.1225, who point out that well prepared documents are also one measure of
keeping down the costs of the arbitral proceedings.
371
to arbitral proceedings,41 it is useful to start with a brief overview regarding the amount of fees
under these provisions.
i. Statutory Amount of Lawyers Fees: Generally, the amount of fees under the RVG depends 22
on the amount in dispute and is further specified in the Vergtungsverzeichnis VV, which
is an annex to the RVG. The first two chapters of the VV also apply to arbitral proceedings
pursuant to 36 (1) No.1RVG and the term arbitral proceedings in this context comprises
court proceedings for appointing or challenging an arbitrator and proceedings for the taking
of evidence or other judicial acts as well pursuant to 16 No.10 RVG. Therefore, a lawyer
cannot charge separate fees for such work, unless he has only been retained for such specific
services without otherwise representing the relevant party in the arbitral proceedings.42
In detail, the amount of fees under the RVG which a lawyer would be entitled to in arbitral 23
proceedings includes the same fees as in proceedings before a court of first instance. In cases
of settlement, there is an additional fee pursuant to No.1000 VV.43 If the amount of fees that
the lawyer charges is in accordance with the provisions of the RVG, these fees have to be
regarded as appropriate and, thus, can be recovered.
These fees are sometimes criticized as being too low because they do not take into consid- 24
eration that there is no second instance in arbitral proceedings.44 Moreover, the amount of
fees that may be charged is limited in relation to the amount in dispute pursuant to 22 (2)
RVG. According to this provision, any sum by which the amount in dispute may exceed the
amount of EUR30 million does not affect the amount of fees due, i.e. the fees are the same
irrespective of whether the amount in dispute is EUR30 million or EUR300 million. This
rule is hardly convincing, as the responsibility and the risks of the lawyer unquestionably
increase with the amount in dispute.45 It must be emphasized, however, that a lawyer is free
to agree on a different remuneration scheme with his client if the RVGs fees do not appear to
be appropriate to the case at issue.
ii. Individual Fee Arrangements: As already stated, it is common practice in Germany to agree 25
on different fee arrangements and not to apply the RVG in arbitral proceedings. This practice
is perfectly in line with the statutory provisions set out in 3a RVG. Lawyers may agree on
individual remuneration schemes with their clients, though it is not generally permissible to
charge fees lower than the RVGs fees pursuant to 4 (1) RVG.46
In practice, however, most individual agreements between the party and the lawyer will 26
provide for remuneration exceeding the statutory fees on the basis of hourly charged rates.
The BGH has stated repeatedly in this regard that, even if the final amount of the lawyers fees
far exceeds the amount of the statutory fees, this proportion cannot lead to the inoperativeness of the remuneration agreement if the parties agreed on a reasonable hourly rate and the
effort spent by the lawyer was necessary in the case at hand.47 An arbitral tribunal may as well
estimate the amount of time that was reasonably necessary for handling the workload of the
case on the basis of its own preparation time, which is considerably less than what the parties
41
42
43
44
45
46
47
Cf. infra, para.22.

For further details see Schwab/Walter (2005), Chap.35 paras3 et seq.
Bischof, SchiedsVZ 2004, 252.
Bischof, SchiedsVZ 2004, 252 (253).
Risse/Altenkirch, SchiedsVZ 2012, 5 (9 seq.).
BGH 03.04.2003, NJW 2003, 2386; id. 04.07.2002, NJW 2002, 2774 (2775); id. 30.05.2000, BGHZ
144, 343 = NJW 2000, 2669.
372
spend. In addition, if a lawyer is part of the tribunal he may use his own experience in order
to decide whether the time spent by the lawyer was reasonable.48
27 The limits for the maximum hourly rate for performance-related remuneration are, however,
not clear-cut. Even though there is case law stating that fees which are six49 or even ten50
times higher than the statutory fees are not inappropriate, whilst a remuneration agreement
exceeding the statutory fees by seventeen51 times was regarded as inoperative pursuant to
138 BGB, the reasonable amount of an hourly rate remains unclear.
28 Another question is whether the winning party is entitled to claim reimbursement from the
other party for lawyer fees which were agreed on an individual basis and exceed the amount
which would have been due under the RVG. In German state court proceedings, the winning party can only claim reimbursement from the other party for lawyer fees which were
necessary for the proper pursuit of its claim or defence (91 (1) ZPO), i.e. any lawyer fees
according to the RVG (91 (2) ZPO). Lachmann refers to the fact that 1057 (1) ZPO also
requires that lawyer fees to be reimbursed must be incurred by the parties necessary for the
proper pursuit of their claim or defence and argues that 91 ZPO shall also apply to arbitral
proceedings located in Germany.52 This would mean that lawyer fees would be reimbursable
only to the extent that they are due under the RVG.53 It does, however, need to be taken into
account that the provisions of the 10th Book of the ZPO on arbitral proceedings constitute
an independent set of norms, i.e. that general provisions such as 91 ZPO do not apply
even by way of analogy to an arbitration located in Germany.54 This means that the term
necessary costs of the arbitration has to be interpreted independently with due regard to
the characteristics of arbitral proceedings.55 As a result, for example, the fees of an English
lawyer exceeding the amount which would have to be reimbursed under 91 (2) ZPO in
connection with the RVG can hardly be seen as unnecessary if this lawyer was mandated
to act in an arbitration subject to English substantive law but having its seat in Germany.56
29 c. Costs Incurred Due to Court Proceedings: As regards the costs that are incurred for court
proceedings, a distinction has to be made between cases where the court assists57 the arbitral
tribunal by taking action beyond the scope of the arbitral tribunals competence and proceedings where the court exercises genuine58 court functions.
48
49
50
51
52
53
54
55
56
57
58

OLG Kln 30.09.1997, NJW 1998, 1960; LG Berlin 21.09.1981, AnwBl 1982, 262.
BGH 11.06.1980, NJW 1980, 1962.
BGH 24.07.2003, NJW 2003, 3486.
Lachmann (2008), paras 1947 et seq.
Risse/Altenkirch, SchiedsVZ 2012, 5 (p.10 and footnote30) who point out that also Lachmann holds that
opinion at another point, Lachmann (2008), para. 1277; cf. infra, para.31.
Risse/Altenkirch, SchiedsVZ 2012, 5 (10).
Example given by Risse/Altenkirch, SchiedsVZ 2012, 5 (10).
For example the appointment of arbitrators pursuant to 1035 (3)-(5) ZPO or the taking of evidence or
performance of other judicial acts pursuant to 1050 sentence1 ZPO.
For example the determination whether arbitration is admissible pursuant to 1032 (2) ZPO, the granting of interim measures pursuant to 1033 ZPO or the review of the preliminary ruling of the arbitral
tribunal confirming its jurisdiction pursuant to 1040 (3) sentence2 ZPO.
373
Costs that are incurred due to proceedings where the courts merely assist the arbitral tribunal 30
are part of the costs of arbitration and, thus, reimbursable under 1057 ZPO.59 By contrast,
in cases where a court exercises a genuine judicial function that involves the supervision of
arbitral proceedings, such costs are not recoverable as part of the costs of the arbitration.60
These costs are subject to the general provisions of the Court Fees Act (Gerichtskostengesetz
GKG) and are reimbursed according to the decision of the court.
Another issue regarding the reimbursement of court fees is whether one party can ask for 31
reimbursement of costs incurred in defending itself in court against an inadmissible claim
brought by the other party.61 Given that German courts are obliged to render a decision
on costs pursuant to 91 et seq. ZPO, this issue regards only proceedings before foreign
courts if such courts do not render a decision on costs. A well-known example is the situation
in the US where, according to the American rule,62 each party to a lawsuit must bear the
fees charged by its own attorneys. Therefore, any party sued in the US despite the existence
of a valid arbitration agreement would necessarily have to bear its own attorneys fees, irrespective of whether the US court declares itself competent to hear the claim or not. Since
German legislation provides arbitral tribunals with broad discretion concerning the decision
on costs,63 arbitral tribunals should also have the authority under 1057 ZPO to order reimbursement of costs that were incurred because of an inadmissible action having been brought
in a foreign court, which then failed to render a cost ruling.64
B.
Decision on the Allocation of Costs Pursuant to 1057 (1) ZPO
By rendering a decision on the allocation of costs, the arbitral tribunal determines how the 32
arbitration costs are to be split between the parties. Despite the somewhat ambiguous wording of 1057 (1) ZPO, it remains possible to order only one of the parties to bear all costs of
the arbitral proceedings and it is not necessary to apportion a share of these costs to each of
the parties. Once again, it has to be emphasized that 1057 ZPO only applies if the parties
have not made other arrangements, which can be contained in the arbitration agreement or
may also be informally agreed in the course of the arbitral proceedings.65
59
60
61
62
63
64
65
Cf. Schwab/Walter (2005), Chap.33 para.18; Kreindler/Schfer/Wolff (2006), para.1217; MnchKomm

ZPO-Mnch (2013), 1057 para.19. The costs for a replacement appointment of an arbitrator by the
courts of law (1035 (4) ZPO) are also regarded as arbitration costs. By way of an argumentation a
fortiori with regard to OLG Brandenburg 02.10.2003, 8SchH02/03, BeckRS 02042, Thiel/Prnbacher,
Kostenentscheidungen und Kompetenz des Schiedsgerichts Probleme aus der Praxis, SchiedsVZ
2007, 295 (297 seq.) hold the opinion that the arbitral tribunal is also competent under 1057 (1) ZPO
to modify the courts cost decision for the appointment procedure if the circumstances of the case have
changed during the arbitral proceedings. OLGBrandenburg held that a state court is not competent to
decide on the costs for the appointment procedure as those costs are subject to the arbitral tribunals cost
decision according to 1057 (1) ZPO.
Henn (2000), para.466; MnchKommZPO-Mnch (2013), 1057 para.19.
Cf. Art.II (3) New York Convention 1958; Art 8 (1) UNCITRAL Model Law on International Commercial Arbitration; 1032 (1) ZPO.
Schtze, Rechtsverfolgung im Ausland, Heidelberg 2002, paras32 seq., 316 for further details; Neufang,
Kostenverteilung im US-amerikanischen Zivilprozess und Urteilsanerkennung in Deutschland, Mnster
2002.
Zller-Geimer (2014), 1057 para.8; Sandrock, IDR 2004, 106 (109).
374
33 German legislation provides arbitral tribunals with broad discretion regarding the allocation
of costs, so that the tribunal can fully consider the specific circumstances of each case and
find flexible solutions.66 Arbitral tribunals are not bound by the general rule that the winning party will receive compensation for its costs as stipulated in 91 et seq. ZPO for court
proceedings. The parties to arbitral proceedings may, however, agree that these provisions
shall also apply with respect to the decision on costs to be made by the arbitral tribunal.67
1057(1) sentence2 ZPO expressly states that the arbitral tribunal shall take into consideration in particular the outcome of the proceedings. However, it is nevertheless likely that the
costs are allocated according to the basic principle that costs follow the event.68
34 On the other hand, the arbitral tribunal has the discretion to depart from the above standards
in situations where the application of these standards would not appear reasonable in light of
the particular circumstances of the case,69 e.g. because of extra costs incurred due to delays70
attributable to only one party or because the parties come from a country with a legal system71 that does not provide for full reimbursement of the costs incurred by the winning party.
However, in the latter case this conclusion is certainly not mandatory as the reimbursement
of costs might have been one reason for choosing Germany as the place of arbitration.
35 If the action is withdrawn or the parties agree to settle their dispute pursuant to 1053 (1)
sentence1 ZPO without requesting an award on agreed terms and without agreeing on the
costs, the arbitral tribunal must decide on the allocation and the amount of the costs as well.
This decision should be made in the order which terminates the proceedings. If the parties
request an award on agreed terms, this award has to include the decision on costs just like any
other award.
36 A decision on costs by the arbitral tribunal is possible even if the proceedings are terminated
on grounds of lack of jurisdiction of the arbitral tribunal.72 Such jurisdiction for costs in the
absence of a valid arbitration agreement is based on the doctrine of Kompetenz-Kompetenz,
which is set out in 1040 (1) ZPO. A defence of lack of jurisdiction raised by a respondent
66
67
68
69
70
71
72
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.57; sceptical Schtze (2012), paras462 seq.
Cf. OLG Mnchen 25.09.2006, OLGR Mnchen 2006, 906 seq.; Henn (2000), para.464.
para.3; MnchKommZPO-Mnch (2013), 1057 para.14; Musielak-Voit (2013), 1057 para.3; Lachmann (2008), para.1929; Lionnet/Lionnet (2005), p.539; Mller (1998), p.111; Raeschke-Kessler/Berger
(1999), para.884; Lew/Mistelis/Krll (2003), paras24-82 speak of an emerging trend; dissenting Stein/
OLG Mnchen 25.09.2006, OLGR Mnchen 2006, 906 seq.
Stein/Jonas-Schlosser (2002), 1057 para. 4; Rtzel/Wegen/Wilske (2005), p. 146; Lionnet/Lionnet
(2005), p.539; stricter MnchKommZPO-Mnch (2013), 1057 para.15 (only in exceptional circumstances).
Musielak-Voit (2013), 1057 para.3; HK-ZPO-Saenger (2013), 1057 para.5; Schtze (2012), para.464.
BGH 06.06.2002, SchiedsVZ 2003, 39 = CLOUT case No.560; Stein/Jonas-Schlosser (2002), 1057
para.2; MnchKommZPO-Mnch (2013), 1057 para.24; HK-ZPO-Saenger (2013), 1057 para.4;
Zller-Geimer (2014), 1057 para. 3; Lachmann (2008), para. 1879; Mnch, Anmerkung zu BGH
06.06.2002, SchiedsVZ 2003, 41 (43); Raeschke-Kessler/Berger (1999), para.889; Rtzel/Wegen/Wilske
(2005), p.148; Schwab/Walter (2005), Chap.33 para.4; Krll, Recourse Against a Negative Decision
on Jurisdiction, Arb.Int. 2004, 55; dissenting BGH 23.11.1972, NJW 1973, 191 (regarding the former
version of the ZPO); Weigand-Wagner (2002), Germany, para.390; Musielak-Voit (2013), 1057 para.2;
Thomas/Putzo-Reichold (2013), 1057 para.9; Mnnikes (2000), p.210.
375
merely refers to the jurisdiction of the tribunal with respect to the merits of the case, but not
with respect to the decision on costs.73
C.
Decision on the Amount of Costs Pursuant to 1057 (2) ZPO
Contrary to the courts, which are bound by the provisions of 103 et seq. ZPO, arbitral 37
tribunals are not required to follow a prescribed procedure for the assessment of costs.
Therefore, an arbitral tribunal has the power pursuant to 1057 (2) sentence1 ZPO not
only to allocate the costs of the arbitration, but also fix the amount of the costs that the parties actually have to pay.74 This amount is then split between the parties in accordance with
1057 (1) sentence1ZPO.
In practice, the decision on the amount of costs is often made together with the decision 38
on the allocation of costs. However, an arbitral tribunal may first render an award on the
allocation of costs and then at a later stage make a decision on the amount of the costs.75 This
procedure is advisable in cases where it may be difficult to assess the amount of the costs,
while a decision on the merits and on the allocation of costs can be made.76 This avoids a
delay in rendering the award until the (secondary) issue of the amount of costs has been
resolved. If an award is rendered without a decision on costs, this award has to be regarded as
a partial award and the arbitrators mission is still uncompleted.77
In order to determine the amount of the costs, a statement by the parties showing the ex- 39
penses they have incurred is essential.78 These statements are frequently filed together with
the final brief. The requirement to file such a statement results from the parties right to be
heard.79 In this connection, the OLG Brandenburg80 has decided that a breach of the obligation to hear the parties concerning the decision on costs should not be regarded as a violation
of public policy, but this decision is very controversial.81 Some legal authors even take the
position that each party should not only be allowed to submit a statement of costs, but to also
have the opportunity to comment on the statement of costs filed by the other party.82
D.
Legal Consequences of the Decision on Costs
1.
Consequences for the Parties
The decision on costs included in the award gives rise to a claim for reimbursement between 40
the parties, which is enforceable together with the main award. It has to be borne in mind that
the allocation of costs by the arbitral tribunal is the only possibility for the winning party to
73
74
75
76
77
78
79
80
81
82

Cf. OLG Dresden 11.12.2000, RPS 1/2001, 20; dissenting with this decision Lachmann (2008),
para.1896.
Cf. OLG Kln 15.01.2004, SchiedsVZ 2004, 269.
Henn (2000), para.482; Lachmann (2008), para.1881.
OLG Koblenz 10.01.1969, NJW 1969, 1540; Lionnet/Lionnet (2005), p.539.
Weigand-Hanefeld (2010), Germany, para.7.199; Lachmann (2008), para.1919; Schwab/Walter (2005),
Chap.33 para.6.
OLG Brandenburg 11.05.2000.
Dissenting Lachmann (2008), para.1903.
Henn (2000), para.484.
376
obtain reimbursement of its expenses.83 Therefore, the decision on costs has to be included
in the dispositive provisions of the award.84
2.
Consequences for Third Parties
41 As regards dealings with third parties (e.g. arbitrators, lawyers, experts and witnesses), the
final award on costs does not give rise to any rights for these parties. In general, legal relations
with such parties fall within the jurisdiction of the courts and are not subject to arbitration.85
Therefore, even the arbitral tribunals determination of the amount in dispute has no binding
effect for the relationship between the parties and their lawyers.86
E.
Recourse Against the Decision on Costs
42 The decision on costs is closely connected with the main award. If the award on the merits is
set aside, then this applies to the decision on costs as well, irrespective of whether the decision is part of the main award or has been rendered as a separate award.87 Even if the main
award is only partially set aside, the decision on costs becomes invalid, because an essential
component underlying the decision on costs has ceased to exist.88
43 If the tribunal renders a separate award on the issue of costs, this award is subject to 1054,
1058, 1059, 1060, 1061 ZPO just like any other award.89 As a matter of fact, the BGH never
overruled a decision by its predecessor, the Reichsgericht, stating that an award on costs can be
set aside separately.90 Given that only one part of an award may be challenged if the remainder
is able to stand alone,91 it is only reasonable to assume that a decision on costs can also be
challenged independently. Moreover, an award on costs can be enforced separately as well, if
it fulfils all requirements of a valid arbitral award.92 An award on the merits, including the allocation of costs, is not subject to judicial review during the enforcement proceedings of the
separate award on costs. Furthermore, an arbitral tribunal is authorized to render a separate
award on costs even if proceedings to set aside the initial award are still pending.93
44 Generally, if an award (and thereby inevitably the decision on costs) is set aside after one
party has already paid its share of the costs, these costs can be reclaimed pursuant to 812
83
84
85
86
87
88
89
90
91
92
93
Stein/Jonas-Schlosser (2002), 1057 para.1; HK-ZPO-Saenger (2013), 1057 para.1; Schwab/Walter

(2005), Chap.33 para.3.
Henn (2000), para.464.
MnchKommZPO-Mnch (2013), 1057 para.12; Schtze (2012), para.467.
Stein/Jonas-Schlosser (2002), 1057 para.14; HK-ZPO-Saenger (2013), 1057 para.4; Thomas/PutzoReichold (2013), 1057 para.8; Zller-Geimer (2014), 1057 para.2a.
Baumbach/Lauterbach (2014), 1057 para.4; Zller-Geimer (2014), 1057 para.2a; Rtzel/Wegen/
Wilske (2005), p.148.
RG 29.10.1940, RGZ 165, 140.
BGH 26.09.1985, BGHZ 96, 40 = NJW 1986, 1436; Stein/Jonas-Schlosser (2002), 1059 para. 11;
Musielak-Voit (2013), 1059 para.32; Zller-Geimer (2014), 1059 para.6; Weigand-Wagner (2002),
Germany, para.398; Hausmann, Die Aufhebung von Schiedssprchen nach neuem deutschen Schiedsverfahrensrecht, in: Hohloch (ed.), FS-Stoll, 2001, p.593 (611).
OLG Kln 15.01.2004, SchiedsVZ 2004, 269; dissenting Schwab/Walter (2005), Chap.33 para.8.
OLG Stuttgart 04.06.2002, NJW-RR 2003, 1438.
377
et seq. BGB, under the concept of unjust enrichment. In such situations, it is preferable,
however, that the court remits the case to the arbitral tribunal pursuant to 1059 (4) ZPO.94
94
378
1058 Correction and Interpretation of Award; Additional Award

(1) Any party may request the arbitral tribunal
1.
to correct in the award any errors in computation, any clerical or typographical

errors or any errors of similar nature,
2.
to give an interpretation of specific parts of the award,
3.
to make an additional award as to claims presented in the arbitral proceedings

but omitted from the award.
(2) Unless otherwise agreed by the parties, the request shall be made within one month
of receipt of the award.
(3) The arbitral tribunal shall make the correction or give the interpretation within one
month and make an additional award within two months.
(4) The arbitral tribunal may make a correction of the award on its own initiative.
(5) 1054 shall apply to a correction or interpretation of the award or to an additional
award.
Commercial Arbitration, Deventer 1989; Lachmann, Handbuch fr die Schiedsgerichtspraxis, Kln
2008; Lrcher/Lrcher, Das Schiedsverfahren national/international nach deutschem Recht,
Heidelberg 2001; Raeschke-Kessler/Berger, Recht und Praxis des Schiedsverfahrens, Kln 1999;
Rosenberg/Schwab/Gottwald, Zivilprozessrecht, Mnchen 2010; Rtzel/Wegen/Wilske, Commercial
Dispute Resolution in Germany, Mnchen 2005; Schtze/Tscherning/Wais, Handbuch des Schiedsverfahrens Praxis der deutschen und internationalen Schiedsgerichtsbarkeit, Berlin 1990; Schwab/
Walter, Schiedsgerichtsbarkeit, Mnchen 2005.
Para.
Correction of Award ( 1058(1) No.1
ZPO) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
III. Interpretation of Award ( 1058(1)
No.2 ZPO) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
I.
II.
I.
Para.
IV. Additional Award ( 1058(1) No.3
ZPO) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
V. Procedure ( 1058 (2)(4) ZPO). . . . . . . . 8
A. Time Limits . . . . . . . . . . . . . . . . . . . . . . . . . 8
B. Form of Decision Taken under
1058 ZPO . . . . . . . . . . . . . . . . . . . . . . . . 10
1 The purpose of 1058 Code of Civil Procedure (Zivilprozessordnung ZPO) is to provide

the parties with the power to request a correction, interpretation or the rendering of an additional award from the arbitral tribunal. Thus, this provision is intended to enable the arbitral
tribunal to clarify mistakes or ambiguities that occurred due to an incorrect, imprecise or
incomplete final award. The arbitral tribunal is, moreover, also entitled to correct an award
sua sponte without being requested by a party to do so. Consequently, 1058 ZPO constitutes an exception from the general rule that no changes can be made after an award has been
finally rendered.
379
The provision is in line with Article33 of the UNCITRAL Model Law (ML) with the ex- 2
ception that the provisions conferring the power to interpret an award (subsection1 No.2)
and to issue an additional award (subsection1 No.3) are mandatory, i.e. cannot be varied
by agreement of the parties.2 The parties may only modify the time limits provided for in
subsection2.
II.
Correction of Award ( 1058(1) No.1 ZPO)
An award rendered in accordance with the requirements of form set out in 1054 ZPO 3
may be corrected at the request of one of the parties or on the arbitral tribunals own initiative. This rule corresponds to 319 (1) ZPO applicable to courts. It implies that the award to
be modified contains an obvious mistake.3 The correction of an award is only possible where
an accidental divergence exists between what is stated in the award and what was intended by
the arbitrators. It may not lead to a change in the original intention or the supporting reasons
of the award.4 For example, the name or other details such as the corporate form of a party
may be corrected if there is no doubt regarding the identity of the party concerned and if the
correction to be made does not interfere with the interests of any other party.5 According to
one legal writer, an award rendered without an appropriate statement of reasons may not be
corrected in accordance with the above provisions or be supplemented by an additional
award.6
The proceedings for correcting the initial award must be conducted in accordance with the 4
general provisions as laid down in 1042 et seq. ZPO.7 Thus, the other party has a right to be
heard (1042 (1) ZPO) before the arbitral tribunal decides on a request for the correction
of the award.8
In those cases in which the arbitral tribunal corrects the award on its own initiative, there is 5
some dispute as to whether the parties have a right to be heard. OLG Frankfurt has held that
an arbitral tribunal is not required to hear the parties as, according to 1058 (4) ZPO, it is entitled to make the correction on its own initiative.9 However, there are questions over whether
the issue simply depends on the question of who initiates the correction of the award (one of
the parties or the arbitral tribunal itself).10 It is imaginable that the correction envisaged by
2
3
5
6
7
9
10
Thomas/Putzo-Reichold (2013), 1058 paras1, 6; cf. MnchKommZPO-Mnch (2013), 1058 para.1.

Rtzel/Wegen/Wilske (2005), p.149; Schtze/Tscherning/Wais-Wais (1990), para.527; Schwab/Walter
(2005), Chap.21 para.14; Stein/Jonas-Schlosser (2002), 1058 para.5; Thomas/Putzo-Reichold (2013),
1058 para.2.
OLG Stuttgart 20.12.2001, OLGR 2002, 166; Lachmann (2008), para. 2004; Rtzel/Wegen/Wilske
(2005), p.149; Schwab/Walter (2005), Chap.21 para.14.
OLG Frankfurt 19.01.1990, MDR 1990, 639.
Schtze/Tscherning/Wais-Wais (1990), para.527.
Fifth Working Group Report A/CN.9/246 para. 124; Baumbach/Lauterbach (2014), 1058 para. 3;
Thomas/Putzo-Reichold (2013), 1058 para. 4; MnchKommZPO-Mnch (2013), 1058 para. 19;
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.58; OLG Karlsruhe 29.11.2002, annotated
by Krll, Schiedsrechtliche Rechtsprechung 2003, SchiedsVZ 2004, 113 (117); Thomas/Putzo-Reichold
(2013), 1058 para.4; MnchKommZPO-Mnch (2013), 1058 para.19; Lachmann (2008), para.2011;
dissenting Musielak-Voit (2013), 1058 para.6, who is of the opinion that the right to be heard only
applies to the interpretation or the rendering of an additional award.
Against such a view Lachmann (2008), para.2011.
380
the arbitral tribunal (for example the correction of the corporate form of a party) affects the
legitimate rights and interests of a party, e.g. with regard to any eventual enforcement of the
award. In such a situation, it is advisable for the arbitral tribunal to inform the parties about
any intended correction beforehand and to ask them if they have any objections to raise.
III. Interpretation of Award ( 1058(1) No.2 ZPO)

6 An arbitral tribunal shall only give an interpretation of its award if this is expressly requested
by one of the parties. The requesting party may not seek an interpretation of the award as a
whole, but rather must refer to a specific ambiguous part of the award.11 This limitation is to
be read into the law to avoid any misuse or delay of the conclusion of the proceedings. Any
such interpretation of an award may only serve the purpose of clarifying, i.e. it may not be
used to supplement or change the reasons of the award.12
IV. Additional Award ( 1058(1) No.3 ZPO)

7 At the request of one of the parties, the arbitral tribunal may issue an additional award to
decide, for example, claims that arose in the arbitral proceedings, but which were not decided
upon in the original award (infra petita), e.g. the decision on costs.13 On the other hand, if an
arbitral tribunal has intentionally failed to render a decision on certain issues, but has made a
partial award only, this does not constitute an omission to be remedied under this provision.14
A decision made to complement a partial award does not constitute an additional award and
is, therefore, not subject to the time limit provided for in subsection3.15
V.
Procedure ( 1058 (2)(4) ZPO)
A.
Time Limits
8 Unless otherwise agreed by the parties, the request shall be submitted within one month
upon receipt of the original award, 1058 (2) ZPO. A delayed request for correction of an
award can give cause for the arbitral tribunal to act on its own initiative according to subsection 4.16 The arbitral tribunal has no possibility to act on its own in cases where an award is
to be interpreted or where an additional award is to be issued. Since the parties may agree
on a different time limit according to subsection 2, however, they may agree at any time
even after the expiration of the time limit in subsection 2 to instruct the arbitral tribunal to
interpret an award or issue a decision in the form of an additional award.17 Although subsection3 sets out a time limit for the arbitral tribunals decisions, the tribunal may render its
decision even after the expiration of the time limit without any legal consequences.18 The
11
12
13
14
15
16
17
18
Stein/Jonas-Schlosser (2002), 1058 para. 8; Lachmann (2008), para. 2021; cf. Holtzmann/Neuhaus
(1989), p.890.
Rosenberg/Schwab/Gottwald (2010), 180II 4 b.
OLG Stuttgart 04.06.2002, NJW-RR 2003, 1438.
Stein/Jonas-Schlosser (2002), 1058 para.7; HK-ZPO-Saenger (2013), 1058 para.5.
Lachmann (2008), paras2020, 2029; Musielak-Voit (2013), 1058 para.5; dissenting Lrcher/Lrcher
(2001), paras336 et seq.
Baumbach/Lauterbach (2014), 1058 para.3; Lachmann (2008), paras2023, 2034; Stein/Jonas-Schlosser
(2002), 1058 para.7; dissenting Schwab/Walter (2005), Chap.21 para.17 an inadequate exceeding of
the time period can be a reason for setting aside the award, 1059 (2) No.1 (d) ZPO.
381
jurisprudence on 1059 (2) ZPO allows the deduction that a request by one party to make
an additional award (and probably also for a correction or an interpretation of the award) has
no suspensive effect regarding the arbitral tribunals decision on costs (1057 ZPO), the enforcement of such an award on costs19 or a challenge to the principle award (1059 ZPO).20
One legal writer holds that the one month time limit as set forth in 1058 (2) ZPO should 9
also apply when the arbitral tribunal corrects the award on its own initiative according to
1058 (4) ZPO (referring inter alia to Art.33 (2) Model Law which does provide for a
time limit of 30 days).21 However, 1058 (4) ZPO does not provide for any such time limit.
Moreover, there does not appear to be a true practical need for such an interpretation of
the law (not based on its wording). Notwithstanding that arbitral tribunals do have the
power to correct their own mistakes,22 it has to be considered that the mandate of an arbitral
tribunal regularly terminates with the termination of the arbitral proceedings, 1056 (3)
ZPO. According to this provision, the arbitral tribunals mandate is extended only under the
conditions set forth in 1056 (1) to (3) ZPO, imposing time limits on the parties for filing
the request and on the arbitral tribunal for ruling on it.
B.
Form of Decision Taken under 1058 ZPO
Any decision made under 1058 ZPO is to be rendered in accordance with the requirements 10
of form laid down in 1054 ZPO, see 1058 (5) ZPO. Decisions correcting or interpreting
an award are regarded as part of the prior award, whereas an additional award is an independent award in the sense of 1055 ZPO.23 Therefore, enforcement (1060 ZPO) of or setting
aside proceedings (1059ZPO) against an additional award are separate proceedings from
any proceedings concerning the original award.24 The decision of an arbitral tribunal denying
a request for a correction or interpretation is to be considered as a separate award.25
19
20
21
22
23
24
25
OLG Mnchen 01.04.2010, 34Sch19/09, paras 38 et seq.

OLG Dsseldorf 14.08.2007, SchiedsVZ 2009, 156 (158).
MnchKommZPO-Mnch (2013), 1058, para.7.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p. 58; Raeschke-Kessler/Berger (1999),
para.910; Stein/Jonas-Schlosser (2002), 1058 para.9 with the restriction that he suggests the award on
correction/interpretation being independent subject to recourse actions.
para.4; Lrcher/Lrcher (2001), paras339 et seq.; Mller (1998), p.114.
Chapter VII
Recourse Against the Award
1059 Application for Setting Aside
(1) Recourse to a court against an arbitral award may be made only by an application
for setting aside in accordance with subsections 2 and 3 of this section.
(2) An arbitral award may be set aside only if:
1.
the applicant shows sufficient cause that:
a) a party to the arbitration agreement referred to in 1029 and 1031 was under
some incapacity pursuant to the law applicable to him; or the said agreement
is not valid under the law to which the parties have subjected it or, failing any
indication thereon, under German law; or
b) he was not given proper notice of the appointment of an arbitrator or of the
arbitral proceedings or was otherwise unable to present his case; or
c) the award deals with a dispute not contemplated by or not falling within
the terms of the submission to arbitration, or contains decisions on matters
beyond the scope of the submission to arbitration; provided that, if the decisions on matters submitted to arbitration can be separated from those not so
submitted, only that part of the award which contains decisions on matters not
submitted to arbitration may be set aside; or
d) the composition of the arbitral tribunal or the arbitral procedure was not in
accordance with a provision of this Book or with an admissible agreement of
the parties and this presumably affected the award; or
2.
the court finds that
a) the subject matter of the dispute is not capable of settlement by arbitration

under German law; or
b) recognition or enforcement of the award leads to a result which is in conflict
with public policy (ordre public).
(3) Unless the parties have agreed otherwise, an application for setting aside to the
court may not be made after three months have elapsed. The period of time shall
commence on the date on which the party making the application had received the
award. If a request had been made under 1058, the time limit shall be extended
by not more than one month from receipt of the decision on the request. No application for setting aside the award may be made once the award has been declared
enforceable by a German court.
(4) The court, when asked to set aside an award, may, where appropriate, set aside the
award and remit the case to the arbitral tribunal.
(5) Setting aside the arbitral award shall, in the absence of any indication to the contrary, result in the arbitration agreement becoming operative again in respect of the
subject-matter of the dispute.
384
Short Bibliography: Aden, Verfahrensversto und Urschlichkeit fr den Schiedsspruch im Aufhebungsverfahren nach 1059 Abs. 2 Nr. 1d ZPO, DZWiR 2013, 149; Arendt, Der Zustndigkeitsstreit
im Schiedsverfahren, Tbingen 1996; Borges, Die Anerkennung und Vollstreckung von Schiedssprchen nach dem neuen Schiedsverfahrensrecht, ZZP 1998, 487; Ebbing, Private Zivilgerichte:
Mglichkeiten und Grenzen privater (schiedsgerichtlicher) Zivilrechtsprechung, Mnchen 2003,
Eckstein-Puhl, Prozessbetrug im Schiedsverfahren, Frankfurt am Main 2005; Ehricke, Die Beschleunigung der Finalitt von Schiedssprchen nach dem neuen deutschen Schiedsverfahrensrecht,
ZZP 2000, 453; Gaul, Die Rechtskraft und Aufhebbarkeit des Schiedsspruchs im Verhltnis zur
Verbindlichkeit des staatlichen Richterspruchs, in: Berger/Ebke et al. (eds), FS-Sandrock, 2000,
p.285; Haas, Aufhebungsklage und Beendigungsbeschluss nach 1056 Abs. 2 ZPO, SchiedsVZ
2010, 286; Habscheid, Die Schiedsgerichtsbarkeit und der ordre public, in: Forstmoser/Heini/
Giger/Schluep (eds), FS-Keller, 1989, p. 575; Hausmann, Die Aufhebung von Schiedssprchen
nach neuem deutschen Schiedsverfahrensrecht, in: Hohloch/Frank/Schlechtriem (eds), FS-Stoll,
2001, p. 593; Heymann, Der ordre public in der privaten Schiedsgerichtsbarkeit, Bielefeld 1969;
Holtzmann/Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration, Deventer 1989; Huber, Das Verhltnis von Schiedsgericht und stattlichen Gerichten bei der
Entscheidung ber die Zustndigkeit, SchiedsVZ 2003, 73; Kornblum, Das Gebot berparteilicher
Rechtspflege und der deutsche schiedsrechtliche ordre public, NJW 1987, 1105; Kremer/Weimann,
Die Aufhebbarkeit von Schiedssprchen insbesondere Zwischen- oder Teilschiedssprchen ber
den Anspruchsgrund Widerspruch zu Prinzipien der Prozesskonomie?, SchiedsVZ 2007, 238;
Krll, Die Ablehnung eines Schiedsrichters nach deutschem Recht, ZZP 2003, 195; Krll, Naumburg
Higher Regional Court Offers Good Example Of How German Arbitration Law Balances Partys
Needs And Protects Arbitral Process, 17 (6) Mealeys I.A.R. 27; Krll, Die Entwicklung des Rechts
der Schiedsgerichtsbarkeit 2001/2002, NJW 2003, 791; Krll, Recourse Against Negative Decisions
on Jurisdiction, Arb.Int. 2004, 55; Krll, Schiedsrechtliche Rechtsprechung 2003, SchiedsVZ 2004,
113; Krll, Die schiedsrechtliche Rechtsprechung 2004, SchiedsVZ 2005, 139; Krll, Die schiedsrechtliche Rechtsprechung 2005, SchiedsVZ 2006, 203; Lachmann, Handbuch fr die Schiedsgerichtspraxis, Kln 2008; Lew/Mistelis/Krll, Comparative International Commercial Arbitration,
Hague/London/New York 2003; Nacimiento/Geimer, Eins zu null fr die Verbandsschiedsgerichtsbarkeit des Deutschen Fuballbundes, SchiedsVZ 2003, 88; Reithmann/Martiny, Internationales Vertragsrecht Das internationale Privatrecht der Schuldvertrge, Kln 2004; Rmann, Der
erschlichene Schiedsspruch der Betrger als Nutznieer des neuen deutschen Schiedsverfahrensrechts?, in: Bachmann/Breidenbach et al. (eds), FS-Schlosser, 2005, p.485; Rtzel/Wegen/Wilske,
Commercial Dispute Resolution in Germany, Mnchen 2005; Sandrock, Zgigkeit und Leichtigkeit
versus Grndlichkeit, JZ 1986, 370; Sandrock, Gewhnliche Fehler in Schiedssprchen: Wann
knnen Sie zur Aufhebung des Schiedsspruchs fhren?, BB 2001, 2173; Sandrock, Scharfer ordre
public interne und laxer ordre public international, in: Coester/Martiny/Prinz von Sachsen Gessaphe
(eds), FS-Sonnenberger, 2004, p.615; Schlosser, Schiedsgerichtsbarkeit und Wiederaufnahme, in:
Schilken/Becker-Eberhard/Gerhardt (eds), FS-Gaul, 1997, p. 679; Schmidt, Der Schiedsspruch,
SchiedsVZ 2013, 32; Schroeder, Zur Aufhebung von Scheinschiedssprchen und anderen formellen
Schiedssprchen durch staatliche Gerichte Ein Beitrag zur Auslegung des Begriffs Schiedsspruch
in 1059 ZPO, SchiedsVZ 2005, 244; Schtze, Die gerichtliche berprfung von Entscheidungen
des Schiedsgerichts, SchiedsVZ 2009, 241; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005;
Vlker, Dogmatik des ordre public, Berlin 1998; Voit, Die Entscheidung des Schiedsgerichts ber die
eigene Unzustndigkeit als Prfstein der dogmatischen Grundlage des Schiedsverfahrensrechts, in:
Heinrich (ed.), FS-Musielak, 2004, p.595; Wagner, Prozessvertrge Privatautonomie im Verfahrensrecht, Tbingen 1998; Weigand (Hrsg.), Practitioners Handbook on International Arbitration,
Mnchen/Copenhagen 2002; Wolff, Streitwertfestsetzung bei wertabhngiger Schiedsrichtervergtung Schiedsrichter in eigener Sache?, SchiedsVZ 2006, 131.
1059 Krll/Kraft
Para.
Legislative Function and Basic Principles . 1
Waiver of the Right to Recourse . . . . . . . . . . 6
Admissibility of Setting Aside
Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
B. The Object of Setting Aside
Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 12
1. Decisions by an Arbitral Tribunal . 13
2. Void Awards . . . . . . . . . . . . . . . . . . . . . 18
3. Pseudo-Awards by other
Dispute Resolution Bodies . . . . . . . 19
4. Limitation to Domestic
Awards and Other Restrictions. . . 21
C. Legitimate Legal Interest and
Proceedings for a Declaration of
Enforceability . . . . . . . . . . . . . . . . . . . . . . . 24
D. Application . . . . . . . . . . . . . . . . . . . . . . . . . 27
2. Form and Content of the
Application . . . . . . . . . . . . . . . . . . . . . . 29
V. Parties to the Proceedings and Legal
Succession. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
VI. Time Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
VII. Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
VIII. Merits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
I.
II.
III.
IV.
I.
385
Para.
A. Basic Principles . . . . . . . . . . . . . . . . . . . . . 41
B. Relationship between the Various
Grounds in No. 1 and No. 2 . . . . . . . . . 45
C. Burden of Pleading and Burden of
Proof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
D. Legal and Factual Basis for the
Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 52
E. Grounds for Setting Aside . . . . . . . . . . . 55
1. Grounds that Must be Pleaded by
the Parties 1059 (2) No. 1
ZPO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
2. Grounds that Must be
Considered ex officio 1059
(2) No. 2 ZPO . . . . . . . . . . . . . . . . . . . 80
IX. The Courts Decision and Legal
Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
B. Setting Aside and Legal
Consequences . . . . . . . . . . . . . . . . . . . . . . 97
X. Protective Measures . . . . . . . . . . . . . . . . . . .100
XI. Other Remedies against the Award . . . . .101
A. Procedural Remedies. . . . . . . . . . . . . . .101
B. Damage Claims Pursuant to 826
BGB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102
XII. Costs of the Proceeding and Amount
in Dispute . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104
Legislative Function and Basic Principles1
The primary function of 1059 Code of Civil Procedure (Zivilprozessordnung ZPO) is 1

to provide for the constitutionally required control2 of the arbitration process and to define
the scope of such control. It is a necessary corollary to the effects accorded to an award in
1055 ZPO. While arbitration is a private means of dispute settlement governed by party
autonomy, pursuant to 1055 ZPO the resulting award has the same effect between the
parties as a final and binding court judgment. Thus, in principle, every award, irrespective of
its procedural or material correctness, has res judicata effect and after having been declared
enforceable its operative parts may be executed in enforcement proceedings. The legal consequence of the classification as a final and binding court judgement would normally be that
no ordinary means of recourse are available against such decision. Under German law as
well as in most other countries3 to grant such wide reaching effects to a private act would
violate the constitutionally guaranteed right to effective legal protection. The latter requires
that the parties must at least have the possibility to set aside such effects that are caused in the
course of the arbitral proceedings by violations of the minimum standards of procedural fairness and due process. In this respect, 1059 ZPO is the constitutionally required limitation
1
2
3
See for the constitutional requirements of control Schtze, SchiedsVZ 2009, 241 et seq.
See Lew/Mistelis/Krll (2003), paras2567 et seq.; in some countries such as Belgium, Switzerland or
France foreign parties may opt out of such control.
386
to 1055 ZPO, providing for setting aside proceedings as a possible means of recourse if one
of the grounds listed in 1059 (2) ZPO exists.4
2 At the same time, 1059 ZPO also has a limiting function. This limiting function dominates the wording of 1059 (1) ZPO, according to which recourse against an award may
be made only by an application for setting aside in accordance with subsections 2 and 3.
As a first consequence reiterated in 1059 (2) ZPO (only if) awards may not be set
aside for grounds other than those enumerated in subsection 2. Thus, a review on the merits
is impossible. Secondly, until the award has been annulled in setting aside proceedings in
accordance with 1059ZPO, it is legally binding on the parties, irrespective of whether one
of the grounds listed in 1059 (2) ZPO exists. In particular, it is impossible to rely on the
grounds mentioned in 1059 (2) ZPO in other proceedings, e.g. as a defence against a party
relying on the res judicata effect of the award.5 Only in proceedings to have an award declared
enforceable may the grounds enumerated in 1059 ZPO be raised as a defence pursuant
to 1060 (2) ZPO; it is only in these proceedings that their existence may lead to a setting
aside of the award. As a third consequence, with the expiration of the three month time limit
provided for in subsection 3, the award will no longer be open to a direct recourse.
3 The application is directed at the retroactive annulment of the award, i.e. at a direct change of
the legal relationship between the parties. An award which has been set aside is considered
to be non-existent ab initio.6
II.
Legislative History
4 The central parts of 1059 ZPO, subsections (1)(3), are largely a literal adoption of Article
34 UNCITRAL Model Law (ML). Differences exist in relation to the shortened time limits
in cases where an application for correction or interpretation has been made and in relation
to the absence of the possibility to stay the setting aside proceedings to allow the arbitral
tribunal to remedy the alleged defects. Instead, 1059 (4) ZPO explicitly foresees the remittance of the case to the arbitral tribunal after the award has been set aside. In addition, 1059
(5) ZPO has no equivalent in the ML.
5 The main differences7 in comparison to the old law are the inclusion of a time limit, the
continuing operability of the arbitration clause and the complete rewording of the grounds
for setting aside. The reason for the latter, however, was not to make any substantive changes
but to harmonize the grounds for setting aside with those for a refusal of recognition. Thus,
the pre-existing case law remains largely valid, even where it relates to grounds which are no
longer explicitly mentioned. Most of the grounds, particularly those giving rise to an action
for a retrial (1041 No. 6 ZPO pre-1998), are now subsumed under public policy.8 While
under the old law requests for the setting aside of an award had to be brought by a way of an
action and resulted in a judgment (Klageverfahren), they are now initiated by an application
and the decisions are issued in the form of an order (Beschlussverfahren).
4
5
6
7
8
However, from its whole structure and the grounds enumerated, 1059 ZPO is not an ordinary means of
recourse in the form of an appeal but closer to the action for retrial; cf. Gaul, FS-Sandrock (2000), pp.285
(289 seq.).
Hausmann, FS-Stoll (2001), p.593 (594); Stein/Jonas-Schlosser (2002), 1059 para.2.
For a more detailed description of the various changes see Borges, ZZP 1998, 487 et seq.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.59; Schwab/Walter (2005), Chap. 24 para.3;
1059 Krll/Kraft
387
III. Waiver of the Right to Recourse

The right to apply for the setting aside of the award as such may not be excluded by the parties 6
in advance, i.e. before the arbitral proceedings have been started.9 In light of the constitutionally required minimum control of the arbitral process, such exclusion agreements are invalid.
However, this prohibition to exclude setting aside proceedings as such must be distinguished 7
from the waiver of reliance on a particular ground. The parties may not validly exclude reliance on the two grounds listed in 1059 (2) No. 2 ZPO. These grounds serve a public interest and cannot therefore validly be waived in advance. By contrast, reliance on the grounds
in No. 1 may, in principle, be waived with the effect that applications based on such grounds
have to be rejected as unfounded.10 This applies without restriction to not only the time after
the award has been rendered but also to waivers, where the relevant defect is already known
before the award has been rendered.11 In the latter cases, reliance on defects will often anyways be excluded by 1027 ZPO. Even beyond these statutory preclusions, there is no need
to protect parties which can evaluate the scope of their waiver.
The provisions contained in some institutional arbitration rules, e.g. Article 28 (6) Inter- 8
national Chamber of Commerce (ICC) Arbitration Rules whereby the parties renounce
any form of recourse, are not considered to be sufficient to constitute a waiver of the right to
initiate setting aside proceedings. They are considered to intend the exclusion of a review on
the merits or the right to appeal on points of law (existing in some legal systems12), but not to
exclude setting aside proceedings.13
Irrespective of the mandatory character of 1059 ZPO, there is no obligation on the par- 9
ties to apply for the setting aside of the award. The initiation and the scope of setting aside
proceedings are largely at the parties disposition. That applies even to the grounds that must
be considered by the court ex officio, since the parties determine which facts they want to
submit.14
IV. Admissibility of Setting Aside Proceedings

A.
General Principles
The admissibility of proceedings to set aside an award must be examined by the courts ex 10
officio, irrespective of any challenge by the other party.15 The courts must verify, primarily,
whether the application complies with the special admissibility requirements laid down in
1059, 1063 et seq. ZPO (existence of a domestic award; formally correct application).
Additionally, the general requirements for the availability of court proceedings must be met
9
10
11
12
13
14
15
BGH 26.09.1985, BGHZ 96, 40 (42) = NJW 1986, 1436; BayObLG 15.12.1999, RPS 2/2000, 16 (17)
= CLOUT case No. 403; Stein/Jonas-Schlosser (2002), 1059 para.2; Lachmann (2008), para.2346;
Hausmann, FS-Stoll (2001), p.593 (595).
BGH 26.09.1985, BGHZ 96, 40 (47) = NJW 1986, 1436 (1437).
Lachmann (2008), para.2346; for a broader view see Zller-Geimer (2014), 1059 para.2; Geimer, NJW
1984, 2768 seq. (= note on OLG Frankfurt 21.12.1983, NJW 1984, 2768).
E.g. s. 69 UK Arbitration Act 1996.
BayObLG 15.12.1999, RPS 2/2000, 16 (17) = CLOUT case No. 403; confirming BGH 26.09.1985,
BGHZ 96, 40 (42); OLG Hamburg 30.05.2008 11 Sch 9/07
For the grounds that have to be considered ex officio see infra, paras80 et seq.
BGH 27.05.2004, SchiedsVZ 2004, 205 (207) = ZIP 2005, 46 (47) = NJW 2004, 2226 (2226 seq.) =
(2006) Int.A.L.R. N-7; Musielak-Voit (2013), 1059 para.3.
388
where they are compatible with the special provisions of the arbitration law in the 10th Book
of the ZPO.16 In case of doubt, the courts must inform the parties about existing reservations
pursuant to 139 ZPO.17 The relevant date at which all requirements for the admissibility
have to be met is the date of the last oral hearing. Until that time, pre-existing defects may be
remedied. The burden of proof for the admissibility of the application lies with the applicant.
Where the admissibility of setting aside proceedings is challenged, the court may render a
separate decision on this issue against which a complaint on a point of law is possible.18
11 Functional and local jurisdiction for proceedings under 1059 ZPO lies with the Higher
Regional Court (Oberlandesgericht OLG) designated in the arbitration agreement or, in
the absence of such a designation, with the OLG in whose district the place of arbitration is
located (1062 (1) No. 4 ZPO).
B.
The Object of Setting Aside Proceedings
12 Setting aside proceedings are only possible against awards and the courts must verify the
existence of an award ex officio at all instances.19 In the interest of effective legal protection,
the term award in the sense of 1059 ZPO should be interpreted broadly. It is not limited
to decisions which, in substance, constitute binding and final decisions of an arbitral tribunal
but also covers other decisions which are rendered in the form of an award and thus create
the appearance of such awards (highly controversial, see infra, paras 18 et seq.).
1.
Decisions by an Arbitral Tribunal
13 Setting aside proceedings may be initiated against all forms of awards rendered in accordance
with 1054 ZPO, including awards on costs20 or awards on agreed terms.21 In addition to
16
17
18
19
20
21
BeckOK ZPO/Wilske/Markert (2013), 1059 para. 3.

139 [Power of control of the subject matter of the proceeding]
(1) To the extent necessary, the court shall discuss the facts and subject matter of the case with the
parties from its factual and legal aspects and shall put questions. The court shall ensure that the
parties make comprehensive submissions in a timely manner with regard to all relevant facts and,
in particular, supplement any insufficient particulars concerning the asserted facts, and file the
pertinent motions.
(2) Unless not only a secondary claim is concerned, the court may base its decision on an aspect
which was apparently overlooked or considered irrelevant by one party only, if the court pointed
out this oversight and gave the party the opportunity to comment thereon. The same applies to an
aspect which the court assesses differently than both parties.
(3) The court shall point out reservations existing with respect to points to be considered ex officio.
(4) The court shall point out issues as early as possible and place them on record. The fact that such
issues have actually been pointed out may be proven only by the content of the records. Objection
against the content of the records shall be allowed on the basis of evidence of their falsification.
(5) If a party is unable to make an immediate statement regarding an issue pointed out by the court, the
court shall determine a time limit, upon the motion of that party within which it may subsequently
provide the statement in a written pleading.
See also Rtzel/Wegen/Wilske (2005), pp.197 seq.
BGH 20.09.2001, NJW 2001, 3787 = (2003) Int.A.L.R. N-13; Lachmann (2008), para.2387.
BGH 27.05.2004, SchiedsVZ 2004, 205 (207) = ZIP 2005, 46 (47) = NJW 2004, 2226 = (2006)
Int.A.L.R. N-7; OLG Braunschweig 12.05.2005, SchiedsVZ 2005, 262 (263).
OLG Kln 26.11.2002 (9 Sch 18/02).
BGH 02.11.2000, BGHZ 145, 376 (381) = NJW 2001, 373 = note by Boecker, EWiR 2001, 345 = note
by Voit, ZZP 2001, 355 et seq. = (2002) Int.A.L.R. N-12.
1059 Krll/Kraft
389
partial awards, severable parts of awards which could have been the object of a partial award
are also covered.22 Negative decisions on jurisdiction, which due to their final character and
the ensuing termination of the arbitral proceedings constitute procedural awards, may be
the object of setting aside proceedings.23 By contrast, the only means of recourse against
preliminary rulings assuming jurisdiction is the special review procedure in 1040 (3) ZPO.
Controversial is the admissibility of setting aside proceedings against interlocutory awards 14
(Zwischenschiedssprche).24 These are awards that decide upon important prerequisites for a
claim, such as the applicable law or liability in principle, but do not constitute a final award
on a severable claim as such.25 The prevailing view is that setting aside procedures are only
admissible against the final award, but not against the interlocutory award.26 According to
this view, under German law parties may not challenge an award that determines the liability
in principle of a party, but must wait until the award on quantum is rendered. In light of the
binding character of such awards and the international practice, the better view is, however,
that interlocutory awards can and must also be attacked under 1059 ZPO to avoid the
expiry of the time limit contained therein.27
Equally controversial is the admissibility of setting aside proceedings against termination 15
orders in the sense of 1056 ZPO.28
Where the arbitration agreement provides for an appeal to a second arbitral instance, awards 16
of the first instance arbitral tribunal may only be attacked by setting aside proceedings when
they have become binding. By contrast, decisions of the second instance are in general open
to recourse under 1059 ZPO. According to the OLG Hamburg, that even applies to decisions that declare the appeal against the first instance award to be inadmissible or withdrawn.
Since such decisions de facto render the award of the first instance binding upon the parties,
22
23
24
25
26
27
28
OLG Mnchen 01.02.2008 34 Sch 18/07 relating to the request to present the accounts in the context
of a dissolution of an entity.
BGH 06.06.2002, BGHZ 151, 79 = SchiedsVZ 2003, 29 (note by Mnch) = IDR 2002, 40 (note by
Sandrock) = CLOUT case No. 560; for a detailed discussion in English see Krll, Arb.Int. 2004, 55 et seq.;
cf. OLG Hamburg 30.08.2002 (11 Sch 02/00) = CLOUT case No. 570; Zller-Geimer (2014), 1059
para. 12; Lachmann (2008), paras 2067 et seq.; for a different view see Musielak-Voit (2013), 1059
para.4 (no award action for a declaration that arbitration is admissible); Voit, FS-Musielak (2004),
pp.595 (597 et seq.) (who, however, favours for systematic reason their qualification as declaratory orders).
See a summary of the discussion in Haas, SchiedsVZ 2010, 286 (290); like in most other jurisdictions
there is no harmonized terminology for these types of awards which are often also treated under the label
of interim awards; on the various types of awards see Schmidt, Die Typologie von Schiedssprchen, 2012,
pp. 1 et seq.
See Schmidt, SchiedsVZ 2013, 32 (39 seq.).
See OLG Frankfurt 10.03.2009, SchiedsVZ 2007, 278; Zller-Geimer (2014), 1059 para.12; Lachmann
(2008), paras2057, 2060.
In this direction OLG Hamburg 30.08.2002 11 Sch 01/02; OLG Stuttgart 04.06.2002, IDR Beilage 3
RIW 2002, 44 (45); Kremer/Weimann, SchiedsVZ 2007, 238; Schmidt, SchiedsVZ 2013, 32 (40); Schtze, SchiedsVZ 2009, 241 (245); for a different view see Stein/Jonas-Schlosser (2002), 1059 para.25;
Zller-Geimer (2014), 1059 para.13 (no setting aside proceedings possible against separate decisions
on liability); against the award quality of interlocutory decisions also BGH 07.10.1953, BGHZ 10, 325
(326 seq.); cf. the decision of the Dutch Gerechtshof rendered in the procedure that led to the decision
of the European Court of Justice 01.06.1999, C-126/97, (Eco Swiss China Time Limited v. Benetton International NV),ECR 1999, I-3055 = EuZW 1999, 565 et seq. = NJW 1999, 3549.
For the discussion see Haas, SchiedsVZ 2010, 286 et seq. (against); in favor Schtze, SchiedsVZ 2009, 241
(246 seq.)
390
they have the same legal effect as awards, irrespective of their classification by the arbitral
tribunal.29
17 Applications for a declaration that a particular decision of an arbitral tribunal does not constitute an award have been rejected as inadmissible by the courts.30 Equally, interim relief
ordered by the tribunal may not form the object of setting aside proceedings.31 The same
applies for mere procedural orders by the chairman or other decisions dealing primarily
with procedural matters, such as rejections of procedural requests by the parties.32 In general,
the non-fulfilment of the formal requirements of 1054 ZPO is a strong indication that a
particular decision is not an award in the sense of 1059 ZPO. As the relevant formal requirements for an award may, however, also be fulfilled subsequently by the arbitral tribunal, this
presumption is not conclusive.
2.
Void Awards
18 Setting aside proceedings may also be initiated against void awards.33 While, in general, defective awards are effective until they have been set aside, in exceptional cases awards may suffer
from such fundamental defects that they must be considered to be a legal nothingness and
not to have any legal effect.34 Examples are awards which deal with obviously non-arbitrable
issues (termination of a marriage) or where obviously any conceivable basis for the arbitral
tribunals jurisdiction is lacking. In the absence of a comprehensive theory on void awards
and differences in classification (e.g. lack of arbitrability), it may not always be clear whether
an award is already void or only defective. Thus, void awards may create the appearance of
a binding award which, as such, may already constitute a burden for a party. In such cases,
parties have a legitimate legal interest in quashing the appearance of a binding award. In light
of 1026 ZPO, the appropriate means to pursue such an interest is not an action for a declaration that no binding award exists an action not provided for in 1025 et seq. ZPO but
the setting aside procedure under 1059 ZPO. Nevertheless, the decision will have a purely
declaratory effect in cases where the award is found to be null and void.35
3.
Pseudo-Awards by Other Dispute Resolution Bodies
19 In general, decisions resulting from other types of dispute resolution mechanisms, such
as expert determination or mediation, cannot be attacked by setting aside proceedings.
29
30
31
32
33
34
35
OLG Hamburg 21.09.1998, NJW-RR 2000, 86 (setting aside proceedings admissible against decision
which considered the appeal to be withdrawn due to a late payment of fees).
OLG Kln 03.06.2003 9 Sch 06/03.
OLG Frankfurt a.M., 28.6.2012 26 Sch 5/12; but see OLG Kln, 16.11.2012 19 Sch 24/12 where an
application for the setting aside of such a decision which strongly affected the other party was allowed.
OLG Kln 03.06.2003 -9 Sch 06/03 (fax by the chairman rejecting counterclaim as belated); other examples include rejections of requests to decide on jurisdiction in a preliminary ruling or requests to render
interlocutory or partial awards in relation to certain claims or issues in dispute; Schtze, SchiedsVZ 2009,
241 (242 seq.).
Schroeder, SchiedsVZ 2005, 244 (248 et seq.); Zller-Geimer (2014), 1059 para.16; Stein/Jonas-Schlosser
(2002), 1059 para.8; BeckOK ZPO/Wilske/Markert (2013), 1059 para. 8.
Zller-Geimer (2014), 1059 para.15; Stein/Jonas-Schlosser (2002), 1059 para.7; concerning an award
that ordered the land registrar to change the register BGH 30.11.1961, JZ 1962, 287 (288) = ZZP 1962,
119 (121 seq.) concurring note by Schwab, 123; cf. for Swiss law Habscheid, FS-Keller (1989), pp.575
(586 seq.); id., RIW 1988, 766 (772).
1059 Krll/Kraft
391
However, in practice the true legal nature of the dispute mechanism agreed by the parties
is not always clear. Particularly in connection with dispute resolution clauses contained in
statutes of associations or other legal persons, the classification of the mechanism and the
decision resulting thereof is often difficult.36 Consequently, not every decision intended to
be an award or rendered in the form of an award actually by its legal nature constitutes an
award in the sense of 1054 et seq. ZPO. The prevailing view is that in case of doubt as to the
nature of the foreseen dispute resolution mechanism, it should be assumed that the members
did not agree on arbitration preventing all claims from appearing before the courts.37 The
Federal Court of Justice (Bundesgerichtshof BGH) without further discussion considers
setting aside proceedings against such pseudo-awards to be inadmissible. According to its
narrow understanding of the term award in 1059 ZPO, the admissibility of setting aside
proceedings depends solely on the true legal nature of the decision, i.e. whether it has been
rendered by an arbitral tribunal.38
The better view, however, is to allow setting aside proceedings against all decisions which 20
appear and were intended to be awards, irrespective of their true legal nature.39 In the interest
of legal certainty in such cases, the formal nature i.e. the formal appearance of the decision
rather than material criteria (true legal nature of the decision) should be decisive. First,
though such pseudo-awards do not have the same effect as true awards, the mere appearance of an award may constitute a burden for a party negatively affected by the decision.40 It
consequently has a legitimate legal interest in having the award set aside and such cases can be
easily subsumed under 1059 (2) No. 1 (a) ZPO. From this provision, it can be deduced that
the term of award in 1059 ZPO cannot be restricted to cases where the decision rendered is
based on a valid arbitration agreement. Second, in practice the true legal nature of a decision
is often difficult to determine. To make it nevertheless the decisive criterion leads to an unfair
allocation of the risks arising from this uncertainty. Though the uncertainty was created by
all parties involved, including the dispute resolution body, the risks associated with it would
solely have to be borne by the party trying to have the decision set aside. It faces the risk of
36
37
38
39
40
For the relevant criteria see supra, Wagner, 1025 paras 8 et seq.; see also Part IV, Duve/Wimalasena,
Arbitration of Corporate Law Disputes in Germany, paras 100et seq.; cf. infra, Haas, 1066, paras 29 et
seq.; cf. BGH 27.05.2004, SchiedsVZ 2004, 205 (207) = ZIP 2005, 46 (47) = NJW 2004, 2226 (2227
seq.) = (2006) Int.A.L.R. N-7; OLG Mnchen, 1.3.2012 34 Sch 25/11 (Arbitral Tribunal of Bridge
Association); OLG Frankfurt 20.12.2004 23 SchH 1/04; OLG Braunschweig 12.05.2005, SchiedsVZ
2005, 262 = OLGR Braunschweig 2005, 515 et seq.; OLG Hamburg 29.09.2000, OLGR Hamburg 2001,
196 = CLOUT case No. 572; OLG Dresden 10.11.2005 11 Sch 17/05; for examples from outside of
the association context OLG Naumburg 20.05.2005, SchiedsVZ 2006, 103; OLG Frankfurt 04.09.2003,
OLGR Frankfurt 2003, 9 et seq.
OLG Mnchen, 1.3.2012 34 Sch 25/11 (Decision rendered by Arbitral Tribunal of Bridge Association
is not an award).
BGH 27.05.2004, SchiedsVZ 2004, 205 (207) = ZIP 2005, 46 (47) = NJW 2004, 2226 (2227 seq.) =
(2006) Int.A.L.R. N-7; see also OLG Stuttgart 23.01.2002, Justiz 2002, 410 (declaration of enforceability
the court found an arbitration agreement to exist even though the agreement made reference to expert determination (Schiedsgutachten) because recourse to state courts was excluded); cf. Zller-Geimer
(2014), 1059 para.16 (admissible but unfounded).
OLG Frankfurt 06.09.2001, OLGR Frankfurt 2001, 302 (306) = CLOUT case No. 568; OLG Naumburg
20.05.2005, SchiedsVZ 2006, 103; cf. OLG Frankfurt 04.09.2003, OLGR Frankfurt 2003, 9 (10 et seq.);
however, the OLG Franfurt did not set aside a pseudo-award in a case in which it refused the declaration
of enforceability, OLG Frankfurt 20.12.2005 26 Sch 29/05.
OLG Frankfurt 06.09.2001, OLGR Frankfurt 2001, 302 (306) = CLOUT case No. 568; cf. Schroeder,
SchiedsVZ 2005, 244 (246).
392
having its application declared inadmissible and thus having to bear the costs of the proceedings, if the decision contrary to the intention of all parties turns out not to be an award.
4.
Limitation to Domestic Awards and Other Restrictions
21 Notwithstanding that it is not explicitly stated in 1059 ZPO, setting aside proceedings are
only admissible against domestic awards, i.e. awards rendered in proceedings with their
place of arbitration in Germany. Despite the misleading wording of 1062 (2) ZPO, German courts in general do not assume jurisdiction to set aside foreign awards.41 1059 ZPO is
not listed in 1025 (2) ZPO as one of the provisions which is also applicable where the place
of arbitration is outside of Germany. Moreover, 1061 ZPO clearly states that in proceedings
to have a foreign award declared enforceable, German courts are limited to declare that the
award is not enforceable in Germany but cannot set the award aside. Pursuant to 1054 (3)
ZPO, the place of arbitration should be stated in the award. Where that is not the case, either
because any reference to a place is missing or the existing reference has a different meaning,
the place where the hearing took place may be of crucial relevance in determining the place
of arbitration.42
22 The wording of 1059 (3) also excludes setting aside proceedings against awards which have
already been declared enforceable.43
23 For constitutional reasons, decisions by arbitral tribunals of the various religious communities affecting their internal affairs are excluded from any review.44 However, where such
decisions do not relate to internal matters, setting aside proceedings are admissible.
C.
Legitimate Legal Interest and Proceedings for a Declaration of Enforceability
24 Legally, setting aside proceedings under 1059 ZPO and proceedings to have a domestic
award declared enforceable under 1060 ZPO have a different subject matter, though the
latter also may result in the annulment of the award.45 Thus, there is no lis alibi pendens between both types of proceedings. However, as both the same defects may be raised, either
as a ground for the setting aside or as a defence against the declaration of enforceability,
1059 (3) sentence 4 ZPO explicitly excludes the admissibility of applications for setting
aside against an award which has already been declared enforceable in Germany. By contrast,
setting aside proceedings are not excluded if the award has been declared enforceable either
by foreign courts or, in the case of an award on agreed terms by a notary, according to 1053
ZPO.46
41
42
43
44
45
46
OLG Dsseldorf 23.03.2000, IPRspr 2000, No. 184 = EWiR 2000, 795 with note by Krll = (2001)
Int.A.L.R. N-25; Zller-Geimer (2014), 1059 para.1b; Borges, ZZP 1998, 487 (498 seq.); Hausmann,
FS-Stoll (2001), p.593 (610); BeckOK ZPO/Wilske/Markert (2013), 1059 paras 9 seq.
OLG Dsseldorf 23.03.2000, IPRspr 2000, No. 184 = EWiR 2000, 795 with note by Krll = (2001)
Int.A.L.R. N-25; OLG Mnchen 22.06.2005, SchiedsVZ 2005, 308 (309).
OLG Mnchen 17.01.2011 34 Sch 16/08.
BGH 11.02.2000, NJW 2000, 1555 (1556 seq.) = NVwZ 2000, 963; OLG Frankfurt 12.05.1999, NVwZ
2000, 113; that also extents to the cost decisions in such awards see OLG Koblenz 28.01.2008 2 Sch
6/07.
Critical MnchKommZPO-Mnch (2013), 1059 para.40.
1059 Krll/Kraft
393
A legitimate legal interest in separate setting aside proceedings is, however, also lacking where 25
proceedings for a declaration of enforceability have already been initiated.47 The grounds for
setting aside may be raised as a defence in the proceedings under 1060 ZPO and will then
lead to the same result as proceedings under 1059 ZPO. That also applies, in principle, if a
party has only sought a declaration of enforceability for parts of the award, as the application
to have the complete award set aside may be raised as a counterclaim.
In the opposite situation where setting aside proceedings are already pending, courts have 26
joined both proceedings.48 In light of the possibility to apply in the existing setting aside proceedings by means of a counterclaim for a declaration of enforceability, the legitimate interest
in initiating separate proceedings for such a declaration could be doubted.
D.
Application
1.
General Principles
The application must be directed at the setting aside of the award or separable parts of it. 27
Courts do not have the power to change the content of the award, so that applications to
this effect must be rejected as inadmissible. It is also not possible to request as main relief
the remittance of the dispute to the arbitral tribunal. Before the court may remit the case
to arbitration, the existing award must have been set aside. Thus, the main request for relief
must always be to set aside the award which may then be supplemented by the request for
remittance to the arbitral tribunal. On the basis of the principle that partial claims are, in
general, possible, an applicant may also limit its request for setting aside to parts of the award,
though the defect pleaded e.g. the lack of a valid arbitration agreement affects the complete
award.49 The application may also be directed solely against the arbitral tribunals decision on
costs.50 Requests to determine that an award is void or non-existent are considered to be
inadmissible.51
The application as such may be filed by the parties themselves (1063 (4), 78 (5) ZPO). 28
From the moment the court orders an oral hearing, as is mandatory pursuant to 1063 (2)
ZPO in actions to set aside an award, the parties must be represented by counsel pursuant to
78 (1) ZPO.52 Unlike in other court proceedings, 297 ZPO does not apply to arbitrationrelated proceedings. Thus, written applications will be considered by the court even if not
47
48
49
50
51
52
Controversial, in favour OLG Hamburg 24.01.2003, SchiedsVZ 2003, 284 (286) = Yearbook XXX
(2005), 509 (515) = (2003) Int.A.L.R. N-33 = CLOUT case No. 571; OLG Naumburg 21.05.2004 =
(2006) Int.A.L.R. N-61; OLG Frankfurt, 14.10.2010 26 Sch 6/10 and 26 Sch 22/10; Zller-Geimer
(2014), 1059 para.22.
BayObLG 16.01.2004, SchiedsVZ 2004, 163 (164) = (2004) Int.A.L.R. N-53; cf. Harbst (2002), p.186
who is of the view that the court has discretion to vacate either proceeding, however considers the vacation of the setting aside procedure more practical.
KG Berlin 05.02.1976, NJW 1976, 1357; Stein/Jonas-Schlosser (2002), 1059 para.11.
Controversial, in favour Zller-Geimer (2014), 1059 para.6; Hausmann, FS-Stoll (2001), p.593 (611).
Lachmann (2008), para.2371; but cf. Musielak-Voit (2013), 1059 para.32 (separate application for the
declaration of nullity is admissible in cases of a void award); cf. supra, paras 17 et seq.
78 [Litigation with necessary representation by attorneys]
(1) Before the regional courts, the parties must be represented by an attorney admitted to a local
court or a regional court. Before the higher regional courts the parties must be represented by
an attorney admitted at a higher regional court. If a highest regional court has been established
in a Federal State on the basis of 8 of the Introductory Law of the Act on the Organization of
Judiciary (Gerichtsverfassungsgesetz GVG) the parties must be represented before this court
394
repeated correctly at the oral hearing. The provisions on default judgments (330 et seq.
ZPO) are not applicable.53 They are not compatible with the legal structure, in particular the
available remedies, of the newly regulated setting aside proceedings.54
2.
Form and Content of the Application
29 The issue in dispute in setting aside proceedings is determined by the request to have the
award set aside and the particular defect relied on in the application. Consequently, the
reliance on a different defect in the course of the proceedings always constitutes a change of
claim.
30 Concerning the content of the application, one must distinguish between the grounds for
setting aside listed in 1059 (2) No. 1 ZPO and those of No. 2. While the latter are considered ex officio, the grounds under No. 1 must be raised explicitly by the applicant. Their mere
existence, even if apparent from the arbitral tribunals files, is not sufficient.55 The requirement
of showing sufficient cause is interpreted strictly by the courts.56 They submit applications
to the strict formal and substantive requirements applicable to the statement of grounds
for appeals on points of law (Revisionsbegrndung), pursuant to 551 (3) ZPO.57 Thus, the
applicant is required to submit the facts upon which its application is based, describe the
relevant defect and specify which grounds for setting aside are fulfilled by these defects.58
Where an effect of the defect on the award is required, the parties are well advised to set out
on how a particular defect could have affected the outcome of the arbitral proceedings, i.e. in
53
54
55
56
57
58
by an attorney admitted at a higher regional court. Before the Federal Court of Justice the parties
must be represented by an attorney admitted at the Federal Court of Justice. []
(5) These provisions shall not be applicable to proceedings before a commissioned or requested judge
and to procedural acts which may be performed before the registrar of the court registry.
See also Rtzel/Wegen/Wilske (2005), p.185.
OLG Kln 03.06.2003 9 Sch 23/01.
See in the context of enforcement proceedings but with arguments which also apply to setting aside
proceedings BGH 23.02.2006, SchiedsVZ 2006, 161 = IHR 2006, 125 = (2006) Int.A.L.R. N-59; for a
different view Stein/Jonas-Schlosser (2002), 1063 para.8a (limited applicability of 330 et seq. ZPO);
cf. infra, Krll, 1061 paras24 et seq.
BGH 15.07.1999, BGHZ 142, 204 (206) = NJW 1999, 2974 (2975) = ZZP 2000, 483 et seq. with note
by Ehricke, 453 (458) = RPS 1/2000, 12; Musielak-Voit (2013), 1059 para.23.
by Ehricke, 453 (458) = RPS 1/2000, 12; OLG Mnchen 08.05.2006 34 Sch 38/05; Zller-Geimer
(2014), 1059 para.33.
551 (3) ZPO provides: The statement of grounds for appeals on points of law must contain: 1. the
statement to what extent the judgement is being appealed and its setting aside is being applied for (notice
of appeal); 2. the statement of the grounds for appeals on points of law, namely: a) a specific description
of the circumstances from which the violation of the law ensues; b) insofar as the appeal on points of law
is based on the allegation that procedural law was violated, the description of the facts which give rise to
the defect. If the appeal on points of law has been allowed on the basis of an appeal against the refusal to
allow the appeal on points of law (Nichtzulassungsbeschwerde), reference may be made to the grounds
stated in that appeal against the refusal to allow the appeal on points of law. See also Rtzel/Wegen/Wilske
(2005), p.286.
Stein/Jonas-Schlosser (2002), 1059 para.4; cf. BGH 02.11.2000, BGHZ 145, 376 (381) = NJW 2001,
373 = note by Boecker, EWiR 2001, 345 = note by Voit, ZZP 2001, 355 et seq. = (2002) Int.A.L.R. N-12;
KG Berlin 17.12.2007 20 Sch 5/07.
1059 Krll/Kraft
395
how far the award could have been different from its present content.59 It has been held that
deficiencies in the application may not be remedied after the expiration of the three month
time limit.60
However, in light of the considerable overlap between the various grounds, as well as the 31
differences in classifying the particular defects, it should be sufficient if the application contains the factual background and sets out broadly which provisions and principles have been
violated. The exact legal classification is left to the court.61 In practice, counsel often attempts
to eliminate the problem by subsuming the same facts under all conceivable grounds. Not
sufficient to fulfil the requirement of showing sufficient cause are unspecific references to
the conduct of the arbitration in general or the arbitrators file.
It is generally possible to change ones pleading from one ground for setting aside to the 32
other in the course of the proceeding to set aside the award. Parties may also supplement
and clarify the facts submitted. However, new facts, which would constitute a completely
new cause of action, can only be submitted within the three month time limit of 1059 (3)
ZPO. It would defeat the purpose of the time limit to allow the unlimited submission of new
facts and grounds if only the setting aside proceedings as such needed to be initiated in time.62
V.
Parties to the Proceedings and Legal Succession
Applicants may only be the parties which are negatively affected by an award, i.e. all parties 33
whose applications have been rejected completely or in part by the arbitral tribunal.63 A decision on costs affecting a party negatively is sufficient to allow for setting aside proceedings.
Parties that have prevailed completely in the arbitral proceedings may not apply to have an
award set aside merely because they consider the award to be wrong.64 Third party interveners may also initiate setting aside proceedings where they are negatively affected by the
award.65 The primary party to the dispute on behalf of which the intervener applies for the
setting aside may, however, object to such an application.
The application must be directed against the parties that at the time of the decision derive 34
rights from the award. While that will usually be the parties mentioned in the award, in the
case of legal succession the correct respondent is the successor.66 It has been submitted that, at
least in cases of single succession, the application may be directed against the original party.67
59
60
61
62
63
64
65
66
67
BGH 08.10.1959, BGHZ 31, 43 (48); OLG Celle 19.02.2004, OLGR Celle 2004, 396 (397); OLG
Mnchen 08.05.2006 34 Sch 38/05; OLG Saarbrcken 29.10.2002, SchiedsVZ 2003, 92 (94) = (2003)
Int.A.L.R. N-60; KG Berlin 17.12.2007 20 Sch 5/07; OLG Kln 21.11.2008 19 Sch 12/08.
KG Berlin 17.12.2007 20 Sch 5/07.
Musielak-Voit (2013), 1059 para.23; cf. OLG Hamburg 15.12.1998 9 U 36/98.
Stein/Jonas-Schlosser (2002), 1059 para.5; Lachmann (2008), para.2368; for a different view MusielakVoit (2013), 1059 para.32; BeckOK ZPO/Wilske/Markert (2013), 1059 para. 17.
OLG Stuttgart 16.07.2002, SchiedsVZ 2003, 84 with note Nacimiento/Geimer, SchiedsVZ 2003, 88 et seq.
Stein/Jonas-Schlosser (2002), 1059 para.9; limited to cases of universal succession Lachmann (2008),
para.2373.
Cf. Schwab/Walter (2005), Chap. 25 para.8; BeckOK ZPO/Wilske/Markert (2013), 1059 para. 20.
396
VI. Time Limit

35 Setting aside proceedings may only be brought within three months, unless the parties
before the expiry of the time limit have agreed to a different time limit (1059 (3) sentence
1 ZPO). The time limit serves to provide for legal certainty within an appropriate time regarding the continued existence and legal effects of the award.68 It starts to run on the day
on which the party has received the award (1059 (3) sentence 2 ZPO).69 In general, it is
neither necessary that the party has actually taken cognizance of the award nor that it has
been served formally. The time of proper service will, however, be relevant where the parties have agreed explicitly on formal service.70 Pursuant to 222 (1) ZPO, the time limit is
calculated according to 187193 Civil Code (Brgerliches Gesetzbuch BGB). Thus, the
time will start to run on the day after the award has been received (187 (1) BGB).71 Where
the last day falls on a public holiday or on a weekend, the time limit will expire only at the end
of the next working day (222 (2) ZPO).
36 In cases where an admissible request for the correction of an award under 1058 ZPO has
been made, the three-month time limit may be extended. Pursuant to 1059 (3) sentence 3
ZPO, the time is extended up to one month after the decision on such application has been
received. Thus, it is guaranteed that a party has at least one month after the decision on the
application under 1058 ZPO has been received to file an application for the setting aside
of the award. However, the time limit (1058 (2) ZPO) for the application for correction of
the award must be observed.
37 In cases of partial or interlocutory awards, the time limit starts to run for each award separately. A party may not wait until the final award has been rendered and then attack previous
awards for which the time limit has already expired (controversial).72
38 The expiry of the time limit excludes any direct recourse in the form of setting aside proceedings against the award, even for a violation of public policy.73 This also applies, in principle,
where the award is based on procedural fraud which was only discovered after the expiry
of the time limit and which, in court proceedings, would give rise to an action for retrial.
Such procedural fraud may, however, give rise to an action for damages pursuant to 826
68
69
70
71
72
73

BGH 20.09.2001, NJW 2001, 3787 (3788) = (2003) Int.A.L.R. N-13; critical of the legislative solution and in favour of making knowledge of the ground for setting aside the relevant criterion Gaul, FSSandrock (2000), pp.285 (291 seq.).
BGH 20.09.2001, NJW 2001, 3787 (3788) = (2003) Int.A.L.R. N-13 for an award to be served under
the old law; OLG Hamburg 24.01.2003, SchiedsVZ 2003, 284 (286) = Yearbook XXX (2005), 509 (514
seq.) = (2003) Int.A.L.R. N-33 = CLOUT case No. 571.
OLG Dresden 26.07.2012 3 Sch 3/12 (the period expires in three month at the end of the day which
has the same number as the day of receipt of the award).
OLG Hamburg 30.08.2002 11 Sch 01/02 (declaration of enforceablility of a partial award); OLG
Stuttgart 04.06.2002, IDR Beilage 3 RIW 2002, 44 (45); for a different view see Stein/Jonas-Schlosser
(2002), 1059 para.25; Zller-Geimer (2014), 1059 para.13 (no setting aside proceedings possible
against separate decisions on liability); against the award quality of interlocutory decisions also BGH
07.10.1953, BGHZ 10, 325 (326 seq.); cf. the decision of the Dutch Gerechtshof rendered in the procedure
that led to the decision of the European Court of Justice 01.06.1999, C-126/97 (Eco Swiss China Time
Limited v. Benetton International NV),ECR 1999, I-3055 = EuZW 1999, 565 et seq.
Cf. Borges, ZZP 1998, 487 (501) who argues in favour of a de facto limitation of the preclusion provision.
1059 Krll/Kraft
397
BGB leading de facto to the same result as setting aside proceedings under 1059 ZPO.74 In
deviation from the Model Law, the expiry of the time limit also excludes any reliance on the
defects covered by 1059 (2) No. 1 ZPO in actions to have the award declared enforceable.
Pursuant to 1060 (3) sentence 2 ZPO, only a violation of public policy and the lack of
arbitrability may still be raised.
VII. Proceedings
The conduct of the setting aside proceedings is only regulated in a rudimentary way in 1063 39
ZPO. Pursuant to 1063 (2) ZPO, setting aside proceedings are the only type of arbitration
related court proceedings in which the ordering of an oral hearing is mandatory. At the hearing, the parties must be represented by counsel.
Procedural acts such as the withdrawal of the application, settlement or acknowledgement 40
are, in general, possible. The freedom of the parties may be limited where that would lead to
the maintenance of an award which violates public interests.75
VIII. Merits
A.
Basic Principles
The grounds for setting aside an award are enumerated in 1059 (2) ZPO and its wording 41
(may be set aside only) emphasizes the exhaustive character of the list.76 The parties are not
empowered to provide for additional grounds, in particular to allow for a review on the merits. Such agreements are either invalid or exclude the characterization of the chosen dispute
resolution mechanism as arbitration.77 By contrast, the exclusion of certain grounds listed in
1059 (2) No. 1 ZPO is at least possible when made after the award has been rendered (for
details see supra, para.7).
The list of grounds in 1059 (2) ZPO is largely a literal adoption of the equivalent list in Ar- 42
ticle34 (2) ML which, in turn, is based on ArticleV NYC. Thus, the commentary on 1059
ZPO is limited to those aspects which are primarily relevant in setting aside proceedings or
enforcement proceedings of domestic awards or constitute changes to the Model Law.78
The grounds enumerated deal primarily with procedural defects but do not allow for any 43
review of the award on the merits, a statement repeated by the courts like a mantra. The
content of the award may only be relevant in connection with an alleged excess of authority
(c) or within the very narrow confines of a violation of public policy, which has nothing in
74
75
76
77
78
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.60; for details see infra, paras 91 et seq. and
102 seq.
Stein/Jonas-Schlosser (2002), 1059 para. 6; for a detailed discussion see infra, Schroeder/Wortmann,
Introduction to 10621065 paras2 et seq.; Schroeder/Wortmann, 1063 ZPO paras 7 et seq.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5247, p. 58; Lachmann (2008), para. 2172;
MnchKommZPO-Mnch (2013), 1059 paras 4, 6.
For the second alternative see OLG Naumburg 20.05.2005, SchiedsVZ 2006, 103 (104 seq.) (the arbitration clause did not provide the required finality to qualify as arbitration in the sense of 1025 ZPO et
seq.); such lack of finality has to be distinguished from cases in which the finality of an award is subject to
a condition, e.g. the expiry of a time limit BGH 01.03.2007, reversing OLG Frankfurt 20.12.2005, BauR
2006, 738; cf. OLG Frankfurt 06.09.2001, OLGR Frankfurt 2001, 302 = CLOUT case No. 568.
For a detailed commentary on the various grounds see Krll, 1061 paras59 et seq.
398
common with a rvision au fond.79 By contrast, a fairly comprehensive review of the arbitral
proceedings is in principle possible. However, due to 1027 ZPO, reliance on existing procedural defects is often excluded where the parties have not objected without undue delay in
the course of the arbitral proceedings. Furthermore, parties may be precluded from raising
grounds for setting aside due to their behaviour in the pre-award phase and the non-use of
existing remedies or decisions rendered in the exercise of such remedies that have res judicata
effect.
44 In light of the general approach of German procedural law to discretionary powers of the
courts, the may be set aside in 1059 (2) ZPO has to be read as shall be set aside. Whenever
a ground for setting aside exists, courts have no discretionary power to refuse the setting
aside of the award.80 In practice, the need for such discretionary powers is limited due to the
broad interpretation of the effects on the award requirement and of the grounds for preclusion. As a consequence, in most of the cases where courts in other Model Law countries have
made use of their discretion to refuse the setting aside of the award, German courts would
already deny the existence of a ground for setting aside or find that a party is precluded from
relying on a certain ground.
B.
Relationship between the Various Grounds in No. 1 and No. 2
45 1059 (2) ZPO distinguishes between grounds which have to be pleaded by the applicant
in No. 1 (shows sufficient cause) and those which are taken into account ex officio in No. 2
(the court finds). While the same distinction can be found in the Model Law and the New
York Convention 1958 (NYC), it is of particular importance in German arbitration law. That
is primarily due to the implications of the distinction for the preclusion of defences in the
context of proceedings to have domestic awards declared enforceable. After the three month
period for setting aside proceedings has expired, pursuant to 1060 (2) sentence 3 ZPO,
only the grounds in 1059 (2) No. 2 ZPO can still be raised as a defence against a requested
declaration of enforceability. Reliance on the grounds listed in No. 1 is explicitly excluded.81
Furthermore, the grounds in No. 1 can only form the basis of a complaint on a point of law
before the BGH pursuant to 1065 ZPO if they have been pleaded in the proceedings before
the OLG, whereas grounds in No. 2 can be raised for the first time before the BGH.82
46 The fact that various aspects of procedural public policy are specifically regulated in 1059
(2) No. 1 (a), (b), (d) ZPO raises the question of whether they are nevertheless also covered
by public policy under 1059 (2) No. 2 (b) ZPO. The great majority of German courts and
scholars answer this question correctly in the affirmative.83 Otherwise courts could, once the
three month period for setting aside proceedings has expired, be required to enforce domestic
79
80
81
82
83
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5247, pp.58 seq.; Lachmann (2008), para.2172;
MnchKommZPO-Mnch (2013), 1059 para. 43; Weigand-Wagner (2002), Germany, para. 425; cf.
OLG Bremen 10.11.2005, OLGR Bremen 2006, 263 (265) for narrow interpretation of ordre public violation.
MnchKommZPO-Mnch (2013), 1059 para.5; slightly different Zller-Geimer (2014), 1059 paras32
et seq. (only where control of arbitration is requested by constitution).
See for example OLG Mnchen 22.01.2007 34 Sch 18/06.
by Ehricke, 453 = RPS 1/2000, 12; cf. id. 01.02.2001, RPS 1/2001, 14 (16) = Yearbook XXIX (2004),
700 (710).
E.g. OLG Hamburg 14.05.1999, OLGR Hamburg 2000, 19 (21) = CLOUT case No. 457 (right to be
heard discussed under No. 1 (d) and No. 2 (b); OLG Kln 24.04.2006 9 Sch 15/05; in the context of
1059 Krll/Kraft
399
awards despite gross violations of such fundamental rights as the right to be heard. The dogmatic frictions resulting from this view rendering the distinction between the grounds to
be pleaded and those to be taken into account ex officio largely moot are mitigated by the
tendency of German courts to require fairly extensive submissions of the parties, including
in the context of the grounds to be taken into account ex officio. As a consequence, certain
defects, despite being subsumed under 1059 (2) No. 2 (b) ZPO, are not treated (at least in
relation to pleading requirements) very differently from the grounds in No. 1. However, in
relation to preclusion, the defects can still be treated like all other defects falling within the
scope of No.2(b).84
The grounds listed in No. 1 concern primarily the private interest side of procedural public 47
policy. Therefore, irrespective of the general obligation under No. 2 (b) to take violations of
public policy into account ex officio, violations covered also by one of the grounds in No. 1
should not be considered against the will of the party negatively affected by the violation.
For example, an applicant may not base its application on a violation of the other partys
right to be heard if that other party opposes the setting aside of the award.85 Furthermore,
while the parties may not waive the grounds in No. 2 in advance, their behaviour during the
arbitral proceedings plays an important role in determining whether the enforcement of the
award would be contrary to public policy. In particular, the lack of objection against known
defects during the arbitral proceedings will often exclude a finding that enforcement would
be contrary to public policy, at least if only subjective party interests are involved.86
C.
Burden of Pleading and Burden of Proof
Concerning the burden of pleading, 1059 (2) ZPO distinguishes in principle between 48
grounds to be pleaded by the parties in No. 1 and those to be considered ex officio in No. 2, i.e.
the lack of objective arbitrability and public policy. Also in relation to the latter, parties must
at least present the courts with sufficient facts which allow a purposeful further investigation
of the grounds. 87 Generally, courts require precise and extensive pleading if a party intends
to rely on grounds under No. 1. It is not sufficient to merely state the facts that allegedly
constitute a violation: the parties must clearly state the specific ground of No.1 which is
supported by these facts.88 The strictness of the requirements is, however, mitigated by the
fact that a number of the grounds listed in No. 1 may also constitute a violation of procedural
public policy such that they must be taken into account ex officio under No. 2.
84
85
86
87
88
Art. V NYC OLG Hamburg 12.03.1998, IPRspr 1999, No. 178 = Yearbook XXIX (2004), 663 (668);
critical Stein/Jonas-Schlosser (2002), Anhang 1061 paras150, 74.
OLG Kln 24.04.2006 9 Sch 15/05.
In that sense also Zller-Geimer (2014), 1059 paras35 et seq.
Zller-Geimer (2014), 1059 para.47; Wagner (1998), p.95; cf. BGH 01.02.2001, RPS 1/2001, 14 (16
seq.) = Yearbook XXIX (2004), 700 (713 seq.) (enforcement of a foreign award lack of impartiality of an
arbitrator).
OLG Mnchen 08.03.2013 34 Sch 13/12.
See for the pleading requirements in the context of enforcement of a domestic award BGH 02.11.2000,
BGHZ 145, 376 (381) = NJW 2001, 373 = note by Boecker, EWiR 2001, 345 = note by Voit, ZZP 2001,
355 et seq. = (2002) Int.A.L.R. N-12; OLG Hamburg 14.05.1999, OLGR Hamburg 2000, 19 (21) =
CLOUT case No. 457 (applying the standards developed by BGH for 554 (3) ZPO); Ehricke, ZZP
2000, 453 (457); Stein/Jonas-Schlosser (2002), Anhang 1061 para.74.
400
49 The burden of proof for the existence of a ground for setting aside lies with the applicant.89
While this is obvious from the wording of 1059 (2) No. 1 ZPO, it also applies to the grounds
to be taken into account ex officio. 1059 (2) No.2ZPO only affects the burden of pleading.
50 Different views exist as to whether this general rule also applies to the lack of a valid arbitration agreement in the sense of 1059 (2) No. 1 (a) ZPO. According to the prevailing view in
Germany, the burden of proof is shifted to the opposing party on the basis of the consideration that, in principle, a party which wants to rely on an arbitration agreement must prove its
conclusion.90 This view does not distinguish sufficiently between arbitral proceedings where
the burden of proof lies with the party relying on the agreement, and the post award proceedings where the burden lies with the party seeking the annulment or resisting enforcement.91
In addition, such an exception from the general rules on the burden of proof would lead to
the odd result that, once the applicant has pleaded the lack of a valid arbitration agreement,
the whole burden of the setting aside proceedings would shift to the party opposing the application; at least until it has proven the existence of the arbitration agreement.
51 The normal standard of proof in court proceedings is certainty beyond reasonable doubt
(281 (1) ZPO) and not mere preponderance of evidence. In relation to the possible effects
of a procedural defect on the award, it is, however, usually sufficient if such effects can be
presumed, as explicitly stated in 1059 (2) No. 1 (d) ZPO.
D.
Legal and Factual Basis for the Proceedings
52 In determining the existence of a ground for setting aside or a defence against enforcement,
the courts are not bound by the arbitral tribunals legal reasoning. This applies to its interpretation of relevant provisions, as well as to the application of such provisions to the facts established.92 Otherwise it would be impossible for the courts to exercise the intended control.
53 Equally not binding for the courts is the arbitral tribunals determination of facts.93 On the
basis of the parties submissions, the courts may whenever they consider it necessary not
only supplement the facts determined by the arbitral tribunal, but also deviate from them.
89
90
91
92
93
Lachmann (2008), para.2381; cf. Musielak-Voit (2013), 1059 para.10.

OLG Mnchen 16.12.2011 34 Sch 30/11; Stein/Jonas-Schlosser (2002), 1059 para.10; Musielak-Voit
(2013), 1059 para.10 (limited to cases where the applicant did not participate in the proceedings).
As for the burden of proof in enforcement proceedings see Krll, Die Schiedsvereinbarung im Verfahren
zur Anerkennung und Vollstreckbarerklrung auslndischer Schiedssprche, ZZP 2004, 453 (464 et
seq.).
BGH 12.05.1958, BGHZ 27, 249 (254) = NJW 1958, 1538 (relating to the public policy defence); id,
27.02.1964, MDR 1964, 590 (public policy defence); id. 31.05.1972, NJW 1972, 2180 = WM 1972,
1244; id. 26.10.1972, KTS 1973, 128 (131); id. 29.09.1983, WM 1983, 1207 (1208) (public policy defence); cf. for Austria OGH 23.02.1998, IPRax 2000, 314 et seq. (regarding the irrelevance of the setting
aside of an award for a violation of the ordre public in its country of origin (Art. IX European Convention
on International Commercial Arbitration)) with note by Reiner, IPRax 2000, 323 (326); cf. for the old
law (1041 ZPO) Arendt (1996), p.12.
BGH 23.04.1959, BGHZ 30, 89; id. 27.02.1964, MDR 1964, 590 (regarding public policy defence); id.
25.10.1966, BGHZ 46, 365 (370); id. 31.05.1972, NJW 1972, 2180 = WM 1972, 1244 (OLG was ordered to investigate facts not dealt with by the arbitral tribunal); id. 29.09.1983, WM 1983, 1207 (1208)
(regarding ordre public defence); cf. for Austria OGH 23.02.1998, IPRax 2000, 314 et seq. (regarding the
irrelevance of the setting aside of an award for a violation of the ordre public in its country of origin (Art.
IX European Convention on International Commercial Arbitration)) with note by Reiner, IPRax 2000,
323 (326); Musielak-Voit (2013), 1059 para.30; Weigand-Haas (2002), NYC, Art. V para.104; cf. Stein/
Jonas-Schlosser (2002), 1063 para.8a; cf. for the old law (1041 ZPO) Arendt (1996), p.12.
1059 Krll/Kraft
401
Contrary to what is in part submitted,94 this is not limited to the cases of defects in the factfinding process itself or to the infringement of fundamental state interests. Particularly in
connection with substantive public policy, the supporters of an at least limited binding force
of the arbitral tribunals determination of facts raise the concern that without any limitation
it could come to a complete retrial of the cases, de facto resulting in a rvision au fond. These
concerns are not, however, justified. While the courts are not legally bound by the facts
determined by the arbitral tribunal, these facts play an important role in the courts evaluation of the case. There is a rebuttable presumption in favour of the correctness of the facts
determined. To overcome that presumption, a party first has to establish what the true facts
are and where the arbitral tribunal has wrongly established the facts. Second, the party must
set out why, under such different facts, the enforcement of the award would be contrary to
public policy or fall under any other ground listed in 1059 (2) ZPO. If a party fails to fulfil
either or both of these requirements, the courts should not and will not deviate from the facts
established by the arbitral tribunal.95 The latter is important because the mere fact that the
arbitral tribunal based its decision on wrong facts is per se not sufficient to justify the setting
aside of the award for a violation of public policy. Furthermore, 1027 ZPO may impose
further restrictions on the parties submitting new evidence.
In addition, the assumption of the binding effects of the arbitral tribunals determination of 54
facts is also difficult to reconcile with the legislative decision to abolish the concept of binding Kompetenz-Kompetenz.96 While the discussion focuses primarily on substantive public
policy, the question of the binding effects concerns, in principle, all grounds enumerated
in 1059 (2) ZPO, in particular No.1 (a) and (c). Whether the parties concluded a valid
arbitration agreement is frequently solely dependent on the evaluation of the facts, such as
whether a certain confirmation letter was received or general conditions were attached.97 In
these cases, to consider the court bound in its determination of the facts would de facto result
in a partial re-inauguration of binding Kompetenz-Kompetenz via the back door.
E.
Grounds for Setting Aside
1.
Grounds That Must be Pleaded by the Parties 1059 (2) No. 1 ZPO
a. Lack of valid Arbitration Agreement (a): Subsection (a) covers various instances where 55
the arbitral tribunal lacked jurisdiction due to defects in regard to the arbitration agreement.
The defence of lacking objective arbitrability is specially regulated under 1059 (2) No. 1 (a)
ZPO and cannot be used as a general objection as to the validity of the arbitration agreement
(see below paras).98 The relevant point in time to determine whether the arbitral tribunal
94
95
96
97
98
Zller-Geimer (2014), 1059 paras53 seq.; Trappe, Rvision au fondbei der Vollstreckung eines Schiedsspruchs eine Anmerkung, RPS 1/2000, 7 (8 seq.); OLG Hamburg 14.05.1999, OLGR Hamburg 2000,
19 (21 seq.) = CLOUT case No. 457 (limiting review to the fact finding process); cf. in connection with
a foreign award OLG Hamburg 12.03.1998, IPRspr 1999, No. 178 = Yearbook XXIX (2004), 663 (669
seq.).
See e.g. BayObLG 20.03.2003 4 Z Sch 23/02; OLG Dresden 07.06.2006 11 Sch 02/06..
For details see supra, Huber/Bach, 1040 para. 3.
E.g. OLG Hamburg 14.05.1999, OLGR Hamburg 2000, 19 (21) = CLOUT case No. 457 (setting out
under which circumstances the enforcement court itself establishes facts).
MnchKommZPO-Mnch (2013), 1059 para. 11; Musielak-Voit (2013), 1059 para. 8 (in cases in
which objective arbitrability is governed by German law, in other cases subsection 2 No. 1 (a) applies);
possibly differently Schwab/Walter (2005), Chap. 24 para.31.
402
had jurisdiction is the moment in which the last oral hearing is closed,99 or the last possibility
of the parties to make submissions to the arbitral tribunal.
56 i. Incapacity of a Party/Subjective Arbitrability Alternative 1: The lack of subjective arbitrability, i.e. the incapacity of a party to enter into an arbitration agreement, is of little practical
relevance. Under German law as well as most other laws, few restrictions exist in this regard.
In adopting the solution of ArticleV (1)(a) NYC of providing that the subjective arbitrability
is determined by the law applicable to it [the party], German law deviates from the Model
Law which had abolished this incomplete conflict of laws provision,100 however without any
effect in practice. The law applicable to a party is determined by the relevant conflict of
laws provisions of German law. These refer for natural persons to the law of the nationality (Article7, 12 Introductory Law of the Civil Code (Einfhrungsgesetz zum Brgerlichen
Gesetzbuch EGBGB) and for legal persons to the law of the seat or incorporation (for
European Companies).101 In practice, the provision has also been applied in a case where
it was doubtful whether the legal person who was bound by the arbitration agreement ever
came into existence.102
57 ii. Invalidity of the Arbitration Agreement Alternative 2: The award may be set aside if the
arbitration agreement is not valid. The concept of validity is interpreted broadly. It covers not
only questions as to the validity in the proper sense, but also questions as to the conclusion of
an arbitration agreement.103 Pursuant to the conflict of laws rule contained in 1059 (2) No.
1 (a) ZPO, the validity is, in principle, determined pursuant to the law chosen by the parties
to govern the arbitration agreement or, in the absence of an express choice, by German law.
Exceptions are the specifically regulated subjective arbitrability and the form requirements,
which are governed by 1031 ZPO. As a substantive conflict of laws rule, 1031 ZPO prevails over the more general rule in 1059 (2) No. 1 (a) ZPO so that, in case the arbitration
agreement has been made subject to a different law, it is not necessary that it also fulfils the
form requirements of that law.104
58 In practice, a valid arbitration agreement was found to be lacking in cases where the parties
never reached an agreement at all or at least not on arbitration,105 and where the parties later
explicitly or implicitly renounced the right to resort to arbitration, which, however, should
not be assumed lightly.106 Equally, arbitration agreements contained in standard conditions
that were contrary to 305 et seq. BGB may be covered by this ground. For these cases,
99
100
101
102
103
104
105
106
Stein/Jonas/Schlosser 1059 para.17; Lachmann (2008), para.2185; Schwab/Walter (2005), Chap. 24

para.8; for a slightly different view (moment at which the award is issued); MnchKommZPO-Mnch
(2013), 1059 para. 17.
It was considered to be either incomplete or misleading since it did not define the relevant connecting
factor (nationality, domicile or property); cf. Holtzmann/Neuhaus (1989), p.916; Commission Report,
A/40/17, para.321.
Reithmann/Martiny-Hausmann (2004), para.3467; for details see infra, Krll, 1061 paras 62 et seq.
OLG Hamburg 30.05.2008 11 Sch 9/07; despite the misleading formulation in the decision, which
can be justified on different grounds, mere doubts as to the existence of a legal person should not be
sufficient.
MnchKommZPO-Mnch (2013), 1059 paras15 seq.; Schwab/Walter (2005), Chap. 24 para.7.
For a different view Musielak-Voit (2013), 1059 para.7.
OLG Frankfurt 06.09.2001, OLGR Frankfurt 2001, 302 (305 seq.) = CLOUT case No. 568; OLG Naumburg 20.05.2005, SchiedsVZ 2006, 103 with critical note by Deutsch, SchiedsVZ 2006, 103 seq.; cf. OLG
Frankfurt 04.09.2003, OLGR Frankfurt 2004, 9 (11).
1059 Krll/Kraft
403
it is not sufficient that the arbitration agreement provides the claimant a choice between
various forms of dispute resolution.107 A violation of 307 BGB (condition unreasonably
disadvantageous for the other party) only exists where the right to choose is accorded to the
user of the standard conditions, even when this is the defendant.108
The determination of the arbitral tribunal as to the existence of a valid arbitration agreement 59
is not binding on the courts.109 Unlike under the old German law, parties may not confer
a binding Kompetenz-Kompetenz on the arbitral tribunal by submitting the question of its
jurisdiction to a binding determination by the arbitral tribunal. Such Kompetenz-Kompetenz
clauses, however, do not affect the validity of the rest of the arbitration agreement.110
In general, the lack of a valid arbitration agreement may only be raised successfully as a ground 60
for setting aside by applicants who have either not participated in the arbitral proceedings
at all or whose challenge to the arbitral tribunals jurisdiction has not been dealt with in a
preliminary ruling on jurisdiction pursuant to 1040 ZPO. In all other cases, the lack has
either been cured (participation without a challenge)111 or the applicant is for other reasons
precluded from relying on the ground (preliminary ruling). Parties which have not challenged a preliminary ruling within the time provided for in 1040 (3) ZPO are precluded
from invoking the lack of a valid arbitration clause in proceeding concerning the award on the
merits.112 In cases where the applicant has participated in the arbitral proceedings without
challenging the arbitral tribunals jurisdiction, such behaviour will either be considered as a
submission to the arbitral tribunals jurisdiction fulfilling the form requirement pursuant
to 1031 (6) ZPO or at least exclude reliance on the lack of a valid arbitration agreement
under the principle of venire contra factum proprium.113
Challenges made to the arbitral tribunals jurisdiction only relate to the particular defect 61
mentioned, while other defects may be cured. In particular, the formal invalidity of an agreement may be cured if not raised before the arbitral tribunal.114 Where the arbitral tribunal has
107
108
109
110
111
112
113
114
OLG Hamburg 14.05.1999, OLGR Hamburg 2000, 19 (21) = CLOUT case No. 457; OLG Bremen
28.06.2006, SchiedsVZ 2007, 51 (52) = (2006) Int.A.L.R. N-65; Baumbach/Lauterbach (2014), 1029
para.15; BGH 10.10.1991, BGHZ 115, 324 (325 seq.); id. 18.12.1975, NJW 1976, 1581 (1581 seq.) =
WM 1976, 331 (332).
BGH 24.09.1998, NJW 1999, 282 (283) = ZIP 1998, 2065; cf. for further examples see infra, Krll,
OLG Naumburg 20.05.2005, SchiedsVZ 2006, 103; Huber, SchiedsVZ 2003, 73 (75); cf. Schwab/Walter
(2005), Chap. 24 para.9 however, with the restriction that findings of the tribunal based on the evaluation of evidence may not be reviewed by the court; in this sense also OLG Hamburg 14.05.1999, OLGR
Hamburg 2000, 19 (21) = CLOUT case No. 457.
BGH 13.01.2005, SchiedsVZ 2005, 95 (96 seq.); for details as to the validity of arbitration agreements see
supra, Trittmann/Hanefeld, 1031 ZPO paras 7 et seq.; cf. supra, Huber/Bach, 1032 paras 7 et seq.
OLG Mnchen 08.03.2013 34 Sch 13/12; BeckOK ZPO/Wilske/Markert (2013), 1059 para. 39.
Musielak-Voit (2013), 1059 para.11; Krll, NJW 2003, 791 (792 seq.); for a rare exception see OLG
Hamburg 08.11.2001, OLGR Hamburg 2002, 305 (306) (applicant not properly informed of the arbitral
procedure that led to the award); cf. for a foreign award under the regime of the NYC OLG Stuttgart
15.04.2002; OLG Schleswig 30.03.2000, RIW 2000, 706 (707 seq.) = Yearbook XXXI (2006), 652 (674
seq.).
BGH 29.06.2005, SchiedsVZ 2005, 259 (260) (the party argued that the dispute was not covered by the
arbitration agreement).
404
assumed jurisdiction in a preliminary ruling,115 the lack of a challenge to such ruling within
the one month time period in 1040 (3) ZPO excludes any reliance on that ground in later
setting aside proceedings.116 While this cannot explicitly be deduced from the wording of
the law, it can be concluded from the legislative materials and the structure of the provision.
The time limit for initiating the 1040 (3) ZPO proceedings would be meaningless if a party
could later rely on the invalidity of the arbitration agreement to attack the final award on the
merits.117 By contrast, where the court has rejected an application to have the arbitral tribunals preliminary ruling on jurisdiction set aside, this decision, which implicitly declares that
a valid arbitration exists, will also be binding for setting aside proceedings. The same applies
if a court has determined in an earlier decision the admissibility of arbitral proceedings under
1032 (2) ZPO.118 Furthermore, an applicant that has either initiated the arbitral proceedings or has invoked the arbitration agreement in court proceedings would act contrary to
good faith (venire contra factum proprium) if it later tries to rely on the lack of an arbitration
agreement.119
62 Very controversial is the treatment of an incorrect denial of jurisdiction by the arbitral tribunal despite the existence of a valid arbitration agreement. It is quasi the opposite situation
to the explicitly regulated incorrect assumption of jurisdiction. The BGH, while correctly
assuming that the decision constitutes an award in the sense of 1059 ZPO,120 held that in
light of the clear wording of 1059 (2) ZPO, it can neither be subsumed under (a) nor under
(c). However, the BGHs central argument against an analogous application of either ground
to the incorrect denial of jurisdiction is not convincing. The BGH denied the need for an
analogy, arguing that contrary to the incorrect assumption of jurisdiction regulated in (a), the
incorrect denial of jurisdiction does not affect the parties right to adequate legal protection.
They still have the possibility to enforce their rights in the state courts. While that may be correct in purely domestic cases with well-functioning judicial systems as the possible fall-back
mechanism, the argument fails where a foreign party is involved. In international cases, one
of the major reasons for providing for arbitration is the wish to avoid the home courts of one
party. Thus, foreign parties will at least doubt whether they are adequately protected if they
have to pursue their claims in the home courts of the other party. The argument also fails if,
as a consequence of the denial of jurisdiction, the claims have to be brought in a country in
which state courts are known to be notoriously slow or partial. Consequently, the incorrect
denial of jurisdiction by the arbitral tribunal should justify the setting aside of the award
either under (a) or (c), resulting in the consequence foreseen by 1059 (5)ZPO.121
115
116
117
118
119
120
121
To be distinguished from mere procedural orders by the tribunal BayObLG 16.01.2004, SchiedsVZ
2004, 163 (164) = (2004) Int.A.L.R. N-53.
OLG Dresden 26.07.2012 3 Sch 3/12; OLG Koblenz 12.05.2011 2 Sch 4/11.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.44; BGH 27.03.2003, SchiedsVZ 2003, 133
seq. = (2004) Int.A.L.R. N-23; Zller-Geimer (2014), 1059 para.39; MnchKommZPO-Mnch (2013),
1059 paras16 seq.; Lachmann (2008), para.2189; Huber, SchiedsVZ 2003, 73 (75).
BayObLG 10.02.2000 4 Z Sch 48/99; OLG Kln 16.10.2000 9 Sch 23/00; BGH 02.04.1987, NJWRR 1987, 1194 (1195) = NJW 1987, 3140; id. 20.05.1968, BGHZ 50, 191 (194 seq.) = NJW 1968, 1928;
RG 08.12.1897, RGZ 40, 401 (403); id. 08.02.1899, RGZ 43, 407 (408 seq.); MnchKommZPO-Mnch
(2013), 1059 para.16.
For a different view but granting protection against such a decision Voit, FS-Musielak (2004), pp.595
(597 et seq.).
For a detailed discussion see Krll, Arb.Int. 2004, 55 et seq.; cf. in favour of (a) Stein/Jonas-Schlosser
(2002), 1059 para.17; for (c) Schwab-Walter (2005), Chap. 24 para.15a.
1059 Krll/Kraft
405
b. Violations of the Right to be Heard (b): The various grounds for setting aside the award 63
listed in (b) concern special emanations of the right to be heard, in the form of the right to
be informed about the proceedings and the right to present ones case. In connection with
awards resulting from proceedings with a place of arbitration in Germany, (b) is of minor
practical importance.122 There is no situation conceivable where the violation of the right
to be heard sanctioned by (b) would not, at the same time, constitute an infringement of
the mandatory rules of German arbitration law and could therefore also be subsumed under
(d) (incorrect procedure). Some authors have tried to make out a genuine scope of application for (b) in so far as its wording unlike under (d) does not require a causal effect on
the award.123 The prevailing view, however, is that also in connection with (b) the violation
must have presumably affected the award.124 Also not convincing is the restriction of (b) to
violations of the general right to be heard while unjustified rejections of specific submissions
should be covered by (d).125 Consequently, the primary effect of (b) is to make clear that,
while the particular violations of the right to be heard would in most cases also be covered by
the public policy ground in 1059 (2) No. 2 (b) ZPO, they have to be pleaded by the party
trying to have an award set aside.126
In principle, the applicant is only properly informed about the proceedings or the appoint- 64
ment of the arbitrator if the relevant documents have reached him.127 However, it is sufficient
if the documents are served pursuant to 1028 ZPO, provided that its requirements are
met.128 In the light of the importance of the right to be heard, a strict standard should be
applied in this context, i.e. it must not have been possible for the party with reasonable means
to investigate the actual address.
In summation, it can be said that a party may only defend itself properly if it is informed 65
in due time about the submission of the other side129 and the facts upon which the arbitral
tribunal wants to rely.130 The arbitral tribunal is, however, not bound by 139 ZPO and has
an obligation to inform the parties about its legal views or the facts it considers relevant.131
Only where the tribunal wants to deviate from previously communicated legal positions or
wants to base its decisions on a completely different legal reasoning or new arguments is the
122
123
124
125
126
127
128
129
130
131
See also Borges, ZZP 1998, 487 (491).

MnchKommZPO-Mnch (2013), 1059 para.22; see also Aden, DZWiR 2013, 149 (152 seq.).
BGH 08.10.1959, BGHZ 31, 43 (48); OLG Celle 19.02.2004, OLGR Celle 2004, 396 seq.; Musielak-Voit
(2013), 1059 para. 13; Zller-Geimer (2014), 1059 para. 40; Hausmann, FS-Stoll (2001), p. 593
(599).
See MnchKommZPO-Mnch (2013), 1059 para.25; Musielak-Voit (2013), 1059 para.13; in favour
of such distinction OLG Hamburg 14.05.1999, OLGR Hamburg 2000, 19 (22) = CLOUT case No. 457;
For the relationship between the various grounds see also Lachmann (2008), paras2197 seq.; MusielakVoit (2013), 1059 para.13.
It is not sufficient if they have reached a partys lawyer if the latter is not duly authorized to act in these
proceedings; for such as case see OLG Frankfurt 22. 10. 2009 26 Sch 5/09.
OLG Dresden 15.03.2005, SchiedsVZ 2006, 166; MnchKommZPO-Mnch (2013), 1059 para.23.
Examples with practical relevance include Schwab/Walter (2005), Chap. 24 para.12 (party is only allowed to hand over submissions to its party appointed arbitrator but is not informed of the submissions
submitted by the other party; cf. LG Bremen 20.01.1983, Yearbook XII (1987), 486 (487).
Lachmann (2008), paras 2198, 2222 et seq.; cf. for foreign award OLG Stuttgart 06.12.2001, Yearbook
XXIX (2004), 742 (745 seq.).
OLG Frankfurt 17.02.2011 26 Sch 13/10; OLG Mnchen 12.04.2011 34 Sch 28/10, SchiedsVZ 2011,
230-232.
406
tribunal required to inform the parties so as to avoid surprise decisions.132 Furthermore, the
right to be heard requires that a party has sufficient time and opportunity to present its own
case133 and its submissions are taken into account by the arbitral tribunal when making its
decision.134 However, the right to be heard may not be used to review the arbitral tribunals
weighing of evidence. The arbitral tribunal is free to reject evidence it considers irrelevant135
for its decision or for procedural or material reasons.136 In light of the requirement of a causal
link, a party pleading that its right to be heard was disregarded has to submit how a particular
defence would have changed the outcome of the proceedings.137 It may furthermore be
precluded under 1027 ZPO from relying on the alleged violation if it had not opposed it
during the arbitral proceedings.138 Equally, an initial violation of the right to be heard may be
cured if the party subsequently receives the necessary information and is able to react to it.139
66 In case different parts of the award are separable, only that part will be set aside which has
been affected by the violation of the right to defend.140
67 c. Excess of Authority (c): An award may be set aside if the arbitral tribunal has exceeded its
authority, either because the dispute or parts of it were outside the scope of the arbitration
132
133
134
135
136
137
138
139
140
OLG Mnchen 29.10.2009 34 Sch 15/09.

A violation was found to exist OLG Hamburg 16.09.2004 6 Sch 01/04 (because the award was rendered
before the time limit set for the a party submission had expired); by contrast not every short time limit
constitutes a violation of the right to be heard see OLG Kln 22.06.2012 19 Sch 1/12; OLG Dresden
25.10.2000 (award on agreed terms); Krll, SchiedsVZ 2005, 139 (146); see also OLG Mnchen 14.03.11
34 Sch 8/10 according to which it is not required that the tribunal sets a time limit but the determination depends only on the actual time available.
OLG Kln 03.06.2003 9 Sch 23/02; id. 26.11.2002 9 Sch 20/02 (award on costs obviously did not
take the claimants submission into account and was already agreed upon before a reply was received to
the last submission of respondent); id. 24.04.2006 9 Sch 15/05; Krll, SchiedsVZ 2005, 139 (146);
MnchKommZPO-Mnch (2013), 1059 para.27; cf. BGH 14.05.1992, NJW 1992, 2299.
OLG Mnchen, 14.03.2011 34 Sch 8/10 (not necessary for tribunal to hear witness concerning nonconformity if remedies for non-conformity lost for delay in giving notice); OLG Karlsruhe, 27.03.2009
10 Sch 8/08.
BGH 14.05.1992, NJW 1992, 2299 (2300) (declined a violation because the requirements were not
met); cf. OLG Kln 24.04.2006 -9 Sch 15/05; OLG Naumburg 21.05.2004 = (2006) Int.A.L.R. N-61 and
OLG Hamburg 31.07.2003, OLGR Hamburg 2004, 97 (the arbitral tribunal can refuse to hear witnesses
if they can only testify on issues that are irrelevant for the tribunals decision); OLG Bremen 10.11.2005
2 Sch 02/05 (the arbitral tribunal had refused to re-hear witnesses); OLG Frankfurt 11.09.2008 26 Sch
12/08 (defences raised against correctness of balance sheet time barred); Baumbach/Lauterbach (2014),
1059 para.13. Independent hereof, courts often confirm the correctness of the tribunals evaluation
of evidence in a fall-back position, see only OLG Celle 20.11.2003, Yearbook XXX (2005), 547 et seq. =
(2004) Int.A.L.R. N-58. For details see supra, Sachs/Lrcher, 1042 paras 36 et seq.; Krll, 1061 paras
80 et seq.
The applicant has to show what a witness not heard would have stated OLG Oldenburg 15.11.2002,
OLGR Oldenburg 2003, 340; KG Berlin 08.04.2002 23/29 Sch 13/01; Zller-Geimer (2014), 1059
para.40.
OLG Stuttgart 16.07.2002, SchiedsVZ 2003, 84 (86), note by Nacimiento/Geimer, SchiedsVZ 2003, 88
(91 seq.); OLG Frankfurt 25.09.2002, OLGR 2003, 186 (188); OLG Naumburg 21.05.2004 = (2006)
Int.A.L.R. N-61; Zller-Geimer (2014), 1059 para.40.
OLG Frankfurt 17.02.2011 26 Sch 13/10, para. 70 where the information contained in belated communications to the expert could be deduced from the expert report upon which the party could comment.
BGH 26.09.1985, BGHZ 96, 40 (49) = NJW 1985, 1436 (1438); Lachmann (2008), para.2389; Stein/
Jonas-Schlosser (2002), 1059 para.11; Schwab/Walter (2005), Chap. 25 para.14a.
1059 Krll/Kraft
407
agreement141 or the arbitral tribunal has acted ultra petita, awarding more or something different than the parties have requested.142 The tribunal is, however, free to interpret the parties
claims and its interpretation is not reviewable by the state courts.143 Thus, not all deviations
from the wording of the claims raised must be considered to be ultra petita.
By contrast, awards ruling infra petita cannot, in principle, be set aside pursuant to (c).144 68
However, some authors have supported the analogous application of (c) to the incorrect
denial of jurisdiction by the arbitral tribunal (for details see supra, paras62 et seq.).
Like the closely connected ground in (a), the excess of authority may only be relied upon 69
if where possible challenged during the arbitral proceedings ( 1040 (2) sentence 3
ZPO) and the arbitral tribunal has not determined its jurisdiction in a preliminary ruling.145
In addition, the parties behaviour can lead to the assumption that the parties intended to include certain matters in the jurisdiction of the arbitral tribunal (for details see supra, paras60
seq.).146
As explicitly stated, the court may only set aside that part of the award which is not covered 70
by the submission to arbitration or beyond the arbitral tribunals power.147
d. Flaws in the Composition of the Arbitral Tribunal or the Arbitral Procedure (d): An award 71
can be set aside if either the arbitral tribunal was not properly composed or the award was
rendered on the basis of an incorrect procedure. The relevant standards for determining the
incorrectness are the provisions of the 10th Book of the ZPO and the existing procedural
agreements by the parties, as far as they are admissible. The limitation to the procedural rules
of the 10th Book of the ZPO shows that the procedural rules for court proceedings in other
parts of the ZPO are generally not relevant.148 The chosen (institutional) arbitration rules are
considered to be part of the parties agreement.149
A difference therefore exists in comparison to the enforcement of foreign awards. In regard 72
to the setting aside of domestic awards, the parties autonomy is restricted by the mandatory
parts of the German lex arbitri. In proceedings to have a foreign award declared enforceable,
party autonomy in the form of the parties procedural agreements is not restricted by the
mandatory rules of the applicable lex arbitri.150 Therefore, a foreign award that that was rendered in violation of mandatory rules of the lex arbitri but in accordance with the parties
agreement will still be declared to be enforceable in Germany.
141
142
143
144
145
146
147
148
149
150
OLG Kln 16.11.2012 19 Sch 24/12 (measure of association dealt with by tribunal outside scope of
tribunals competence foreseen in the statutes of the association).
Lachmann (2008), para.2243; Weigand-Wagner (2002), Germany, para.440; Schwab/Walter (2005),
Chap. 24 para.15 but see also para.24 (d); Hausmann, FS-Stoll (2001), p.593 (600); in favour of including decision ultra petita in (d) MnchKommZPO-Mnch (2013), 1059 paras19, 37 (second alternative); Musielak-Voit (2013), 1059 para.14.
OLG Mnchen 05. 10. 2009 34 Sch 12/09.
OLG Dresden 26.07.2012 3 Sch 3/12 (part set aside which declared the award to be enforceable)
Musielak-Voit (2013), 1059 para.17; Zller-Geimer (2014), 1059 para.43; Baumbach/Lauterbach
(2014), 1059 para.12.
For details see infra, Krll, 1061 para.108.
408
73 1059 (2) No. 1 (d) ZPO in deviation from Article34 (2)(c) ML furthermore requires
that these defects presumably have affected the award. This additional requirement is intended to ensure that the award may not be set aside for minor formal defects that did not
affect the outcome of the proceedings.151 The relevant standard in this respect is met if an
influence on the award cannot be excluded.152 This is normally assumed where the arbitral
tribunal is incorrectly composed. By contrast, in relation to an incorrect procedure, the additional requirement is of considerable practical relevance and replaces in its limiting effect
the previously existing requirement of the graveness of the defect.153 In addition, one has to
consider whether a flaw in procedure has been cured by the arbitral tribunal.154
74 The arbitral tribunal is incorrectly composed when its initial constitution or the treatment
of subsequent challenges by the parties is not in line with the agreed procedures or the few
mandatory legal provisions. By contrast, unilateral efforts to terminate the arbitrators contract by one of the parties do not result in an incorrect composition of the tribunal.155 Equally,
the mere existence of grounds which would have justified a challenge of an arbitrator during
the arbitral proceedings or a violation of the arbitrators disclosure obligations do not lead to
an incorrect composition of the arbitral tribunal in the sense of 1059 (2) No. 1 (d) ZPO.156
Where a party participated in the arbitration without challenging an arbitrator despite being
aware of the relevant facts, it will usually be barred from invoking the incorrect composition
of the arbitral tribunal.157 The same applies if a party challenged an arbitrator and did not
make use of all recourse available under German law or foreseen by the arbitration rules (cf.
1037 (3) ZPO).158 Once an award has been rendered, in order to protect its finality, only
instances of actual bias justify the setting aside of the award.159 The lack of the permissions
required by 40 German Law on Judges (Deutsches Richtergesetz DRiG) for active judges
to act as arbitrators does not justify the setting aside of the award.160
151
152
153
154
155
156
157
158
159
160
A presumed effect was denied in OLG Hamm 18.10.1999.

OLG Saarland 29.10.2002, SchiedsVZ 2003, 92 (94) = (2003) Int.A.L.R. N-60; in favour of a lenient
standard Musielak-Voit (2013), 1059 para.17; MnchKommZPO-Mnch (2013), 1059 para.33; cf.
Controversial; in favour of maintaining the graveness requirement Schwab/Walter (2005), Chap.
24 para.21 with further references to the position under the old law; Lachmann (2008), para.2257;
Hausmann, FS-Stoll (2001), p.593 (604); against MnchKommZPO-Mnch (2013), 1059 para.30;
Musielak-Voit (2013), 1059 para.17; Borges, ZZP 1998, 487 (493).
OLG Mnchen 01.02.2008 34 Sch 18/07.
OLG Naumburg 11.07.2008 10 Sch 3/07; see also OLG Mnchen, 07.05.2008 26/07; for a different
view see BeckOK ZPO/Wilske/Markert (2013), 1059 para. 49.
OLG Kln 16.10.2000 9 Sch 23/00; unless the arbitrators were biased in a way that it would constitute
a violation of the ordre public to not set aside the award.
BGH 04.03.1999, BGHZ 141, 90 (95) = RPS 2/1999, 9 (10); Krll, ZZP 2003, 195 (211 et seq.); Krll,
(2002) 17 (6) Mealeys I.A.R. 27 (31); Borges, ZZP 1998, 487 (493).
OLG Stuttgart 16.06.2002, SchiedsVZ 2003, 84 (87); MnchKommZPO-Mnch (2013), 1059 para.36;
for a detailed discussion see Lachmann, Nebenttigkeit des Richters im schiedsrechtlichen Verfahren, in:
Bachmann et al. (eds), FS-Schlosser, 2005, pp.477 (484 et seq.); however the lack of a permission may
play a role in the procedure to reject a state court judge as an arbitrator, see supra, Nacimiento/Abt/Stein,
1035 para.16.
1059 Krll/Kraft
409
Procedural defects which may lead to an incorrect procedure in the sense of (d) are the rejec- 75
tion of a partys counsel,161 refusals to hold an oral hearing where requested by a party,162
the administration of oaths for witnesses and experts,163 decisions ex aequo et bono without
authorization164 or awards rendered before a proper statement of claim has even been submitted.165 Equally, where the tribunal deviates from procedural agreements by the parties, the
award may be set aside.166 The procedure may also be incorrect where the arbitral tribunal
directly or indirectly acts as a judge in its own affairs, in particular if it decides on its own fees
or tries to enforce its claim to fees by procedural means. This is the case where the award is
rendered without an evidentiary hearing, despite being considered necessary by the arbitral
tribunal but not held since one of the parties refused to pay its advance on costs.167
Infringements of the obligation to give reasons for the award under 1054 ZPO may also 76
fulfil (d). Though defects in the reasoning of the award are no longer (1041 (1) No. 5 ZPO
pre-1998) listed as a separate ground for setting aside the award, the legislative materials
make clear that this was not meant to lead to any change in the law, but instead was due
to the drafting technique adopted.168 While, in principle, the reasoning must not fulfil the
requirements applicable to court decisions, obviously contradictory reasons or reasons
which do not support the findings of the arbitral tribunal may constitute a violation of the
applicable 1054 ZPO and thereby an incorrect procedure.169 In light of the importance
of the reasoning for a partys ability to understand, control and accept the award and the
clear legislative intent to maintain defects in reasoning as a ground for setting aside, the requirement that the flaw in procedure must have affected the award must be interpreted very
161
162
163
164
165
166
167
168
169
Schwab/Walter (2005), Chap. 24 para.24; MnchKommZPO-Mnch (2013), 1059 para.37; different in

connection with a tribunal of a political party OLG Kln 19.12.1990, NVwZ 1991, 1116 (1117).
OLG Bremen 30.09.1999, RPS 2/2000, 18 (19 seq.) = Yearbook XXXI (2006), 640 (641 seq.) = (2001)
Int.A.L.R. N-26 = CLOUT case No. 371 (but violation finally denied as no timely objection); Schwab/
Walter (2005), Chap. 24 para. 24; cf. BGH 19.05.1994, NJW 1994, 2155 et seq. (violation denied as
waiver of right to oral hearing by partys counsel).
Lachmann (2008), para.2273; Schwab/Walter (2005), Chap. 24 para.24; Baumbach/Lauterbach (2014),
1059 para.13; MnchKommZPO-Mnch (2013), 1059 para.37.
BGH 26.09.1985, BGHZ 96, 40 (45) = NJW 1986, 1436 (1437) (under the old law) with further references; critical note by Sandrock, JZ 1986, 370 (373 et seq.) who is of the view that (d) only covers true
flaws in procedo the application of a law other than the one agreed on by the parties however is a flaw in
iudicando; OLG Mnchen 22.06.2005, SchiedsVZ 2005, 308 (309 seq.); Musielack-Voit (2007), 1059
para.18; Schwab/Walter (2005), Chap. 24 para.22; Lachmann (2008), para.2276; Zller-Geimer (2014),
1059 para.43; Weigand-Wagner (2002), Germany, para.443; Krll, SchiedsVZ 2006, 203 (211) (declaration of enforceability).
BayObLG 29.09.1999 (the arbitrator rendered an award even though a statement of claim containing the
minimum requirements as set out in 1046 had not yet been submitted and later applied for the declaration of enforceability on behalf of the defendant); cf. Lachmann (2008), para.2265.
OLG Frankfurt 17.02.2011 26 Sch 13/10, SchiedsVZ (admission of an expert report which was rendered in breach of the ToR agreed with the parties).
BGH 07.03.1985, BGHZ 94, 92 (94 et seq.) = NJW 1985, 1904 (1905); cf. supra, von Schlabrendorff/
Sessler, 1057 ZPO paras 4 et seq.
KG Berlin 08.04.2002; cf. BGH 29.09.1983, WM 1983, 1207 seq.; id. 26.09.1985, BGHZ 96, 40 (47)
= NJW 1986, 1436 (1437 seq.) (both on the basis of the old law); Schwab/Walter (2005), Chap. 24
para.25; MnchKommZPO-Mnch (2013), 1059 para.37; Lachmann (2008), paras2281 et seq.
410
leniently. Otherwise, this ground could hardly ever be successfully invoked.170 Consequently,
there should be a presumption that, whenever 1054 ZPO is infringed, an influence on the
award cannot be excluded.
77 By contrast, no such alleviations exist for other procedural incorrectness.171 For example,
where evidence taken at an evidentiary hearing has played no role in the decision of the
arbitral tribunal, procedural defects in relation to this hearing do not justify the annulment
of the award.172 Parties seeking annulment always have at least to plead how the award could
have been affected if the procedural mistake would not have occurred. If the complaint concerns the absence of a hearing, a party has at least to plead what additional arguments would
have been submitted at this hearing that could have changed the outcome.173
78 In addition, parties174 may only rely on the defects in the composition of the arbitral tribunal175 or the procedure if they have objected to them without undue delay during the arbitral
proceedings. In all other cases, the lack of objection will either be considered as an implied
consent or waiver, or at least lead to the loss of the right to object pursuant to 1027, 1034
(2), 1037 (2) ZPO.176 This applies even to the right to an oral hearing where the party has not
objected to the arbitrators decision to proceed on a documents only basis.177
79 Furthermore, decisions rendered by the courts confirming the correctness of the arbitral
tribunals composition during challenge proceedings under 1034 (2) ZPO or 1037 (3)
ZPO at the pre-award stage are also binding for the setting aside court.
2.
Grounds That Must be Considered ex officio 1059 (2) No. 2 ZPO
80 Based on the Model Law (if the court finds), it is the general understanding that the grounds
for the setting aside under subsection 2 No. 2 have to be considered ex officio because they
concern fundamental public interests.178 However, the party relying on such grounds must
prove that their factual requirements are fulfilled. The competent court will decide on the
basis of the facts presented to it by the party to whom the ground for the setting aside will be
of advantage.179 It has no duty to start an independent investigation of the facts.180 The court
170
171
172
173
174
175
176
177
178
179
180
Possibly in favour of an exclusion of that requirement in the context of a lack of reasons Weigand-Wagner
(2002), Germany, para.444.
For a different view see Aden, DZWiR 2013, 149 (153 seq.).
OLG Braunschweig 12.05.2005, SchiedsVZ 2005, 262 (party not present at hearing and no proper minutes created).
OLG Mnchen 14.03.11 34 Sch8/10.
The same applies for intervenors OLG Stuttgart 16.07.2002, SchiedsVZ 2003, 84 (86).
OLG Frankfurt 17.11.2008 26 Sch 19/08 holding that the procedure for challenging an unequal influence on the composition of the tribunal in 1034 (2) ZPO prevails as lex specialis over the general rules
for standard conditions.
OLG Frankfurt 06.05.2010 26 Sch 04/10 (three member tribunal instead of sole arbitrator);. OLG
Mnchen 07.05.2008 34 Sch 26/07 (lack of possibility to comment directly on taking of evidence);
Stein/Jonas-Schlosser (2002), 1059 para.21; MnchKommZPO-Mnch (2013), 1059 para.30; ZllerGeimer (2014), 1059 para.42.
OLG Naumburg 21.02.2002, NJW-RR 2003, 71 (72) = CLOUT case No. 659.
Hausmann, FS-Stoll (2001), p.593 (605) with further consequences resulting from the view.
MnchKommZPO-Mnch (2013), 1059 para.50; Zller-Geimer (2014), 1059 paras83 seq.; in favour
of a limited duty to investigate Stein/Jonas-Schlosser (2002), Anhang 1061 para.74.
1059 Krll/Kraft
411
must be put in the position to establish on the facts presented to it and beyond doubt that
one of the grounds under subsection 2 No. 2 exists.181
a. Non-Arbitrability (a): The non-arbitrability of the dispute, according to 1030 ZPO, 81
constitutes a ground for setting aside the award irrespective of the validity of the arbitration
agreement in all other respects. By defining the arbitrability, the national legislator determines conclusively the extent to which disputes are open to arbitration and at the same time
reserves certain disputes to state court jurisdiction.182 However, in light of the broad scope of
arbitrability under German law, 1059 (2) No. 2 (a) ZPO, it is of little practical importance.
Under the new law, most of the previously controversial questions of company law are now
clearly arbitrable,183 as well as competition law and patent law issues.184 Not arbitrable are
disputes concerning residential lease agreements which in case of a dual use of the rented
property require, however, that the emphasis of use is on the residential part.185
Arbitrability under the law chosen by the parties to govern their arbitration agreement is 82
irrelevant under No. 2 (a).186
b. Conflict with Public Policy (Ordre Public) (b): (i.) General Principles: Awards can be set 83
aside if their enforcement would be contrary to German public policy. Guidelines as to what
constitutes a violation of public policy may be drawn from the wording of the predecessor to
1059 (2) No. 2 (b) ZPO.187 1041 No. 1 ZPO pre-1998 provided for setting aside if the
award led to a result that obviously violates basic principles of German law, especially if it is
inconsistent with constitutional rights. Its reference to an obvious violation and to basic
principles of German law reveals that, even for awards rendered in purely domestic cases,
the mere infringement of mandatory laws by itself does not necessarily constitute a violation
of public policy. Not every mandatory provision forms part of public policy; only those rules
which protect fundamental values form part of public policy.188 Furthermore, the violation
must be obvious.189 German law, therefore, has a much narrower concept of domestic or
181
182
183
184
185
186
187
188
189

Hausmann, FS-Stoll (2001), pp.593 (605 seq.).
BGH 06.04.2009 II ZR 255/08.
Baumbach/Lauterbach (2014), 1030 para.4 in connection with Grdz 1 para. 13 seq.
Denied in OLG Karlsruhe 27. 03. 2009 10 Sch 8/08.where at best 25% were used for residential purposes.
Musielak-Voit (2013), 1059 para.24; Baumbach/Lauterbach (2014), 1059 para.15. For a detailed
analysis see supra, Trittmann/Hanefeld, 1030 paras 7 et seq.
Lachmann (2008), para.2300; Musielak-Voit (2013), 1059 para.25; cf. for the development of the ordre
public ground Schwab/Walter (2005), Chap. 24 para. 32; sceptical in relation to obviousness MnchKommZPO-Mnch (2013), 1059 para.39.
OLG Dresden 20.04.2005, SchiedsVZ 2005, 210 (211); OLG Frankfurt 08.09.2005 26 Sch 06/05;
Schwab/Walter (2005), Chap. 24 paras33, 38; Lachmann (2008), paras2302 seq.; Zller-Geimer (2014),
1059 para.55; cf. RG 29.06.1942, RGZ 169, 240 (245) (trying to draw a line between those mandatory
provisions covered and those not covered); Habscheid, Zur neueren Entwicklung im Recht des Schiedswesens, KTS 1970, 132 (143 seq.); different still Heymann (1969), p.183 (a violation of mandatory
provisions is an ordre public violation).
The abolition of the obviousness requirement from the wording of the public policy defence was not
intended to lead to changes in substance; see also OLG Hamburg 14.05.1999, OLGR Hamburg 2000,
19 (21) = CLOUT case No. 457 (obvious violations); KG Berlin 27.05.2002 23 Sch 06/02; OLG
Mnchen 08.05.2006 34 Sch 38/05; cf. OLG Schleswig 30.03.2000, RIW 2000, 706 (709) = Yearbook
XXXI (2006), 652 (661); but see MnchKommZPO-Mnch (2013), 1059 para.39 against obviousness requirement.
412
national public policy than many other legal systems, where all mandatory rules are considered to form part of the national public policy. According to the commonly used definition,
public policy is only affected if the award or the procedure upon which it is based disregards
mandatory laws, which form the basis for a functioning public and economic life190 and/or
violates the most basic notions and principles of German law.191 The latter is only assumed if
the award is likely to undermine confidence in the predictability of legal decisions generally
and the reliability of arbitral procedures.192
84 Irrespective of this narrow basic concept of public policy, a distinction is made between
national public policy and the even narrower international public policy. However, as both
are largely defined in the same way, it is primarily a distinction of degree and not in kind.193 It
takes account of the fact that the fewer contacts a case has with Germany, the smaller is the
German interest in enforcing German basic ideas of fundamental justice. In this respect, it
is not completely accurate to make the nationality of the award the decisive criteria for the
application of either standard in all cases. In regard to substantive public policy, the relevant
criteria should be the connection of the case and the award with the German legal order
and not whether it is a foreign or domestic award.194 Consequently, as regards their content,
domestic awards rendered between two parties with little connection to Germany are also
subject to international public policy. By contrast, in relation to the procedure upon which
such an award is based, the national ordre public is the relevant standard.
85 ii. Substantive Public Policy: In relation to substantive public policy, courts have consistently
emphasized that the notion of public policy must be interpreted narrowly to avoid any abuse
as a gateway to challenge an award on its merits.195 The courts do not review whether the
arbitral tribunal applied the law or at least its mandatory provisions correctly, but merely
whether the content of the award is such that its enforcement would be contrary to public
policy.196 That may be the case if the award is either contrary to those mandatory rules which
190
191
192
193
194
195
196
BGH 17.09.1968, BGHZ 50, 370 (376) (enforcement of a foreign court judgement); id. 18.06.1970,
BGHZ 54, 123 (130) (enforcement of a foreign court judgement); OLG Karlsruhe 14.09.2001, OLGR
Karlsruhe 2002, 94 (95); OLG Dresden 20.04.2005, SchiedsVZ 2005, 210 (211); Lachmann (2008),
para.2303; Zller-Geimer (2014), 1059 para.55; Stein/Jonas-Schlosser (2002), Anhang 1061 para.135.
BayObLG 20.11.2003, IHR 2004, 81 (82) = Yearbook XXIX (2004), 771 (773 et seq.); cf. OLG Stuttgart
03.06.2003; OLG Karlsruhe 14.09.2001, OLGR Karlsruhe 2002, 94 (95).
OLG Kln 03.06.2003 9 Sch 23/02.
MnchKommZPO-Mnch (2013), 1059 para.43; in the light of this, the justification for a distinction
is contested by Sandrock, FS-Sonnenberger (2004), pp.615 et seq.; Schwab/Walter (2005), Chap. 30
para.21; Kornblum, NJW 1987, 1105 (1105 seq.); Sandrock, BB 2001, 2173 (2175) seq.
Borges, ZZP 1998, 487 (495); cf. Stein/Jonas-Schlosser (2002), Anhang 1061 para.135; Schwab/Walter
(2005), Chap. 30 para.21; in practice, the relevant criteria for the distinction appears often to be the
nationality of the award (domestic/international) and not the international element as such which can
only justify the distinction, in this direction see also ILA, Final Report on Public Policy as a Bar to Enforcement of International Arbitral Awards, Recommendation 1 (f), reproduced in Arb.Int. 2003, 249
(257).
OLG Dresden 07.06.2006 11 Sch 02/06; OLG Kln 26.11.2002 9 Sch 20/02; OLG Mnchen
07.09.2005, OLGR Mnchen 2006, 208 (209); BayObLG 25.08.2004, SchiedsVZ 2004, 319 = BayObLGR 2005, 105 (106); id. 20.03.2003 4 Z Seh 23/02; KG Berlin 08.04.2002 23/29 Sch 13/01; Schwab/
Walter (2005), Chap. 24 para.33; MnchKommZPO-Mnch (2013), 1059 para.41; Ebbing (2003),
pp.268 et seq.
OLG Frankfurt 26.06.2003 1 Sch 01/02; BayObLG 20.03.2003 4 Z Seh 23/02.
1059 Krll/Kraft
413
protect the bases of the German public and economic order, contrary to fundamental principles of law or otherwise infringes public order or good morals.
The latter is assumed where the fulfilment of the award would constitute a criminal offence,197 86
would result in prohibited behaviour (paying bribes),198 orders the performance of a contract
that violates good morals,199 is contradictory to an extent that the award is nonsensical200 or
is merely impossible to fulfil.
The fundamental principles of law that form public policy encompass the principles of pacta 87
sunt servanda, good faith and the principle of proportionality. However, only gross violations
of the principles of good faith or proportionality leading to an arbitrary decision fall within
the narrow public policy ground.201 Thus, even awards which are obviously wrong may only
violate public policy if the infringement of the law has reached a level which would seriously
affect the principle of legal certainty and the confidence in arbitration.202 This was assumed in
cases where sanctions ordered by an arbitral tribunal for a minor wrong were completely out
of proportion and contrary to the applicable catalogue fixed for such sanctions.203
Examples of mandatory provisions constituting part of the German public policy are com- 88
petition and antitrust law,204 export and import control regulations,205 the former law on
foreign currency exchange control206 and the law on money laundering. Whether the courts
can sanction any deviation from such provisions207 or whether a violation of public policy
197
198
199
200
201
202
203
204
205
206
207
RG 19.04.1904, RGZ 57, 331 (334) (award ordered the performance of a prohibited act in the sense of
1041 ZPO); OLG Hamburg 11.03.1953, NJW 1953, 1309 (1309 et seq.) (finally rejected that fulfilment of the underlying contract would have resulted in a criminal offence); Musielak-Voit (2013), 1059
para.31; Schwab/Walter (2005), Chap. 24 para.41.
Cf. OLG Hamburg 12.03.1998, IPRspr 1999, No. 178 = Yearbook XXIX (2004), 663 (671 seq.) (held
that the underlying contract neither offended common decency (138 BGB) for reasons of disproportion of performance and counter-performance nor was illegal for other reasons); Zller-Geimer (2014),
1059 para.59; Schwab/Walter (2005), Chap. 24 para.36.
RG 16.01.1931, RGZ 131, 179 (182 et seq.) (ordering a partner in a partnership to vote in a certain way);
OLG Frankfurt 06.05.2010 26 Sch 04/10 (rejection of certain damage position despite reasoning to
the contrary); OLG Hamburg 08.06.2001, CLOUT Case No. 569; BGH 05.12.1985, NJW 1986, 1436
(1437).
OLG Dresden 20.04.2005, SchiedsVZ 2005, 210 (213); OLG Kln 03.06.2003 9 Sch 23/01 (exclusion
of a member for minor misconduct later vacated for other reasons by the BGH); violation of good faith
rejected in OLG Karlsruhe 27.03.2009 10 Sch 8/08.
OLG Dresden 20.04.2005, SchiedsVZ 2005, 210 (213); OLG Kln 26.11.2002 9 Sch 20/02.
OLG Kln 03.06.2003 9 Sch 6/03 (exclusion of a member for minor misconduct later vacated for
other reasons by the BGH); see also OLG Mnchen 30.08.2011 34 SchH 8/11 (award against public
policy if tribunal orders more than required).
BGH 25.10.1966, BGHZ 46, 365 (367) (antitrust law); European Court of Justice, Eco Swiss China Time
Limited vs. Benetton International NV, 01.06.1999 Rs. C-126/97,European Court Reports 1999 Page
I-3055 = EuZW 1999, 565 et seq. = NJW 1999, 3549 (European antitrust law); Musielak-Voit (2013),
1059 para.31; Lachmann (2008), paras2333 et seq.; Schwab/Walter (2005), Chap. 24 para.44 (German
antitrust law) and 45 (European antitrust law); MnchKommZPO-Mnch (2013), 1059 para.47.
BGH 27.02.1964, KTS 1964, 172 (173); Musielak-Voit (2013), 1059 para. 31; Lachmann (2008),
para.2332; Schwab/Walter (2005), Chap. 24 para.43; MnchKomm-Mnch (2013), 1059 para.47;
Schlosser (1989), para.887.
Schlosser (1989), para. 886; Musielak-Voit (2013), 1059 para. 31; Schwab/Walter (2005), Chap. 24
para.43; MnchKommZPO-Mnch (2013), 1059 para.47.
Against this Musielak-Voit (2013), 1059 para.31.
414
must be denied in cases where the arbitral tribunal adopts a different but a still reasonable interpretation of the rules, is controversial. In light of the original wording of the public policy
defence (obviously violates) and the public policy character of the finality of the award, the
latter interpretation is preferable.208 In determining whether public policy is infringed, the
court is not bound by the facts determined by the arbitral tribunal or its legal reasoning.209
89 iii. Procedural Public Policy: An award may be set aside for the violation of procedural public
policy if the arbitral proceedings were contrary to the most basic concepts of procedural
fairness.210Although most of these, in particular the right to be heard, are already covered by
the various grounds in 1059 (2) No.1ZPO, they may also be reviewed in the context of
the public policy defence. The legislative materials explicitly mention the right to be heard
and correct representation in the arbitral proceedings listed as separate grounds for setting
aside under the old law (1041 (1) Nos 3, 4 ZPO pre-1998) as examples which are, under
the new law, to be covered by the public policy ground.211 The frequently alleged violations
of the right to be heard are, however, in most cases unsubstantiated. Not every rejection of a
submission or an offer or request concerning evidence constitutes a violation of that right.212
The tribunal is entitled to reject evidence offered for substantive or procedural reasons. In the
absence of indications to the contrary, arbitral tribunals are assumed to have taken the submission by the parties into account even if the awards do not specifically deal with them.213
Only where it is obvious from the remainder of an award or other circumstances that arguments or submissions were not taken into account is the award contrary to public policy.214
208
209
210
211
212
213
214
Musielak-Voit (2013), 1059 para.31; in that sense probably Hermanns/Brck, Die neue EG-Kartellverfahrensordnung Umdenken auch in Schiedsverfahren, SchiedsVZ 2004, 137 (140). For details see
infra, Krll, 1061 paras 139 et seq.
BGH 23.04.1959, BGHZ 30, 89 (95) = WM 1959, 912; id. 25.10.1966, BGHZ 46, 365 (370) (under
the old law); id. 29.09.1983, WM 1983, 1207; Schwab/Walter (2005), Chap. 24 para.46; Musielak-Voit
(2013), 1059 para.30; controversial for a different view Zller-Geimer (2014), 1059 para.53; for
details see supra, paras53 seq.
OLG Hamburg 14.05.1999, OLGR Hamburg 2000, 19 (21) = CLOUT case No. 457; violation denied in
BayObLG 15.12.1999, RPS 2/2000 = CLOUT case No. 403, 16 (18); OLG Bremen 10.11.2005, OLGR
Bremen 2006, 263 et seq.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.59; for the relationship between the grounds
see also Zller-Geimer (2014), 1059 para.48.
OLG Naumburg 21.05.2004 = (2006) Int.A.L.R. N-61 (refusal to hear a witness); OLG Hamburg
31.07.2003, OLGR Hamburg 2004, 97 et seq. (refusal to hear witnesses); OLG Bremen 10.11.2005, OLGR
2006, 263 (265) (arbitral tribunal had refused to re-hear witnesses); see also OLG Kln 21.11.2008 19
Sch 12/08 (refusal to appoint an expert); OLG Karlsruhe 27.03.2009 10 Sch 8/08 (refusal to hear party
as a witness).
Declining a violation of the right to be heard BGH 14.05.1992, NJW 1992, 2299 (2300); OLG Hamburg 18.11.2003, OLGR Hamburg 2004, 244 (244); id. 31.07.2003, OLGR Hamburg 2004, 97 (98)
(the reasoning of an award need only to summarize the main arguments underlying the award); id.
14.05.1999, OLGR Hamburg 2000, 19 (21) = CLOUT case No. 457 (arbitral tribunal rejected offer of
evidence, as it considered the evidence irrelevant); OLG Stuttgart 06.12.2001, Yearbook XXIX (2004),
742 (745); OLG Karlsruhe 27.03.2009 10 Sch 8/08; OLG Mnchen 20.04.2009 34 Sch 17/08 =
OLGR Mnchen2009, 482-485 = IBR2009, 430.
See OLG Kln 26.11.2002 9 Sch 20/02 (claimants submissions obviously not taken into account);
OLG Frankfurt 06.05.2010 26 Sch 04/10 (rejection as unsubstantiated shows that submission not
taken into accout). For details see supra, Sachs/Lrcher, 1042 paras44 et seq.
1059 Krll/Kraft
415
Infringements of the principle of procedural neutrality may constitute violations of proce- 90

dural public policy. Thus, awards rendered by biased arbitral tribunals may be set aside,215
as well as awards rendered in breach of the principle that no one should be arbitrator in his
own affairs. Consequently, awards in which the arbitral tribunal either directly or indirectly
fixes its remuneration are contrary to public policy.216 The arbitral tribunal may, however,
decide upon the distribution and refund of the already paid advance on costs, either under
its implied authorization217 or if it has been explicitly authorized to do so by the parties.218
Furthermore, awards rendered by an arbitral tribunal that lacks jurisdiction can infringe the
guarantee of free access to ones lawful judge, which is one of the most fundamental procedural rights.219
Procedural public policy is also violated in cases where one of the grounds for an action for 91
retrial listed in 580 ZPO220 exists. The explicit reference to the action for retrial pursuant
to 580 ZPO as a ground for setting aside that was still contained in the old law was only
abolished for technical reasons, without the intention of any greater change in substance.221
Different views exist as to whether a party can only rely on the various examples of procedural
215
216
217
218
219
220
221
But only such violations of neutrality that would justify concerns of an objective third party that the arbitrator acts in the interest of one party and is guided by other than factual considerations lead to setting
aside OLG Kln 22.12.1999 = CLOUT case No. 440; id. 16.10.2000 9 Sch 23/00.
BGH 07.03.1985, BGHZ 94, 92; see also id. 25.11.1976, JZ 1977, 185 (determination of amount in
dispute as indirect fixing of own fees) but probably less strict in id. 15.07.1999, BGHZ 142, 204 (206) =
NJW 1999, 2974 (2975) = ZZP 2000, 483 et seq. with note by Ehricke, 453 et seq. = RPS 1/2000, 12; for
a detailed discussion see Wolff, SchiedsVZ 2006, 131 et seq.; cf. supra, von Schlabrendorff/Sessler, 1057
paras 7 et seq.
OLG Dresden 28.10.2003, SchiedsVZ 2004, 44; id. 29.06.2005 11 Sch 07/05; id. 06.09.2004 11 Sch
06/04, referring to Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, pp.57 seq.; but see OLG
Frankfurt 30.03.2006 (award set aside as the tribunal had discretion as to the amount of its fees).
OLG Dresden 21.09.2005 11 Sch 10/05.
For a detailed discussion of the various infringements see infra, Krll, 1061 paras 147 et seq.
580. [Action for retrial]
An action for a retrial shall be available:
1. if the opposing party, by confirming on oath a statement upon which the judgment is based, is
guilty of intentionally or negligently violating his obligation to make a truthful statement on oath;
2. if a document upon which the judgment is based was falsely drawn up or was falsified;
3. if, in case of a testimony or opinion upon which the judgment is based, the witness or the expert is
guilty of a violation of the duty to speak the truth which is liable to criminal prosecution;
4. if the judgment has been obtained by the representative of the party or by the opponent or the
opponents representative by way of a criminal offence committed in relation to the lawsuit;
5. if a judge participated in giving the judgment who is guilty, in relation to the lawsuit, of a violation
of his official duties against the party, which violation is liable to criminal prosecution;
6. if the judgment of an ordinary court, of a previous special court or of an administrative court, upon
which the judgment is based, has been set aside by another res judicata judgment;
7. if the party discovers, or is enabled to use,
a) a judgment delivered in the same matter which has become res judicata at an earlier time or
b) another document which would have brought about a decision more favorable to that party.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.59; for the still persisting controversies concerning the treatment of ground No. 7 (subsequent discovery of conflicting decision/award) see Gaul,
FS-Sandrock (2000), pp.285 (310 et seq.).
416
fraud listed in 580 Nos 15 ZPO if additionally the requirements of 581 ZPO222 are met,
i.e. criminal proceedings either have led to a conviction for fraud or would have done so if
their initiation had not been prevented for reasons other than the lack of evidence. In line
with the majority view under the old law, the prevailing view under the new law still submits
that in connection with a German award, an infringement of public policy still depends on
the fulfilment of 581 ZPO.223 In all other cases of procedural fraud that have not yet led to a
conviction, a party could only attack the award or defend itself via a damage claim pursuant
to 826BGB.224
92 However, the better view under the new law is that the mere existence of one of the instances
of procedural fraud enumerated in 580 ZPO is by itself sufficient to assume a violation of
public policy in the sense of 1059 (2) No. 2 (b) ZPO.225 Under the old law, the main reason
for the exclusion of the instances of procedural fraud enumerated in 580 ZPO from the
general public policy ground was that 1041 (1) No. 6 ZPO explicitly mentioned the action
for retrial as a separate ground for setting aside. Thus, it would have been contrary to the
legislative intent to consider the mere existence of one of the grounds in 580ZPO sufficient
within the general public policy defence contained in No. 5 if No.6, which specifically dealt
with these situations, set up additional requirements.226 By contrast, for foreign awards, for
which no such specific regulation existed, the mere existence of one of the grounds enumerated in 580ZPO was considered sufficient to lead to an infringement of public policy.227
With the abolition of the action for retrial as a separate ground, there is no longer any need
to make the treatment of instances of procedural fraud dependent on whether one is dealing
with a domestic award or a foreign award. The legislative materials, which make clear that (in
the future) the instances of procedural fraud should be covered by the public policy defence,
only refer to the grounds for retrial and no longer to the action for retrial, as the old law did.
93 In addition, this view is also more in line with one of the major objectives pursued by the
new German arbitration law, namely re-aligning the German law with international practice
and making Germany as a place of arbitration more attractive to international users. Internationally and, in particular, in the context of the NYC, on which 1059 (2) No. 2 (b) ZPO
is indirectly modelled, the various cases of procedural fraud enumerated in 580 ZPO are
222
223
224
225
226
227
581. [Special requirements for an action for retrial]

(1) In the cases of 580 nos. 1 to 5, an action for retrial shall only be available if a sentence with
res judicata effect has been passed for the criminal offence or if the institution or the conduct of
criminal proceedings is impossible for reasons other than a lack of evidence.
(2) It shall not be possible to furnish evidence of the facts which form the grounds of the action for
retrial by means of the motion for examination of the party.
BGH 14.05.1952, NJW 1952, 1018 (under the old law); id. 02.11.2000, BGHZ 145, 376 (381) = NJW
2001, 373 = note by Boecker, EWiR 2001, 345 = note by Voit, ZZP 2001, 355 et seq. = (2002) Int.A.L.R.
N-12; OLG Dresden 07.06.2006 11 Sch 02/06; OLG Stuttgart 16.07.2002, SchiedsVZ 2003, 84 (88)
with critical comment in this respect by Nacimiento/Geimer, SchiedsVZ 2003, 88 (91 seq.); OLG Stuttgart
03.06.2003 1 Sch 2/03; cf. Lachmann (2008), para.2340; Schwab/Walter (2005), Chap. 24 para.51;
Eckstein-Puhl (2005), pp.205 et seq.; Hausmann, FS-Stoll (2001), p.593 (609); Rmann, FS-Schlosser
(2005), pp. 785 (797 et seq.); Krll, SchiedsVZ 2004, 113 (119).
Eckstein-Puhl (2005), pp.201 seq.
BGH 18.01.1990, NJW 1990, 2199 (2200); OLG Dsseldorf 03.07.1997 6 U 67/96, at <www.juris.
de>; cf. Schlosser, (1989), para.873; Vlker (1998), p.165.
1059 Krll/Kraft
417
generally considered to be infringements of public policy even without a criminal conviction, as is also recognized by German courts in relation to foreign awards. By contrast, the
solution favoured by the BGH which considers a substantive damage claim under 826
BGB to adequately deal with such instances would re-install a German particularity and,
furthermore, leads to considerable dogmatic frictions.228 Moreover, contrary to what is assumed for all other aspects of public policy, for the question of procedural fraud the internal
public policy would be narrower than the international public policy, which does not require
a conviction for procedural fraud.
Fraudulently false statements or perjury can also be invoked to justify the setting aside of 94
an award on agreed terms, e.g. where the settlement reached was based on a forged balance
sheet.229
Parties may be precluded from relying on infringements of even fundamental procedural 95
principles if they have not objected without undue delay to the conduct of the proceedings
during the arbitration. 1027 ZPO directly covers only procedural rights from which the
parties can derogate. As many of the principles belonging to procedural public policy primarily protect private interest, courts have also considered parties to be precluded from raising
infringements of the right to be heard.230 The same applies for violations of the principle of
equal influence on the composition of the arbitral tribunal, if the parties have not made use
of the proceedings under 1034 (2) ZPO.231
IX. The Courts Decision and Legal Remedies

A.
General Principles
The court decides in the form of an order (1063 (1) ZPO). Depending on its findings, the 96
court may either reject the application or may set aside the award in part or completely. In
addition to the annulment of the award, the court may in appropriate cases remit the case to
the arbitral tribunal.232 Where the admissibility of setting aside proceedings is challenged,
the court may render a separate decision on this issue.233 Against all types of decisions rendered in setting aside proceedings, a complaint on a point of law to the BGH is admissible
according to 1065 (1) ZPO.234 Consequently, all decisions must contain the necessary
228
229
230
231
232
233
234
In the light of the newly inserted time limit for setting aside proceedings, the need to rely on 826 would
be even increased as it is largely illusory to assume that the required conviction could be obtained within
the three month period; cf. Eckstein-Puhl (2005), p.206.
OLG Celle 24.07.2003 8 Sch 01/03 (applicant had failed to raise before the arbitral tribunal that it
was excused from participating in an oral hearing and therefore was barred from invoking that it had no
right to question witnesses); but see also OLG Hamburg 16.09.2004 (defendant had no knowledge of
the violation of the right to be heard and was therefore not considered to be precluded); cf. preclusion of
grounds for restitution in regard to a foreign award (under the old law) BGH 06.03.1969, KTS 1970, 30
(35) = BB 1969, 892 = WM 1969, 671 et seq.
OLG Mnchen 22.06.2005, SchiedsVZ 2005, 308 seq. (in a proceeding to have a domestic award declared
enforceable, the court set aside the award and upon applicants subsidiary motion referred the matter
back to the arbitral tribunal); OLG Mnchen 30.08.2011 34 SchH 8/11 (case remitted after award set
aside for violation of public policy).
BGH 20.09.2001, NJW 2001, 3787 = (2003) Int.A.L.R. N-13; Lachmann (2008), para.2387.
For details see infra, Schroeder/Wortmann, 1065 paras 8 et seq.).
418
factual basis for such recourse. This can either be in the form of a separate statement of facts
or through including the facts into the legal reasoning. Where the facts are undisputed and
easily ascertainable, a reference to the statement of facts in the award may be sufficient.235
B.
Setting Aside and Legal Consequences
97 Where the ground for setting aside only affects a separable part, e.g. a separate claim for
which the arbitral tribunal has no jurisdiction or a particular order beyond the tribunals
competence,236 only this part of the award should be set aside. That is not only explicitly
provided for in relation to the excess of powers in 1059 (2)(c) ZPO, but applies also to all
other grounds. However, if the ground for setting aside established for a part of the award is
of such a nature that it destroys the trust in the arbitral tribunal in general, the other parts of
the award may also be set aside.237
98 Pursuant to 1059 (5) ZPO, the setting aside of the award will, in the absence of indications
to the contrary, result in the arbitration agreement becoming operable again. This obviously
does not apply to cases in which the ground for the setting aside is the non-existence or invalidity of the arbitration agreement. In all other cases, there is a presumption that the parties
still want to have their dispute decided by arbitration. The claimant may then re-initiate its
case before a new arbitral tribunal, since the mandate of the old arbitrators terminated according to 1056 (3) ZPO with the rendering of the award.238 In appropriate cases, the court
may, at the request of a party, also refer the parties back to the same arbitral tribunal after
having set aside the award.239 In determining the appropriateness of a remittance, the crucial
question is whether a decision by the pre-existing arbitral tribunal may save time and costs.
In cases of remittance, the arbitral tribunal must decide the case anew, taking into account
the decision of the court.240
99 The rejection of an application at the same time determines with res judicata effect that at
least the grounds raised are not present. Thus, as explicitly set out in 1060 (2) sentence 2
ZPO, these defects may no longer be raised as defences in ensuing proceedings for a declaration of enforceability.
X.
Protective Measures
100 Interim relief is available to protect the rights of the parties during setting aside proceedings.
In practice, the need for interim relief will exist primarily in cases where the award, due to its
content, is quasi self-executing and does not have to be enforced via enforcement proceedings. Examples are awards ordering the exclusion of a party from an organization, withdrawing powers or refusing permissions. The mere fact that the courts in such cases must, on a
235
236
237
238
239
240
BGH 15.07.1999, BGHZ 142, 204 (206) = NJW 1999, 2974 = ZZP 2000, 483 et seq. with note by
Ehricke, 453 et seq. = RPS 1/2000, 12.
OLG Dresden 26.07.2012 3 Sch 3/12.
KG Berlin 02.04.1976, NJW 1976, 1356.
Schwab/Walter (2005), Chap. 25 para.18 also with reference to the different practice in Switzerland;
Hausmann, FS-Stoll (2001), pp.593 (613 seq.).
OLG Mnchen 22.06.2005, SchiedsVZ 2005, 308 seq. (in a proceeding to have a domestic award declared
enforceable, the court set aside the award and upon the applicants subsidiary motion referred the matter
back to the arbitral tribunal).
1059 Krll/Kraft
419
preliminary basis, order the same measures as are applied for in the main proceedings, i.e. the
setting aside of the award, does not prevent them from granting such relief.241
XI. Other Remedies against the Award

A.
Procedural Remedies
The clear wording of 1059 (1) ZPO (Recourse may be made only) appears to exclude 101
any other means of recourse against the award besides its setting aside. However, the wording
is too broad, as 1060 (2) ZPO explicitly provides that the grounds for setting aside may be
raised as a defence in proceedings for a declaration of enforceability and their existence will
lead to a setting aside of the award. Beyond this statutory exception and in light of 1026
ZPO, no other direct means of recourse exists. In particular, it is impossible to invoke the
grounds justifying the setting aside as defences against a party relying in other proceedings
on the res judicata effect of the award.242 Until the award has been set aside, its prejudicial effects must be recognized. Applications to declare that the award is ineffective due to the nonfulfilment of the mandatory requirements of 1054 ZPO are inadmissible.243 In addition, the
res judicata effect of the award prevents a party attempting to defy the findings of the award
by again bringing the same proceedings either before an arbitral tribunal or before a court.
B.
Damage Claims Pursuant to 826 BGB
According to the prevailing view under German law244 which finds support in the legislative 102
materials245 the limitation of further recourse only relates to the procedural remedies, but
does not exclude possible damage claims under substantive law. Thus, in cases of procedural
fraud, a party negatively affected by the fraud may have a damage claim under 826 BGB
against the other party. While legally such damage claims do not lead to the annulment of
the award, they have de facto comparable results. They are directed at the handing over of the
award obtained by fraud and the issuance of an order stating that the party should refrain
from having the award executed. 826 BGB in regard to a fraudulently obtained award
requires (1) that the award is objectively wrong, but this should not be due to the applicants
own neglectful conduct of the proceedings, (2) that the party benefiting from the award
must know about the awards incorrectness and (3) the existence of additional aggravating
circumstances that can serve as a justification to take away a secured legal status (namely the
241
242
243
244
245
OLG Frankfurt 20.12.2004 23 SchH 1/04 (exclusion from a sport organization, the membership in
which was required for the participation in the national championship).
Stein/Jonas-Schlosser (2002), 1059 para.28; Hausmann, FS-Stoll (2001), p.593 (616).
For a different view Musielak-Voit (2013), 1059 para.3; Schwab/Walter (2005), Chap. 25 para.2; Hausmann, FS-Stoll (2001), p.593 (616).
by Voit, ZZP 2001, 355 et seq. = (2002) Int.A.L.R. N-12; Schlosser, FS-Gaul (1997), pp.679 (687 seq.);
Musielak-Voit (2013), 1059 para.26; Schwab/Walter (2005), Chap. 24 para.2a; controversial; for the
opposite view see Eckstein-Puhl (2005), p.291 (who in addition finds it in incompatible with 1026,
1062 ZPO); Gaul, FS-Sandrock (2000), p.285 (294); Zller-Geimer (2014), 1059 para.69.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.60 which explicitly mentions the damage
claim as a means to attack the award in cases of procedural fraud only discovered after the expiry of the
period in which its setting aside may be requested; contrary to this, the initial Report of the Commission
for the Reform of the Model Law (1994) at p.200 had still expressed a preference for the finality over
considerations of individual justice; for this view also Eckstein-Puhl (2005), p.291.
420
award) from the party that committed the intentional fraudulent act. Different views exist as
to before which court this claim is to be raised.246
103 Contrary to the view of the BGH,247 there is no need to allow for the claim under 826 BGB
as an additional defence in proceedings to resist the declaration of enforceability. The cases
covered by 826 BGB can, in their entirety, be subsumed under the public policy defence.248
XII. Costs of the Proceeding and Amount in Dispute

104 The courts decision on the allocation of the costs of the setting aside proceeding is based
on 91 et seq. ZPO. The costs of the proceedings to be allocated between the parties (according to the above principles) comprise of attorneys fees and the court costs. Both are
calculated on the basis of the amount in dispute.
105 Relevant for the determination of the amount in dispute is the part of the award that negatively affects the applicant. In an action that is not directed at payment of a certain amount,
the amount in dispute will be determined by the court. Where the applicant has prevailed
in part in the arbitral proceedings, this part is not taken into account in the calculation of
the amount in dispute in the setting aside proceeding. In general, decisions as to the costs of
the arbitral proceeding are not included in the calculation of the amount in dispute.249 The
situation must be different if the decision on costs is the only reason for which the setting
aside proceedings have been initiated.
106 The reimbursable attorney fees are calculated on the basis of Nos 3100, 3104 VV Law on
Attorneys Fees (Rechtsanwaltsvergtungsgesetz RVG). A party is free to agree with its attorney on higher fees.250
107 Court costs are determined pursuant to KV No. 1620 Law on Court Fees (Gerichtskostengesetz GKG) on the basis of the amount in dispute.251
246
247
248
249
250
251
Cf. Schlosser, FS-Gaul (1997), 679 (687) (who is of the view that there are good arguments that a claim
arising out of 826 can be governed by the arbitration agreement); for a critical discussion; cf. Gaul, FSSandrock (2000), pp.285 (295 et seq.) (who is of the view that neither an arbitral tribunal nor the OLG
has jurisdiction concerning a claim pursuant to 826 BGB).
See supra, paras91 et seq.
BGH 23.11.1956, NJW 1957, 103 seq., however, the main argument that the taking into account of
costs could lead to a difficult determination of the competent court does not apply under the new
law because all setting aside procedures have to be initiated before a Higher Regional Court; OLG Kln
18.03.1969, KTS 1970, 52 (53); Stein/Jonas-Schlosser (2002), 1059 para. 14a; MnchKommZPOMnch (2013), 1059 para.71; Zller-Herget (2014), 3 Schiedsrichterliches Verfahren; OLG Karlsruhe
23.11.2004 9 Sch 01/04 (enforcement proceeding); OLG Koblenz 28.07.2005, SchiedsVZ 2005, 260
= Yearbook XXXI (2006), 673 (666) (not reproduced in this regard/enforcement proceeding); OLG
Naumburg 21.05.2004 = (2006) Int.A.L.R. N-61 (enforcement proceeding); OLG Hamburg 31.07.2003,
OLGR Hamburg 2004, 97; OLG Karlsruhe 14.06.2000 9 Sch 01/04 (enforcement proceeding of a
foreign award reverts to 3 ZPO); differently BayObLG 16.03.2000, RPS 2/2000, 15 (16) = NJW-RR
2001, 431 = Yearbook XXVII (2002), 445 (449) (including in the amount in dispute arbitration fees of
the arbitration institution and costs incurred by the applicant in regard to the arbitral proceedings).
For details see infra, Krll, 1061 para.187.
Chapter VIII
Recognition and Enforcement of Awards
Introduction to 1060, 1061 ZPO
Short Bibliography: von Bernuth, Die Doppelkontrolle von Schiedssprchen durch staatliche
Gerichte, Frankfurt am Main 1995; Bosch, Rechtskraft und Rechtshngigkeit im Schiedsverfahren,
Tbingen 1991; Borges, Die Anerkennung und Vollstreckung von Schiedssprchen nach dem neuen
Schiedsverfahrensrecht, ZZP 1998, 487; Borris/Schmidt, Vollstreckbarkeit von Schiedssprchen
und materiellrechtliche Einwendungen des Schiedsbeklagten, SchiedsVZ 2004, 276; Ebbing, Private
Zivilgerichte: Mglichkeiten und Grenzen privater (schiedsgerichtlicher) Zivilrechtsprechung,
Mnchen 2003; Epping, Die Schiedsvereinbarung im internationalen privaten Rechtsverkehr nach
der Reform des deutschen Schiedsverfahrensrechts, Mnchen 1999, Flther, Auswirkungen des
inlndischen Insolvenzverfahrens auf Schiedsverfahren und Schiedsabrede, Kln 2001, Gaul, Die
Rechtskraft und Aufhebbarkeit des Schiedsspruchs im Verhltnis zur Verbindlichkeit des staatlichen Richterspruchs, in: Berger/Ebke et al. (eds), FS-Sandrock, 2000, p.285; ILA, Final Report
on Public Policy as a Bar to Enforcement of Arbitral Awards, 2000; Kawano, Aufrechnung und
Schiedsgerichtsbarkeit, ZZPInt 1999, 393; Krll, Das neue deutsche Schiedsrecht vor staatlichen
Gerichten: Entwicklungslinien und Tendenzen 1998-2000, NJW 2001, 1173; Krll, Die Ablehnung
eines Schiedsrichters nach deutschem Recht, ZZP 2003, 195; Krll, Schiedsrechtliche Rechtsprechung 2003, SchiedsVZ 2004, 103; Krll, Die schiedsrechtliche Rechtsprechung 2005, SchiedsVZ
2006, 203; Lachmann, Handbuch fr die Schiedsgerichtspraxis, Kln 2008; Loritz, Probleme der
Rechtskraft von Schiedssprchen im deutschen Zivilprozessrecht, ZZP 1992, 1; Mankowski, Der
Schiedsspruch mit vereinbartem Wortlaut, ZZP 2001, 37; Mnch, Das Exequatur von Schiedssprchen: materielle Einwendungen zur prozessualen Verteidigung?, in: Lke/Mikami/Prtting (eds),
FS-Ishikawa, 2001, 335; Nelle, Anspruch, Titel und Vollstreckung im internationalen Rechtsverkehr,
Tbingen 2000; Peters, Materielle Einwendungen gegen den Schiedsspruch, JZ 2001, 598; Rtzel/
Wegen/Wilske, Commercial Dispute Resolution in Germany, Mnchen 2005; Sandrock, Scharfer
ordre public interne und laxer ordre public international, in: Coester/Martiny/Prinz von Sachsen
Gessaphe (eds), FS-Sonnenberger, 2004, p.615; Schlosser, Die Durchsetzung von Schiedssprchen
und auslndischen Urteilen im Urkundsprozess und mittels eines inlndischen Arrests, in: Gottwald/Prtting (eds), FS-Schwab, 1990, p.435; Schlosser, Auslndische Schiedssprche und ordre
public international, IPRax 1991, 218; Schtze/Tscherning/Wais, Handbuch des Schiedsverfahrens
Praxis der deutschen und internationalen Schiedsgerichtsbarkeit, Berlin 1990; Schwab/Walter,
Schiedsgerichtsbarkeit, Mnchen 2005; Solomon, Die Verbindlichkeit von Schiedssprchen in der
internationalen privaten Schiedsgerichtsbarkeit, Mnchen 2007; Spohnheimer, Gestaltungsfreiheit
bei antezipiertem Legalanerkenntnis des Schiedsspruchs, Tbingen, 2010; Walter, Die Vollstreckbarerklrung als Voraussetzung bestimmter Wirkungen des Schiedsspruchs, in: Gottwald/Prtting
(eds), FS-Schwab, 1990, p.539.
I.
A.
Para.
The Role of Recognition and
Enforcement in the Arbitration Process . . . 1
The Hazards of Misleading
Terminology . . . . . . . . . . . . . . . . . . . . . . . . . 4
B. Enforcement of Awards:
The Need for a Declaration of
Enforceability . . . . . . . . . . . . . . . . . . . . . . . . 7
II.
Para.
C. Recognition of Awards . . . . . . . . . . . . . . . 8
The German Provisions and the Model
Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
A. Differences Pertaining to the
Recognition and Enforcement of
Foreign Awards . . . . . . . . . . . . . . . . . . . . . 12
422
Para.
B. Differences Pertaining to Domestic
Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
III. Differences between the German
Regimes for Domestic Awards and
Foreign Awards . . . . . . . . . . . . . . . . . . . . . . . . . 16
I.
Para.
IV. The Declaration of Enforceability
under German Law . . . . . . . . . . . . . . . . . . . . . 18
V. Enforcement of Titles in Germany. . . . . . . 20
The Role of Recognition and Enforcement in the Arbitration Process1
1 The provisions on recognition and enforcement are a central element for the success of
arbitration. In general, parties will only perceive arbitration as a viable alternative to court
proceedings if the resulting award, despite the private nature of the dispute settlement
mechanism, will be accorded the same or at least equivalent effects as that of a state court
judgment. Of the various effects associated with a state court judgment, two are of primary
importance: first, the judgment may constitute the basis for subsequent enforcement proceedings, if it is not complied with voluntarily. Or, to use the German terminology for this
enforcement-related effect, it has the quality of a title for enforcement. Second, a judgment
ensures a measure of legal certainty in so far as it precludes that the same claims or issues can
be litigated again. This preclusive effect is often described by the Latin term res judicata.2
2 The rules governing recognition and enforcement define the circumstances and conditions
under which a state is willing to grant a private award these or any of the other effects of a
court judgment. In this respect, the term recognition and enforcement is usually used when
the focus is solely, or at least also on, the enforcement-related effects, i.e. the title quality
of the award. By contrast, the term recognition is primarily used in connection with the
non-enforcement related effects of an award, in particular its res judicata or preclusive effects.
3 Internationally, considerable harmonization has been achieved by the New York Convention
1958 (NYC), which has more than 145 Contracting States. Although it applies directly only
to the recognition and enforcement of foreign awards, it has also strongly influenced the provisions on the enforcement of domestic awards in the UNCITRAL Model Law (ML) and
most national arbitration laws. Irrespective of any difference in detail, in particular concerning
the grounds for refusal, the various arbitration laws generally follow the same basic approach
as ArticlesIII and V NYC: Awards will, in principle, be recognized and enforced unless one
of the few enumerated grounds is present. These narrow grounds primarily aim to ensure
that the award has been rendered procedurally in accord with the parties agreement and
that the minimum requirements of due process and procedural fairness have been observed.
By contrast, the material incorrectness of the award in general does not constitute a ground
to refuse its recognition and enforcement. Only where recognition and enforcement of the
award would be contrary to public policy may the content of the award itself be relevant.
1
2
The preclusive effects associated with a decision vary considerably. They range from the very narrow
German concept of res judicata which, in principle, only relates to the dispositive part of the judgments
but does not cover the underlying facts, to the much broader doctrine of estoppel in many common law
systems, where, under the heading of issue estoppel, determinations as to facts may also be binding for
subsequent proceedings; for a good overview see 71st ILA Berlin Conference Report (2004), Committee on International Commercial Arbitration, Interim Report: Res judicata and arbitration, pp.826 et seq.
Introduction to 1060, 1061 Krll
A.
423
The Hazards of Misleading Terminology
Unfortunately, the terminology used in this context is not coherent and, in two respects, of- 4
ten even misleading. First, the proceedings for the recognition and enforcement in the sense
of the New York Convention 1958 or 1060, 1061 Code of Civil Procedure (Zivilprozessordnung ZPO) must be clearly distinguished from enforcement proceedings in the proper
sense, often also referred to as execution proceedings. In most legal systems, the enforcement
of rights is a two-step process, involving two separate and different sets of proceedings.3 The
first stage is concerned with making a binding determination of whether an alleged right exists. The second stage, the enforcement proceedings in the proper sense, serves to execute
the findings of the first stage against a party or its property, where the judgment debtor has
not voluntarily complied. Proceedings for the recognition and enforcement of awards pursuant to the New York Convention 1958 or to 1060, 1061 ZPO, belong to the first stage.4
Normally,5 their purpose is to confer upon the award the status of a title for enforcement
which, in one way or another, is in most legal systems a necessary prerequisite for all types
of enforcement proceedings in the proper sense. Such conferral, which legally constitutes
the recognition of the awards enforcement-related effects, normally has to be requested in
special proceedings, either for a declaration of enforceability6 or for leave to enforce.7
This leads directly to the second point where the terminology used is often not very helpful. 5
The terms recognition and enforcement are regularly used as if they are always inextricably
linked. They are necessarily linked in so far as enforcement of an award necessarily entails
its recognition. However, the converse is not true: recognition of the non-enforcement
related effects of an award, in particular its res judicata effect, may occur even in the absence
of enforcement. German arbitration law clearly distinguishes between both concepts. This
distinction is particularly obvious in relation to domestic awards. For domestic awards, both
concepts are even regulated in different sections, with recognition in 1055 ZPO and enforcement in 1060 ZPO. The distinction largely reflects the different effects associated with
an award and the different purposes for which the award may be used.
Under German law, as in many other legal systems, it makes a difference whether a party 6
wants to use the award as a sword, i.e. to require its active enforcement, or whether it wants to
rely on the award as a shield, i.e. to prevent the re-litigation of issues already decided. While
special proceedings to obtain a declaration of enforceability are generally necessary to obtain
a sword, the recognition of non-enforcement related effects of an award occurs in many legal
systems automatically.
3
German law distinguishes between the Erkenntnisverfahren, regulated in the first seven books of the ZPO
and the Vollstreckungsverfahren, regulated in the 8th Book of the ZPO; for a clear separation of the two
stages see from other Model Law jurisdictions, Hong Kong Court of Final Appeal, 8 June 2010, FG Hemisphere Associates LLC v. Congo & Ors (Hemisphere), [2011] 1 H.K.C.F.A. 41 (C.F.A.) at paras 382 seq.;
Oberster Gerichtshof, 11 July 2012, Joint Stock Corporation v. Czech Republic, 3 Ob18/12m (Austria).
BGH 30.01.2013, Thailand v. Schneider (Walter Bau Decision) (2013) XXXVIII YCA 384, paras 10 et seq.
(special part of adjudication process); BeckOK ZPO/Wilske/Markert (2013), 1060 para. 16 (Ernenntnisverfahren besonderer Art).
Separate proceedings for the recognition of the other non-enforcement related effects of awards are rare
and in many legal systems, including German law, also not necessary as recognition occurs automatically.
This is the terminology used by the New York Convention 1958 (Art. V NYC), the UNCITRAL Model
Law (Arts 35, 36 ML) and the German law (1060, 1061 ZPO).
Requested for example under s. 66 English Arbitration Act 1996.
424
B.
Enforcement of Awards: The Need for a Declaration of Enforceability
7 In relation to the active enforcement of awards against a recalcitrant debtor, states will, in
general, not lend their enforcement powers to awards before having verified that the awards
accord with the minimum requirements of due process. Consequently, to allow for a preventive control, in most legal systems awards do not automatically have the quality of an
enforceable title, but rather must first be declared enforceable in special proceedings. Only
in few legal systems, e.g. Austria,8 are domestic awards considered to be enforceable titles
without having previously been declared enforceable. In the latter systems, the safeguards
contained in the national arbitration law are deemed to be sufficient to ensure that the minimum requirements of a fair arbitral procedure are met. Consequently, the legislature does
not consider any preventive control to be necessary before an award is given the quality of a
title capable of being enforced, i.e. executed, against the debtor or its property.
C.
Recognition of Awards
8 In principle, the non-enforcement-related effects of an award, in particular its res judicata effect, are recognized under the same conditions as exist for a declaration of enforceability. The
main difference is that in numerous legal systems, the recognition of these effects does not
require a special declaration rendered in specific recognition proceedings, but rather takes
place on an ad hoc basis whenever a party seeks to invoke or rely on the award in the course
of other judicial proceedings. Thus, a party may invoke the preclusive effects of an award,
associated with its status as res judicata or under the corollary doctrine of collateral estoppel,
as a defence in other proceedings initiated in the same matter or where the findings of the
award determine a prejudicial question, even if the award itself has not yet obtained enforceable status.
9 Courts or other public authorities examine whether grounds exist to refuse recognition; in
their absence, the res judicata effect or any other effect associated with an award is recognized.
In some legal systems, including Germany, these non-enforcement-related effects are automatically recognized on a statutory basis irrespective of whether grounds exist which would
justify the setting aside of an award (infra paras 14 seq.). The underlying rationale for this
distinction between the recognition of the title-quality, i.e. the awards enforceability, and
the recognition of other effects, in particular the awards various preclusive effects, is that the
former constitutes the basis for a direct action by the enforcement personnel of the state. In
contrast, this is not generally the case in regard to preclusive effects, where the award is only
used as a shield.
II.
The German Provisions and the Model Law
10 Chapter VIII of the 10th Book of the ZPO, regulating the recognition and enforcement of
awards in Germany, constitutes that part of the German arbitration law which, upon a purely
textual analysis, deviates the most from the Model Law. In particular, the German legislator
has adopted an approach that differs from that of the Model Law in two respects. First, the
Model Law contains a single regime for the recognition and enforcement of international
awards. It is irrelevant whether the place of arbitration has been in the enforcement state, i.e.
the award is a domestic international award, or whether it had been in a foreign country,
8
Riegler, Enforcement and Recognition of Arbitral Awards, in: Riegler/Petsche/Fremuth-Wolf/Platte/

Liebscher (eds.), Arbitration Law of Austria: Practice and Procedure 2007, pp. 694 et seq.
425
leading to a foreign award. By contrast, the German law regulates foreign and domestic awards
separately. Second, the Model Law provides in Article36 ML for a completely autonomous
national regime for the enforcement of foreign awards and provides its own list of grounds
for refusal which, in principle, operate alongside the New York Convention 1958 regime. German law, to the contrary, has largely abandoned the idea of an autonomous national regime
for the enforcement of foreign awards, as had existed under the old German law,9 in favour
of a general reference to the enforcement provisions under the New York Convention 1958.
In practice, the actual consequences of these deviations in approach are minimal, since the 11
crucial factors in the different regimes governing recognition and enforcement, viz. the possible defences against recognition and enforcement, are largely identical.
A.
Differences Pertaining to the Recognition and Enforcement of Foreign Awards
The differences between the Model Law regime and the German legal regime concern- 12
ing recognition and enforcement of foreign awards are minimal. The Model Law regime
in Article36 ML is largely a literal adoption of the enforcement regime of the New York
Convention 1958. The German law only deviates from the Model Law insofar as it has alleviated the formal requirements for applications to have an award declared enforceable. 1064
ZPO does not require parties to attach the arbitration agreement to the application and the
certification of the award is facilitated.10
B.
Differences Pertaining to Domestic Awards
Of slightly greater practical importance are the deviations in relation to the recognition 13
and enforcement of domestic awards. Concerning the recognition of the non-enforcement
related effects of domestic awards, in particular the res judicata effects, German law has traditionally been more favourable than the regime contained in the Model Law. Primarily to
maintain this more favourable treatment for domestic awards, the German legislator decided
to deviate from the uniform regime of the Model Law and to differentiate between domestic
and foreign awards.11
Under the Model Law regime, the recognition of an award, while it does not require special 14
proceedings, occurs on an ad hoc basis whenever the issue arises. Still, this effect depends on
the absence of any ground for refusing recognition and enforcement. By contrast, domestic
awards under German law are traditionally entitled to a kind of unconditional statutory recognition of their non-enforcement-related effects.12 Pursuant to 1055 ZPO, which replaces
the nearly identical language of 1040 ZPO pre-1998, every domestic13 award has the same
9
10
11
12
13
BGH 10.05.1984, NJW 1984, 2763 (2764); OLG Frankfurt 29.06.1989, RIW 1989, 911 (911 seq.) =
Yearbook XVI (1991), 546 (547 et seq.); Schtze/Tscherning/Wais (1990), para. 638; cf. infra, Krll,
1061 para.5.
BGH 25.09.2003, SchiedsVZ 2003, 281 (282) with note by Krll = note by Gebhard, IDR 2004, 42 =
IHR 2006, 125 = Yearbook XXIX (2004), 767 = (2004) Int.A.L.R. N-21; BayObLG 11.08.2000, RPS
2/2000, 10 (11) = RIW 2001, 140 (141) = Yearbook XXVII (2002), 451 (453); cf. infra, Krll, 1061
paras 24 et seq.; and infra, Schroeder/Wortmann, 1064 para. 2.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.60; for the legal consequences on the nature
of the different actions see Solomon (2007), pp. 359 et seq.
For details see Spohnheimer (2010), pp. 9 et seq.
The restriction to domestic awards, while not apparent from the wording, follows from the fact that
1055ZPO is not one of the provisions listed in 1025 (2) ZPO which also apply where the place of
arbitration is abroad.
426
effect between the parties as a final and binding court judgment. This general recognition
of the effects of an award, from which 1060 ZPO de facto excludes that of constituting a
title for enforcement, is not dependent on the absence of possible defects. Thus, until an
award has actually been set aside, it constitutes res judicata between the parties irrespective of
whether or not grounds exist which would justify setting it aside under 1059 ZPO.
15 As regards the enforcement of domestic awards, German law is more favourable than the
Model Law, which contains no time limit for raising defences. By contrast, under German
law, the three month time limit for setting aside proceedings also applies in relation to possible defences in proceedings for a declaration of enforceability. With the exception of the
defences that must be taken into account ex officio (1059 (2) No. 2 ZPO), a party is, pursuant to 1060 (2) sentence 3 ZPO, precluded from raising any defence which can no longer
form the basis of setting aside proceedings.
III. Differences between the German Regimes for Domestic Awards and Foreign
Awards
16 German law treats domestic and foreign awards differently in three fundamental respects.
The first two of these differences have already been identified in the foregoing comparison
between German law and the Model Law, i.e. the statutory recognition of domestic awards
(1055 ZPO) and the time limit for defences (1060 (2) sentence 3 ZPO). The third difference concerns the effects of rejection of an application for recognition and enforcement.
A courts refusal to declare a domestic award enforceable will normally result in setting aside
the award. By contrast, when a court rejects an application to have a foreign award declared
enforceable, the only consequence is a declaration that the award is not to be recognised
(1061 (2) ZPO) in Germany. This difference reflects the fact that German courts have no
jurisdiction to set aside a foreign award. 14
17 The decisive criterion for differentiating between domestic and foreign awards under German law is the place of arbitration. Awards rendered in proceedings which have their place
of arbitration in Germany constitute domestic awards in the sense of 1060 ZPO, while
all other awards fall under 1061 ZPO. The nationality of the parties, the law applicable
to the merits or the procedure are irrelevant in this context. The same enforcement regime
applies for domestic national awards, i.e. awards dealing with dispute without any foreign
element, as well as domestic international awards, i.e. awards where such an element exists
and sometimes the place of arbitration is the only connecting factor to Germany.
IV. The Declaration of Enforceability under German Law

18 The primary function of the declaration of enforceability is to convert the award into an
executory title. According to 794 (1) No. 4 (a) ZPO, it is not the award as such but the
declaration of enforceability that constitutes the required title for enforcement proceedings.
It follows from 1060 (1) ZPO15 that the proceedings for a declaration of enforceability are
not yet part of the enforcement proceedings, i.e. the proceedings executing the award, but a
14
15
OLG Bremen, 30.10.2008 2 Sch 2/08; OLG Thringen, 13.01.2011 1 Sch 1/08, Yearbook XXXVII
(2012), 220; MnchKommZPO-Mnch (2012), 1061 paras2, 28.
Notwithstanding that 1060 ZPO deals, in principle, only with domestic awards, the statement concerning the dividing line between enforcement proceedings proper and adjudication proceedings also applies
to foreign awards.
427
necessary precondition for the latter.16 The proceedings for a declaration of enforceability
constitute a special form of adjudication proceedings (Erkenntnisverfahren) for the creation
of an enforceable title.17
This has several consequences. First, in the absence of special regulations in 1060 et seq. 19
ZPO, the general rules for court proceedings may be applied where they do not conflict
with the special features of proceedings under 1060 ZPO.18 By contrast, the provisions
on enforcement proceedings in the 8th Book of the ZPO are not, in general, applicable.
In particular, the strict requirements imposed there in relation to the specificity and the
enforceable content of a title are not applicable in proceedings to have the award declared
enforceable. Second, a court is not prevented from declaring an award enforceable even if
the defendant has entered into insolvency proceedings after the award has been rendered.19
Insolvency proceedings exclude only enforcement measures in favour of single creditors, but
not any preceding acts that create an enforceable title. Third, states or state entities that have
submitted to arbitration cannot rely on their sovereign immunity in the proceedings to have
the award declared enforceable. The waiver of immunity contained in the submission to arbitration also covers these proceedings.20 Fourth, actions raising objections to the judgment
claim according to 767 ZPO (Vollstreckungsgegenklage) where admissible can only be
directed against the declaration of enforceability, not the award as such.
V.
Enforcement of Titles in Germany
Once a court has declared an award enforceable, the award or, to be precise, its declaration 20
of enforceability that constitutes the title for enforcement pursuant to 794 (1) No. 4 (a)
ZPO can be executed in enforcement proceedings like any other title. With the exception
of certain minimum funds necessary to fulfil the basic needs of daily life, the creditor may
enforce the award against the debtors entire property. The necessary steps for execution
of the title depend both on the content of the award and on the particular measure sought,
which depends in turn on the type of property against which the creditors want to execute.
An overview of enforcement proceedings in Germany can be found below in Part IV.21
16
17
18
19
20
21

Schwab/Walter (2005), Chap. 26 para.3; BGH 30.01.2013, Thailand v. Schneider (Walter Bau Decision)
(2013) XXXVIII YCA 384, paras 10 et seq.
BGH 27.03.2002, BB 2002, 963 = IHR 2003, 43 (legal representation); Musielak-Voit (2007), 1060
para.6 (legal representation).
OLG Dresden 25.09.1998 11 Sch 01/98; OLG Brandenburg 02.09.1999, RPS 1/2001, 21 = Yearbook
XXIX (2004), 697 (698).
See KG Berlin 16.02.2001, KGR Berlin 2001, 146 (148 seq.); OLG Frankfurt 08.07.1999 10 Sch 01/98;
that is in line with the practice in other states; see for example U.S.: Ipitrade International S.A. v. Federal
Republic of Nigeria, 465 F. Supp. 824 (D.D.C. 1978); Belgium: Cour dappel de Bruxelles (Court of Appeal
Brussels) 10.03.1993, (1993) 123 Clunet 444; for a more extensive overview of the case law under different national laws see Langkeit, Staatenimmunitt und Schiedsgerichtsbarkeit, Heidelberg 1989, pp.131
et seq.; Delaume, Sovereign Immunity and Transnational Arbitration, Arb.Int. 1987, 28 et seq. For details,
see Part IV, Nacimiento/Weissenborn/Escher/Lange, Investment Arbitration and the Participation of State
Parties in Germany.
For a more detailed description in English see Part IV, Rtzel/Krapfl, Enforcement of Decisions Declaring Awards Enforceable in Germany; cf. Rtzel/Wegen/Wilske (2005), pp.95 et seq.
1060 Domestic Awards

(1) Enforcement of the award takes place if it has been declared enforceable.
(2) An application for a declaration of enforceability shall be refused and the award set
aside if one of the grounds for setting aside under 1059 (2) exists. Grounds for
setting aside shall not be taken into account, if at the time when the application for
a declaration of enforceability is served, an application for setting aside based on
such grounds has been finally rejected. Grounds for setting aside under 1059 (2)
No. 1 shall also not be taken into account if the time limits set by 1059 (3) have
expired without the party opposing the application having made an application for
setting aside the award.
Short Bibliography: Berger, The Practice of Transnational Law, 2001; Bosch, Rechtskraft und
Rechtshngigkeit im Schiedsverfahren, Tbingen 1991; Lachmann, Handbuch fr die Schiedsgerichtspraxis, Kln 2008; Loritz, Probleme der Rechtskraft von Schiedssprchen im deutschen Zivilprozessrecht, ZZP 1992, 1; Mnch, Das Exequatur von Schiedssprchen: materielle Einwendungen
zur prozessualen Verteidigung?, in: Ishikawa/Lke/Mikami (eds), FS-Ishikawa, 2001, p. 335; Schlosser, Die Durchsetzung von Schiedssprchen und auslndischen Urteilen im Urkundsprozess und
mittels eines inlndischen Arrests, in: Gottwald/Prtting (eds), FS-Schwab, 1990, p.435; Schwab/
Walter, Schiedsgerichtsbarkeit, Mnchen 2005; Walter, Die Vollstreckbarerklrung als Voraussetzung bestimmter Wirkungen des Schiedsspruchs, in: Schwab/Waldner/Knzl (eds), FS-Schwab,
Pressath 1990, p. 539.
I.
II.
III.
IV.
V.
VI.
VII.
I.
Para.
Importance, Role and Basic Principles
of Enforcement Proceedings . . . . . . . . . . . . . 1
The Need for a Declaration of
Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Admissibility . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
B. Existence of a Domestic Award . . . . . . 14
C. Legitimate Legal Interest . . . . . . . . . . . . 20
D. Relation to other Proceedings . . . . . . . 25
E. Application . . . . . . . . . . . . . . . . . . . . . . . . . 27
Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Merits of the Application. . . . . . . . . . . . . . . . 34
Para.
B. Preclusion of Defences Exception
1059 (2) No. 2 ZPO. . . . . . . . . . . . . . . 36
C. Material Defences against the
Declaration of Enforceability . . . . . . . . 38
VIII. Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
B. Negative Decisions . . . . . . . . . . . . . . . . . . 41
C. Positive Decisions. . . . . . . . . . . . . . . . . . . 43
IX. Protective Measures . . . . . . . . . . . . . . . . . . . . 48
X. Legal Remedies against Declaration of
Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . 49
XI. Alternative and Concurring Legal
Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
XII. Costs of the Proceeding and Amount
in Dispute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Importance, Role and Basic Principles of Enforcement Proceedings1
1 1060 Code of Civil Procedure (Zivilprozessordnung ZPO) regulates the conditions

under which a domestic award may constitute the basis for enforcement proceedings, i.e.
proceedings to execute the dispositive part of the award against the debtor or its property. In
principle, pursuant to 1055 ZPO, an award has the same effect as a final and binding court
judgment. 1060 (1) ZPO, however, de facto limits this equation to the non-enforcement
1
1060 Krll
429
related effects of an award. Unlike a final and binding court judgment, the award does not ipso
jure constitute an enforceable title under 794 ZPO, which enumerates the decisions and
legal documents which may constitute the basis for enforcement proceedings. For the enforcement of an award, it is necessary that the courts grant leave for enforcement by declaring
the award enforceable. While it is left to the parties whether to apply for the setting aside of
an award and remove the other judgment-like effects of an award, in particular its res judicata
effect, the state will not, in general, lend its enforcement powers to awards before having
verified that they are in line with the minimum requirements of due process. 1060(1)ZPO
not only imposes the requirement of a declaration of enforceability, but at the same time
provides for the required power (1026 ZPO) to issue such a declaration.
The standard of the control exercised in the proceedings, i.e. the conditions under which 2
the declaration of enforceability may be refused, can be found in 1060 (2) ZPO. Its first
sentence declares that the grounds for setting aside in 1059 (2)ZPO constitute the relevant
yardstick. Sentences two and three ensure that no double control takes place. The control
possible in 1060 ZPO proceedings to have the award declared enforceable is harmonized
in relation to time limits and preclusion with that of setting aside proceedings under 1059
ZPO. Thus, where the defendant has not made use of the opportunity to challenge the award
in time, the control will be limited to the grounds listed in 1059 (2) No. 2 ZPO, which must
be taken into account ex officio. In the case that the defendant can prove the existence of a
ground to refuse a declaration of enforceability, this will not only result in the rejection of the
application but also in the setting aside of the award.
The procedure and the jurisdiction for proceedings under 1060 ZPO are regulated in 3
1063, 1065 ZPO and 1062 (1) No. 4 ZPO. The proceedings are not yet part of the
enforcement proceedings in the proper sense, but a necessary prerequisite for them.2
The effects of the proceedings under 1060 ZPO are limited to converting the award into 4
an enforceable title. It follows from 794 (1) No. 4 (a) ZPO that it is not the award as such
that constitutes the necessary title for the enforcement proceedings, but the declaration of
enforceability issued.3 For the actual enforcement, i.e. the execution of the dispositive parts of
an award against the debtors property, the additional requirements of enforcement proceedings according to 704 et seq.ZPO must be met. In particular, leave for execution must be
given under 724 et seq. ZPO.4
II.
Legislative History
1060 ZPO has no direct equivalent in the UNCITRAL Model Law (ML), which does not 5
contain a separate regime for the enforcement of domestic awards. Concerning its content,
the main difference to the regime in Article35, 36 ML is that 1060 ZPO is limited to the
declaration of enforceability. No recognition is necessary as domestic awards are statutorily
recognized (1055ZPO). Moreover, 1060 (2) sentence 2 and 3 ZPO provide for the
possible preclusion of defences which do not exist under the Model Law.5
2
3
4
For the distinction between the two types of proceedings and the effects of that see Introduction to
1060, 1061 paras 4, 18 seq.
BGH 28.10.1999 III ZB 43/99.
MnchKommZPO-Mnch (2013), 1060 para. 5; BGH 28.10.1999 III ZB 43/99; OLG Hamburg
26.05.2000, RPS 2/2000, 13 (14).
For details see Introduction to 1060, 1061 para. 15.
430
6 In relation to the old German arbitration law, the revision in 19986 has led to considerable
changes concerning the procedure. The old and sometimes cumbersome procedure for a
declaration of enforceability, requiring a full claims procedure, has been replaced by a facilitated procedure with limited means of recourse. Decisions are now always rendered in the
form of an order, with the consequence that an oral hearing is not mandatory and functional
jurisdiction lies with the Higher Regional Court (Oberlandesgericht OLG).
7 By contrast, the changes concerning the possible defences against the issuance of a declaration of enforceability are minor, despite the complete rewording of the current relevant
grounds for setting aside.7 Thus, the case law that deals with possible defences can still be
consulted as reference. However, what is new is the above mentioned preclusion of all defences which do not have to be taken into account ex officio after three months, pursuant to
1060 (2) sentence 3 ZPO.
III. The Need for a Declaration of Enforceability

8 The declaration of enforceability is only required for enforcement proceedings pursuant to
704 et seq. ZPO. 1055 ZPO clearly states that all other effects8 attached to a final and
binding judgement are operative with the rendering of the award. As a consequence, declaratory awards have their full effects once they are rendered without the need of a declaration
of enforceability.9 Also, the implicit declaratory effects connected with an award ordering
payment, i.e. the determination that a claim of payment exists, are immediately operative
with the rendering of the award.
9 It follows from the above that the award may form the basis for further official acts, such as
the entry into a public register, without the necessity of being declared enforceable. 1055
ZPO clearly states that, irrespective of any possibility of removing the effects of an award by
agreement, awards are not considered to be of a lesser quality in relation to their finality than
judgments.10
10 In principle, awards which change the legal situation (Gestaltungsschiedssprche) do not require a declaration of enforceability to bring about their full legal effects. The change of the legal situation effected by the award will occur once the award has been rendered.11 Exceptions
are awards replacing a declaration of will, such as e.g. the necessary consent for the conveyance
of property. They require a declaration of enforceability before this consent is considered
to be given. The relevant fiction in 894 ZPO, that the required declaration of consent is
replaced by a final judgment, is systematically part of the enforcement proceedings.12
6
7
8
9
10
11
12
For an overview of the different procedural formats for the declaration of enforceability since its codification see Stein/Jonas-Schlosser (2002), 1060 para.1.
For details see supra, Krll/Kraft, 1059 paras 5 and 10 et seq.
For these see supra, von Schlabrendorff/Sessler, 1055 para. 3.
Schwab/Walter (2005), Chap. 28 para.19; Musielak-Voit (2013), 1060 para.3; Stein/Jonas-Schlosser
(2002), 1060 para. 2; cf. Bosch (1991), pp. 54 et seq.; Walter, FS-Schwab (1990), pp. 539 (555 et
seq.); Loritz, ZZP 1992, 1 (18); for a different view BayObLG 24.02.1984, BayOblGZ 1984, 45 (47) =
BB1984,74.
Walter, FS-Schwab (1990), pp.539 (552 et seq.).
Controversial MnchKommZPO-Mnch (2013), 1060 para.5; Musielak-Voit (2013), 1060 para.2;
Lachmann (2008), para.2398; cf. Walter, FS-Schwab (1990), pp.539 (556 et seq.); Bosch (1991), pp.56
et seq.; for a different view OLG Dresden 08.05.2001, RPS 1/2001, 22 = CLOUT case No. 444; Stein/
Jonas-Schlosser (2002), 1060 para.2; Loritz, ZZP 1992, 1 (18).
1060 Krll
431
While the declaration of enforceability is a necessary requirement for enforcement proceed- 11

ings, the opposite is not true. The declaration of enforceability has a second effect not related
to enforcement. Pursuant to 1059 (3) sentence 4 ZPO, it excludes further setting aside
proceedings against the award. In effect, the determination that no grounds for setting aside
exist, inherent in a decision to declare the award enforceable, has res judicata effect. Under the
new law, however, this effect has lost much of its previous importance. The pre-1998 German
arbitration law did not contain any time limit for setting aside proceedings. Consequently,
a declaration of enforceability was the only way to remove any doubts as to the continued
persistence of an award, excluding setting aside proceedings. Under the new law, 1059 (3)
sentence 1 ZPO now excludes the possibility of initiating setting aside proceedings after the
expiry of a three month time limit. Thus, the positive preclusion effects of the declaration
of enforceability are largely restricted to those rare cases where the declaration is obtained
before the expiration of the three month time limit.
IV. Admissibility
A.
General Principles
The admissibility of applications to have an award declared enforceable must be examined 12

by the courts ex officio.13 The burden of proof for the admissibility of the application lies with
the applicant.14
Besides the special requirements for admissibility arising from 1060, 1062 et seq. ZPO 13
(existence of a domestic award; correct application), the general requirements for the admissibility of court proceedings also have to be fulfilled where they are compatible with the
provisions of the 10th Book. These include, inter alia, the ability to be a party to the proceedings and to take the necessary procedural steps, jurisdiction of the court and a legitimate
interest in the proceedings. Functional and local jurisdiction for proceedings under 1060
ZPO lie with the OLG designated in the arbitration agreement or, in the absence of such a
designation, with the OLG in whose district the place of arbitration is located (1062 (1)
No. 4 ZPO).15
B.
Existence of a Domestic Award
In principle, proceedings for a declaration of enforceability are only admissible for awards 14
meeting the formal requirements of 1054 ZPO. With regard to the formal requirements,
courts in general have adopted a very lenient standard. Thus, a mere calculation or a list of
items may constitute an enforceable award where the underlying ruling can be deduced
by interpretation.16 The lack of signatures does not prevent the issuance of a declaration of
13
14
15
16
Schwab/Walter (2005), Chap. 27 para.6; MnchKommZPO-Mnch (2013), 1060 para.7.

For details see infra, Krll, 1061 paras 8 et seq.
BayObLG 14.12.1998, RPS 1/1999, 17; for the internal allocation of tasks see OLG Dsseldorf 15.07.2002,
IDR 2002, 44 (cartel senate if violation of public policy due to infringement of competition law alleged);
for details see infra, Schroeder/Wortmann, 1062 para.4.
BayObLG 10.07.2003, BayObLGR 2003, 370 (371 seq.) = EWiR 2003, 999 with note Geimer = DB
2003, 2545; however, see BayObLG 13.05.2003, MDR 2003, 1132 seq. (denied for an award of a tribunal
provided for in the statutes of an association statutes did not clearly rule out recourse to the ordinary
courts).
432
enforceability if reasons for their missing are given.17 Moreover, existing defects may be cured
by the end of the proceedings to have the award declared enforceable. Therefore it is, for
example, sufficient if a party has received the award in the course of the proceedings.18
15 The awards must be final and not open to review by a higher arbitral instance. Thus, where
the applicable arbitration rules allow for a second instance, awards of the first instance may
only be declared enforceable if an appeal is excluded, e.g. because the time limit foreseen for
the appeal has expired. Partial awards may be declared enforceable, though in cases where
a counterclaim is still pending, the court may limit enforcement of the partial award to the
possibility of attachment, ensuring later execution when the decision on the counterclaims
has been rendered.19
16 Void awards containing orders which are obviously illegal, beyond the arbitral tribunals
jurisdiction or which are obviously contradictory or senseless are not possible subjects for
proceedings for leave for enforcement.20 By contrast, it is not required that the award has an
enforceable content.21
17 Preliminary rulings, in which the arbitral tribunal confirms its jurisdiction, are not considered
to constitute awards in the sense of 1060 ZPO.22 However, where they contain a decision
on costs, the latter may be declared enforceable.23 Different views exist as to the treatment
of awards in which the arbitral tribunal determines only the liability of a party, leaving the
decision on quantum for a separate award or reserves the decision on the claim for set-off for
a later stage of the arbitral proceedings. Contrary to the prevailing view under German law,24
such awards should be open to the declaration of enforceability. They constitute final awards
on these separate questions, which are intended to be binding on the arbitral tribunal and
the parties.25
18 Settlements concluded in the course of the arbitral proceedings may only be declared
enforceable under 1060 ZPO when they are recorded in the form of an award on agreed
terms.26 Such awards on agreed terms are treated like any other award in regard to a possible
declaration of enforceability.27
17
18
19
20
21
22
23
24
25
26
27
OLG Kln 24.04.2006 -9 Sch 15/05 (refusal to sign based on arbitrators discontent with award); but see
also id. 15.01.2004 9 Sch 17/03 (signature of chairman not sufficient despite agreement of the parties).
OLG Karlsruhe 29.11.2002 9 Sch 1/02.
BGH 30.11.1961, ZZP 1962, 119 (120) with note Schwab; Stein/Jonas-Schlosser (2002), 1060 para.7.
Controversial BGH 30.03.2006, IHR 2006, 129 = SchiedsVZ 2006, 278 et seq.; BayObLG 27.07.1999,
BB 1999, 1948 = RPS 2/2000, 14; for a different view see Musielak-Voit (2013), 1060 para.2.
BGH 18.01.2007 III ZB 35/06, in connection with a foreign award.
Stein/Jonas-Schlosser (2002), 1060 para.4; Schwab/Walter (2005), Chap. 26 para.5; Lachmann (2008),
para. 2408; Schmidt, Der Schiedsspruch, SchiedsVZ 2013, 32 (40), BeckOK ZPO/Wilske/Markert
(2013), 1060 para. 3; cf. BGH 07.10.1953, BGHZ 10, 325 (326) case where the decision on the set-off
claim was reserved for a second award.
Berger (2001), p.411.
OLG Saarbrcken 06.11.2002 4 Sch 2/04; OLG Frankfurt 14.03.2003, SchiedsVZ 2003, 288; OLG
Mnchen 21.02.2007 34 Sch 01/07.
Voit, ZZP 2001, 355 et seq. = (2002) Int.A.L.R. N-12; cf. Mankowski, Der Schiedsspruch mit vereinbartem Wortlaut, ZZP 2001, 37 et seq.
1060 Krll
433
Binding decisions rendered in the context of other dispute settlement mechanisms cannot 19
be declared enforceable under 1060 ZPO.28 Where such decisions are rendered in the form
of an award and objections are raised, the decisions may be set aside for the lack of a valid
C.
Legitimate Legal Interest
A legitimate legal interest is a prerequisite for all types of court proceedings in Germany, 20
primarily to avoid the waste of public resources. In relation to proceedings to have an award
declared enforceable, the mere willingness of the liable party to comply voluntarily with
the awards dispositive parts is not a sufficient ground for rejection of a legitimate interest
in such proceedings. Until the award has been completely fulfilled, a party has an interest in
converting the award into an enforceable title.30 Equally, it is not necessary that the obligation
arising from the award is already due31 or that the debtor has threatened not to comply with
a desist order.32 In such cases, the other party may be able to rely on 93 ZPO burdening the
applicant with the costs of the proceedings, provided that it immediately acknowledges the
claim and has given no ground to doubt its willingness to fulfil the award. For the latter, however, strict requirements apply, which must be complied with by the defendant.33 In several
decisions, courts have granted an award debtor two weeks to comply with the award before
they have awarded costs against the debtor.34 In general, a legitimate legal interest in having an
award or parts of an award declared enforceable is lacking if the defendant has undisputedly
performed what it was ordered to perform.35
Different views exist as to whether a legitimate legal interest in proceedings to have an award 21
declared enforceable presupposes that there is at least the possibility of future enforcement
proceedings. Parts of the literature and some courts make the existence of the required
28
29
30
31
32
33
34
35
BayObLG 13.05.2003, MDR 2003, 1132; OLG Naumburg 17.04.2000 10 Sch 01/00 (1) (conciliation
board of the district Schlichtungsausschsse des Kreisverbands); OLG Frankfurt 20.12.2005, BauR 2006,
738; OLG Mnchen 13.01.2011 34 Sch 24/10 (Schiedsgutachten) for the relevant criteria see OLG
Mnchen, 24.08.2010 34 Sch 21/10 (abrufbar bei juris) supra, Wagner, 1025 paras 8 et seq.
OLG Naumburg 20.05.2005, SchiedsVZ 2006, 103; for a different view OLG Frankfurt 20.12.2005, BauR
2006, 738; (only rejection of application as inadmissible) overruled by BGH 10.03.2007, SchiedsVZ
2007, 160 et seq.; OLG Naumburg 17.04.2000 (rejection as unfounded); for details see supra, Krll/Kraft,
OLG Dresden 09.02.2005 11 Sch 03/04; BayObLG 11.11.2004 4 Z Sch 19/04; OLG Mnchen
01.02.2008 34 Sch 18/07; id. 01.08.2011 34 Sch 16/11; OLG Koblenz 24.02.2011 2 Sch 11/10.
OLG Naumburg 08.06.2010 10 Sch 2/10, SchiedsVZ 2011, 277; OLG Mnchen 22.01.2010 23 Sch
25/08; the same applies in cases where payment has to be effected in several instalments OLG Mnchen
02.12.2010 34 Sch 26/10.
OLG Stuttgart 13.10.2008 1 Sch 2/08.
OLG Frankfurt 25.07.2005 26 Sch 07/05; id. 31.05.2001, RPS 1/2001, 23; OLG Dresden 09.02.2005
11 Sch 03/04; id. 17.11.2008 11 Sch 06/08; BayObLG 11.11.2004 4 Z Sch 19/04; OLG Mnchen
21.08.2008 34 Sch 07/08; for a case where 93 ZPO was applied see KG Berlin 10.05.2007 20 Sch
14/06 (application one day after the award was rendered despite previous statements that debtor would
comply with the award).
OLG Mnchen 05.01.2010 34 Sch 07/07; OLG Frankfurt 30.03.2010 26 SchH 15/09, but see OLG
Dresden 24.02. 2009 11 Sch 01/09 (right for direct application).
BayObLG 11.11.2004 4 Z Sch 19/04; OLG Mnchen 10.04.2008 34 Sch 25/077; id. 30.10.2008 34
Sch 14/08; see also for partial payments OLG Mnchen 02.12.2010 34 Sch 26/10; for the allocation of
costs in case of payment after filing but before service of an application see OLG Mnchen 13.01.2010
34 Sch 20/09.
434
legitimate legal interest dependent on such a potential for enforcement. Consequently, they
reject a legitimate interest in the case of declaratory awards or awards which obviously lack
the necessary specificity to constitute the basis for enforcement proceedings.36 The same
applies where there are no assets for enforcement in Germany and it is not likely that there
will be assets in the near future. The underlying rationale for this view is that proceedings
for a declaration of enforceability are primarily intended to create the necessary title for
enforcement proceedings. The very limited preclusion effect additionally associated with a
declaration of enforceability under the new law is not considered to be sufficient to justify a
legitimate interest.
22 However, the better view, endorsed by the Federal Court of Justice (Bundesgerichtshof
BGH),37 is to make the legitimate interest in a declaration of enforceability independent of
an enforceable content of the award. By including 1059 (3) sentence 1 and 4 ZPO, both
of which have no direct equivalent in the Model Law or the old German law, the legislature
has provided for two situations in which any further setting aside proceedings are excluded:
first, by the expiry of the time limit according to 1059 (3) sentence 1 ZPO and second,
by a declaration of enforceability pursuant to 1059 (3) sentence 4 ZPO. Unlike a mere
exclusion of setting aside proceedings by the expiry of the time limit, the latter alternative
contains an at least implicit positive declaration by the state courts that the award is the result
of fair and equitable arbitral proceedings and that its content is not contrary to public policy.
It carries an additional moral value which may encourage compliance with the findings of the
award and thereby contribute to legal certainty. Furthermore, in light of the divergent views
as to when the legal changes ordered by the arbitral tribunal become effective, a party may
have an interest in a declaration of enforceability to exclude any uncertainty attached to this
issue. As a consequence, a declaration of enforceability may also be requested for declaratory
awards, awards which ipso jure change the legal situation and other awards, the operative part
of which is not sufficiently specific to constitute the basis for enforcement proceedings.38 For
this reason, it is also irrelevant whether the defendant has assets in Germany which could be
the subject of execution. An application cannot be rejected on the ground that enforcement
in a different state would be more convenient.39
23 In the case of awards ordering payment in instalments, the legitimate legal interest for a
declaration of enforceability is not limited to instalments already due. Irrespective of whether
there are indications of non-payment of future instalments, a party has an interest in having
the whole award declared enforceable. 751 ZPO, which makes the actual enforcement of
36
37
38
39
Musielak-Voit (2013), 1060 para.2; MnchKommZPO-Mnch (2013), 1060 para.8; Zller-Geimer

(2014), 1060 paras6 and 7 (but action for declaration that no ground for setting aside exists possible);
cf. KG Berlin 27.05.2005, SchiedsVZ 2005, 310 (311); OLG Frankfurt 03.01.2002 16 Sch 02/01 (not
for declaration concerning the rejection of a claim); id. 10.04.2006 26 Sch 01/06; cf. under the old law
BGH 22.12.1960, KTS 1961, 31 voiced considerable doubt as to whether a consent can be assumed
pursuant to 894 (1) sentence 1 ZPO before the award has been declared enforceable and made clear
that at least a legal obligation to that extent exists.
BGH 30.03.2006, IHR 2006, 129 = SchiedsVZ 2006, 278 et seq. (overruling KG Berlin 27.05.2005,
SchiedsVZ 2005, 310).
BGH 30.03.2006, SchiedsVZ 2006, 278 et seq.; cf. BayObLG 27.07.1999, BB 1999, 1948 = RPS 2/2000,
14 (lack of specificity); OLG Mnchen 31.01.2008 34 Sch 13/07 (Lack of specificity); BayObLG
28.05.2003 4 Z Sch 10/03 (declaratory content); OLG Celle 09.09.2003 8 Sch 07/03 (declaratory
content); OLG Koblenz 07.02.2008 2 Sch 1/08; Stein/Jonas-Schlosser (2002), 1060 para.2; Lachmann
(2008), para.2407; Schwab/Walter (2005), Chap. 26 para.7.
1060 Krll
435
decisions dependant on the instalment being due, does not apply to proceedings for a declaration of enforceability.40
The legal interest may be lacking where the findings of the award affect a third party and not 24
the defendant in the proceedings.41
D.
Relation to other Proceedings
The existence of setting aside proceedings under 1059 ZPO does not affect the admissibil- 25
ity of (and particularly not the legal interest in) proceedings to have an award declared enforceable.42 The possibility to apply by way of counterclaim in the setting aside proceedings
for a declaration of enforceability does not exclude a legitimate legal interest in the initiation
of separate proceedings.43
Proceedings in a foreign country to have the award declared enforceable in that country 26
concern a different issue in dispute. Consequently, they have neither lis alibi pendens nor res
judicata effect.44
E.
Application
The application must be made in writing or may be put on record at the court registry 27
(1063 (4) ZPO) without the need for counsel. It must be accompanied by the original or
a certified copy of the award.45 Awards rendered in a foreign language, at least their operative
part, should be translated.46 Moreover, it is advisable to include that operative part into the
wording of the application. Any problems which may arise from a badly worded declaration
of enforceability may thereby be avoided.47
In general, applications will be interpreted to extend only to those parts of the awards in 28
which a party has prevailed, even if they do not contain explicit limitations to this effect.
In the absence of indications to the contrary, it cannot be assumed that a party intends to
make applications to its own detriment.48 Consequently, the part of the award with which the
party did not prevail should not be taken into consideration when determining the amount
in dispute that is the basis for the calculation of the costs of the proceedings.49 That part may
be the object of separate applications. In particular, the other party is required to apply for
the setting aside of the award, if it wants the award to be set aside in toto. Equally, where
40
41
42
43
44
45
46
47
48
49
OLG Mnchen 08.03.2007 34 Sch 28/06; cf. in connection with foreign awards OLG Karlsruhe
23.11.2004 9 Sch 01/04.
OLG Kln 21.09.2004 9 Sch 7/04.
OLG Stuttgart 04.06.2002, IDR Beilage 3, RIW 2002, 44 (45).
See for example OLG Bremen 04.12.2004 (2 Sch 2/04) award declared enforceable after the action for
setting aside had been rejected in separate proceedings OLG Bremen 04.12.2003 (2 Sch 2/03).
OLG Hamburg 23.01.2003, SchiedsVZ 2003, 284 (286); Zller-Geimer (2014), 1060 para.29.
For details see infra, Schroeder/Wortmann, 1064 para. 5.
For the wording of an application see the Model Application in Annex III 5.
KG Berlin 22.03.1928, JW 1929, 143; OLG Kln 18.03.1969, KTS 1970, 52 seq. (with further reference);
OLG Frankfurt 26.06.2003 1 Sch 01/02; OLG Kln 30.03.2004 (9 Sch 02/04); OLG Karlsruhe
29.11.2002 9 Sch 7/04; Lachmann (2008), para.2468.
OLG Kln 18.03.1969, KTS 1970, 52 seq. with further references; OLG Hamburg 28.03.1958, NJW
1958, 1046 (1047); cf. OLG Brandenburg 20.12.2004 7 SchH 1/04.
436
the award has already been partially performed and that is mentioned in the application, the
latter should be interpreted to cover only the remaining parts of the award.50
29 In all other cases, the defendant merely has to object to the declaration of enforceability, as
the court will set aside the award ex officio.51 In the course of enforcement proceedings, applications for setting aside the award are generally interpreted as constituting mere objections
to the declaration of enforceability.52
V.
Parties
30 In general, the parties mentioned in the award are also the appropriate parties in proceedings
to have the award declared enforceable. In cases of legal succession, the application can, in
principle, also be made by or against the successor. Though 727 ZPO which permits the
issue of the declaration of enforcement53 directly in favour of or against a successor only
directly covers enforcement proceedings proper, the underlying rationale is also applicable
in proceedings under 1060 ZPO.54 Succession can be proven by any means and not only
by the documents foreseen in 727 ZPO.55 While the dissolution of legal persons and their
extinction from the register in general excludes the admissibility of proceedings for a declaration of enforceability, the initiation of insolvency proceedings does not, in general, do so.
Proceedings may be brought against the insolvency administrator.56
VI. Procedure
31 The procedure is regulated primarily in 1063, 1064 ZPO. In addition, the general principles of procedure apply as far as they are compatible with the specific requirements of the
10th Book.57 All parties must have the opportunity to present their case. An oral hearing is
only required where grounds for setting aside are to be considered.
32 From the time an oral hearing has been ordered, the parties must be represented by counsel.
However, in case there is no proper representation at the hearing the provisions on default
decisions are not applicable but the court will decide on the basis of the existing written
submissions.58
50
51
52
53
54
55
56
57
58
OLG Naumburg 08.06.2010 10 Sch 2/10, SchiedsVZ 2011, 277.

OLG Frankfurt 11.09.2008 26 Sch 12/08; id. 17.11.2008 26 Sch 19/08 which even considered applications for setting aside to be inadmissible.
OLG Naumburg 21.05.2004 = (2006) Int.A.L.R. N-61.
For the distinction between the declaration of enforceability and the declaration of enforcement see Part
IV, Rtzel/Krapfl, Enforcement of Decisions Declaring Awards Enforceable in Germany, paras 24 et seq.
BGH 06.03.1969, KTS 1970, 30 (32) = BB 1969, 892 = WM 1969, 671; cf. OLG Mnchen 22.01.2007
34 Sch 18/06.
OLG Mnchen 12. 11. 2009 34 Sch 17/09.
For details see infra, Krll, 1061 paras 31 et seq., especially para. 33.
Lachmann (2008), para.2477; Zller-Geimer (2014), 1060 para.3.
BGH 23.02.2006, SchiedsVZ 2006, 161 = IHR 2006, 125 = (2006) Int.A.L.R. N-59; Lachmann (2008),
paras 2484 seq.; cf. Stein/Jonas-Schlosser (2002), 1063 para. 8a; Schwab/Walter (2005), Chap. 28
para.10; for a different view BayObLG 24.02.1999, RPS 2/2000, 24 = BayObLGZ 1999, 55 = NJW-RR
2000, 807 = CLOUT case No. 437 (rejection of application where applicant did not repeat his application in the oral hearing); for details see infra, Schroeder/Wortmann, 1063 paras 6 et seq.
1060 Krll
437
Security for costs may not be requested by the respondent.59 It would be contrary to the 33
legislative intention to burden the facilitated procedure for a declaration with an obligation to
provide security for costs. This is even more so as in light of the general rule that the declaration should be granted the defendant may well be considered to be the true claimant.60
VII. Merits of the Application

A.
General Principles
The wording and the structure of 1060 (2) ZPO state clearly that a declaration of enforce- 34
ability should, in general, be granted and refusal of the application should be the exception.
The requested declaration may only be refused if one of the grounds for setting aside under
1059 (2) ZPO exists. Consequently, the court may, in principle, only review whether the
arbitral proceedings that led to the award were in line with the agreement of the parties
and the basic principles of a fair trial. A rvision au fond is prohibited and the content of the
award may only justify a refusal of the declaration of enforceability if the enforcement would
be contrary to public policy.61 Existence in the sense of 1060 (2) ZPO requires, for the
grounds in 1059 (2) No. 1 ZPO, that they have to be pleaded by the defendant while the
grounds in 1059 (2) No. 2 ZPO will be taken into account by the court ex officio.62 The
burden of proof for all grounds rests, however, with the party trying to resist enforcement.
An exception from this general allocation of the burden of proof is made, according to the
prevailing view, for the conclusion of the arbitration agreement, which is to be proven by the
applicant.63
Problems which may be encountered in subsequent enforcement proceedings, such as the 35
lack of specificity, are as such not grounds for resisting enforcement.64
B.
Preclusion of Defences Exception 1059 (2) No. 2 ZPO
Pursuant to 1060 (2) sentence 2 ZPO, grounds for refusal shall not be taken into account 36
where an application to set aside an award based on them has already been rejected. On the
basis of a literal understanding of 1060 (2) sentence2ZPO, the rejection of an action to
set aside an award would always result in a preclusion of the grounds in 1059 (2) No. 2
ZPO, as they have to be taken into account ex officio even when not pleaded by the parties.65
In practice, courts will, however, only examine the existence of such grounds where the facts
submitted by the parties provide for incidences for their presence. To avoid cases where the
59
60
61
62
63
64
65
OLG Stuttgart 20.09.2001, Yearbook XXIX (2004), 729 (731) relying on BGH 22.09.1969, BGHZ 52,
321 (324 seq.).
Schwab/Walter (2005), Chap. 27 para.10. For details see infra, Krll, 1061 para. 40.
For a detailed discussion of the various grounds see supra, Krll/Kraft, 1059 paras 55 et seq.and infra,
Krll, 1061 paras 59 et seq.
BGH 15.07.1999, BGHZ 142, 204 = NJW 1999, 2974; Schwab/Walter (2005), Chap. 27 para.8; Stein/
Stein/Jonas-Schlosser (2002), Annex 1061 para.74; cf. infra, Krll, 1061 para.51.
See e.g. OLG Mnchen 08.12.2011 34 Sch 25/08 where the award was first declared enforceable but the
subsequent request to enforce it was rejected since the dispositive part did not comply with the specificity
requirements of the law of execution.
In favour of such a view Lachmann (2008), para.2429 (grounds only relevant where there existence was
discovered after the termination of the setting aside proceedings); BeckOK ZPO/Wilske/Markert (2013),
1060 para. 6.
438
parties in setting aside proceedings have not submitted the necessary factual basis for such an
examination, awards must be declared enforceable, though one of the grounds in 1059 (2)
No. 2 ZPO is fulfilled. 1060 (2) sentence 2 ZPO must be interpreted narrowly. Therefore,
it only excludes reliance on the grounds to be taken into account ex officio if they have actually been considered in the setting aside proceedings.66 The public interest in avoiding the
enforcement of awards that are contrary to public policy must prevail over the interest in
precluding a party from pleading selectively.
37 Pursuant to 1060 (2) sentence 3 ZPO, the various grounds under 1059 (2) No.1 ZPO
may also be precluded where they have not been raised within the three month time limit of
1059 (3) ZPO, either in setting aside proceedings or as defences in earlier but later abandoned proceedings under 1060 ZPO. By contrast, the non-arbitrability of the dispute and
public policy may also be raised in enforcement proceedings after the expiration of the time
limit. The preclusion under 1060 (2) sentence 3 ZPO is limited to the grounds in 1059
(2) No.1ZPO and does not extend to those in 1059 (2) No. 2 ZPO, even if they are based
on identical facts.67 Where such grounds are found to exist in enforcement proceedings, the
award will be set aside, though, in principle, the initiation of separate setting aside proceedings would be time barred. This is of particular importance for the grounds for an action for
a retrial, which may only be discovered after the three month period has expired. As they fall
under the public policy defence, they may be raised at any time in proceedings to have the
award declared enforceable.68
C.
Material Defences against the Declaration of Enforceability
38 The extent to which substantive defences against the judgment claim, such as the fulfilment
of the award or a set-off, can be raised in addition to those defences listed in 1059 (2) ZPO
as defences in the proceedings to have the award declared enforceable is highly controversial.
Based on grounds of procedural efficiency, the prevailing view is that such defences, which
may be the object of a separate action pursuant to 767 ZPO against the title in the enforcement proceedings, can be already availed of in the proceedings to have the award declared
enforceable.69 Unlike the defences in 1059 ZPO, they do not lead to the setting aside of the
award but merely prevent the declaration of enforceability. In light of the legislative intent
and the role of the declaration of enforceability in the arbitration system, the better view is,
however, to refer such defences to the enforcement proceedings in the proper sense, unless
66
67
68
69

by Voit, ZZP 2001, 355 et seq. = (2002) Int.A.L.R. N-12; Schwab/Walter (2005), Chap. 27 para.9.
BGH 08.11.2007, SchiedsVZ 2008, 40 (43) after it had originally left the question open in BGH
10.08.2000, WM 2000, 1972; OLG Hamm 20.06.2001, OLGR Hamm, 335 (336 et seq.) = NJW-RR
2001, 1362 (1362 seq.) (set-off allowed); OLG Dresden 09.02.2005 11 Sch 03/04 (allowed for the
defence of fulfilment of the award); id. 20.04.2005, SchiedsVZ 2005, 210 (213) (finally denying because
arbitral tribunal had ruled on the set-off claim); Musielak/Voit (2013), 1060 para. 12; MnchKommZPO-Mnch (2013), 1060 paras 34 and 35; Mnch, FS-Ishikawa (2001), 335 (355); for the resulting
questions concerning the action pursuant to 767 ZPO BeckOK ZPO/Wilske/Markert (2013), 1060
paras 13 seq.
1060 Krll
439
they are uncontested. They are an element unknown to the proceedings under 1060 ZPO
and to consider them generally admissible would lead to considerable systematic frictions.70
It is, however, generally accepted that such material defences may only be raised in court 39
proceedings for a declaration of enforceability if they are not by themselves covered by an
arbitration clause. That is often the case for the defence that the award has already been
complied with.71 Equally, it is required that such defences could not have been raised in the
arbitration proceedings. For the set-off defence, the relevant time is not the declaration of
a set-off but when the award debtor had knowledge about the facts justifying the set-off.72
A defence, which according to the jurisprudence of the BGH may be raised in exequatur
proceedings, is the insolvency administrators right to avoid certain transactions concluded
by the debtor.73
VIII. Decision
A.
General Principles
The decision is rendered in the form of an order (1063 (1) ZPO). As a complaint on a point 40
of law may be brought to the BGH, the decision must contain the necessary factual basis to
allow for such recourse. It is not necessary that the facts are stated in a separate statement
of facts; they may also be contained in the courts reasoning or even in the arbitral award to
which the decision should then refer.74 The order must be served on the parties pursuant to
329 (2), (3) ZPO and becomes effective with service.
B.
Negative Decisions
The application will be rejected if it is either inadmissible, the defendant has successfully 41
raised (uncontested) material defences against the judgement claim or one of the grounds
for refusal under 1059 ZPO is found to exist. In the first two cases, the decision will, in
general, be limited to a mere rejection of the application.75 As such, the award remains valid
and continues to have res judicata effect between the parties. Only where grounds for refusal
under 1059 (2) ZPO are found to exist will the award additionally be set aside, irrespective
of whether a separate action for setting aside would have been time barred. The setting aside
will occur automatically, without the need for an application to this effect. It is, however,
limited to that part of the award which has been the subject of the proceedings to have the
award declared enforceable.
70
71
72
73
74
75
BayObLG 12.04.2000, BayObLGZ 2000, 124 = JZ 2000, 1170 with critical note Wagner = MDR 2000,
968 with approving note Weigel = (2003) Int.A.L.R. N-12; OLG Stuttgart 04.10.2000, OLGR Stuttgart
2001, 50 (51 et seq.) = MDR 2001, 595 (596), Borris/Schmidt, Vollstreckbarkeit von Schiedssprchen
und materiellrechtliche Einwendungen des Schiedsbeklagten, SchiedsVZ 2004, 276 (278 seq.); Peters,
Materielle Einwendungen gegen den Schiedsspruch, JZ 2001, 598; Nelle (2000), pp.576 et seq. For a
more detailed analysis see infra, Krll, 1061 paras160 et seq.
OLG Mnchen 01.02.2008 34 Sch 18/07.
OLG Mnchen 01.02.2008 34 Sch 18/07.
BGH 17.01.2008, SchiedsVZ 2008, 148; critical comment by Wagner, Insolvenz und Schiedsverfahren,
KTS 2010, 39 (49 seq.).
BGH 15.07.1999, BGHZ 142, 204 (207) = NJW 1999, 2974 (2975).
Schwab/Walter (2005), Chap. 28 paras 1 et seq.; MnchKommZPO-Mnch (2013), 1060 paras7 and 35;
BayObLG 19.11.2001, NJW-RR 2002, 934 (935) = BayObLGR 2002, 94 (lack of local jurisdiction of
the BayObLG); OLG Dresden 09.02.2005 11 Sch 03/04; for the res judicata effect of rejecting decision
barring an second application OLG Celle 09.02.2004 8 Sch 01/04.
440
42 The option to remit the case back to the arbitral tribunal is not explicitly provided for. 1059
(4) ZPO directly regulates only the power to remit the dispute where the award has been set
aside in the framework of setting aside proceedings. There are, however, good arguments to
the extent that such power also exists in cases where the set aside occurs as the result of an
unsuccessful application to have an award declared enforceable.76 The situation is the same
for the parties and, at least in cases where both parties agree to such remittance, it should be
allowed.77
C.
Positive Decisions
43 In practice, in the vast majority of cases, the requested declaration of enforceability will be issued. Notwithstanding misleading formulations sometimes used in practice, the declaration
does not only declare the award provisionally enforceable.78 The declaration of enforceability,
as such, then constitutes the title for enforcement pursuant to 794 (1) No. 4 (a) ZPO. In
general, the declaration of enforceability is a verbatim adoption of the awards operative part
(Tenor). Where the latter contains obvious clerical errors, is not sufficiently clear or not specific enough to allow for later enforcement proceedings, such defaults may be cured in the
decision on the declaration of enforceability.79 However, this is only the case if the necessary
clarifications or corrections can be deduced without doubt from other parts of the award.80
44 The declaration of enforceability cannot go any further than the award itself. Thus, payment
of interest may not be ordered in the declaration of enforceability where the operative part of
the award is silent on the issue of interest.81
45 Where defects affect only separable parts of the award, the other parts can be declared to be
enforceable.82 This includes cases in which the order is for the payment of a single sum of
money.
46 In the case of awards which order payment in several instalments, the declaration of enforceability need not be limited to the part already due. The proceedings for a declaration of
enforceability are not part of the enforcement proceedings proper, but serve to provide the
applicant with a decision which in all its aspects has the same effects as a final and binding
court decision. The applicants right to request such a declaration is therefore not dependent
on the separate instalments being due.83
47 The decision declaring the award enforceable must be declared provisionally enforceable
pursuant to 1064 (2) ZPO. 712 ZPO, allowing the debtor to prevent enforcement by
providing appropriate security, is not applicable in these proceedings.
76
77
78
79
80
81
82
83
See OLG Hamburg 30.05.2008 11 Sch 9/07 in favor of such an analogous application of 1059 (4)
ZPO.
MnchKommZPO-Mnch (2013), 1060 para.27 (assumes even a general right to remit).
BGH 28.10.1999 III ZB 43/99.
OLG Mnchen 29.10.2009 34 Sch 15/09 (wrong dates).
Schwab/Walter (2005), Chap. 28 para. 7; OLG Frankfurt 02.03.2001 2 Sch 2/00; OLG Koblenz
28.07.2005, SchiedsVZ 2005, 260 = Yearbook XXXI (2006), 673 (678) (determining the interest rate of
legal interest).
OLG Dresden 20.04.1999 11 Sch 02/99; Stein/Jonas-Schlosser (2002), 1060 para.12 (in purely domestic cases interest may be ordered on basis of 291 BGB).
OLG Hamburg 28.05.1998 14 U 29/98; Lachmann (2008), para. 2409; but see OLG Frankfurt
31.05.2001, RPS 1/2001, 23 (applicant has to bear the costs for part not yet due).
1060 Krll
441
IX. Protective Measures

Pursuant to 1063 (3) ZPO, the presiding judge at the competent court may even issue 48
ex parte orders allowing for a preliminary enforcement or the enforcement of interim relief
necessary to protect the legal rights of the applicant for the duration of the proceedings for
the declaration of enforceability.84 Such protective orders form part of the proceedings to
have the award declared enforceable and therefore do not have any cost effects.85
X.
Legal Remedies against Declaration of Enforceability
All decisions rendered in proceedings under 1060 ZPO may be attacked by a complaint on 49
points of law to the BGH. The rejection of an application may not be circumvented by merely
applying anew for a declaration of enforceability, as the courts decision has res judicata effect.
In addition, an action for retrial pursuant to 580 ZPO may be brought if, after the decision
has been rendered, one of the grounds for retrial has been discovered. Such action only affects the declaration of enforceability, not the award itself.
XI. Alternative and Concurring Legal Remedies

For awards on agreed terms, 1053 (4) ZPO explicitly provides for the possibility to have 50
the award declared enforceable by a notary, who must at least ensure that its enforcement
would not be contrary to public policy.
Actions on the award that are based on the claim that a party has breached its obligation 51
to fulfil an award such obligation is inherent in any arbitration agreement are unlike
in other legal systems86 generally considered to be inadmissible.87 The proceedings under
1060 ZPO constitute an easier means to enforce an award such that the necessary legal
interest in proceedings on the award is lacking. Furthermore, due to the statutory recognition
of domestic awards in 1055 ZPO, to allow actions on the award would (under German law)
result in an exclusion of the defences which the legislature considered necessary even for
the facilitated way of enforcement.88 Summary proceedings on a documents only basis for
uncontested claims are inadmissible.89
There is no legitimate legal interest in a claim for a declaration that the award is valid.90 52
Uncertainties as to whether the award may be used against a successor are to be solved in
proceedings for a declaration of enforceability and do not justify an action on the award.91
Actions based on the claim underlying the award are, in general, excluded due to the res ju- 53
dicata effect of the award (1055 ZPO). An exception to the res judicata effect and a second
84
85
86
87
88
89
90
91
For cases where such an order was granted and the requirements see OLG Frankfurt 10.06.2011 26 Sch
09/11; OLG Mnchen 17.11.2011 34 Sch 33/11.
Lachmann (2008), para.2493; for details see infra, Schroeder/Wortmann, 1063 paras 22 et seq.
See for English law Sutton/Gill (2003), para.8-007; Goldstein v. Conley (2002) 1 WLR 281 (294).
MnchKommZPO-Mnch (2013), 1060 para.41; Musielak-Voit (2013), 1060 para.4; cf. under the old
law RG 01.07.1927, RGZ 386 (387 seq.); cf. for an exception under the old law BGH 06.03.1969, KTS
1970, 30 (32 et seq.) = BB 1969, 892 = WM 1969, 671.
Stein/Jonas-Schlosser (2002), 1060 para.16; cf. for the admissibility under the old law Schlosser, FSSchwab (1990), pp.435 et seq.
Stein/Jonas-Schlosser (2002), 1060 para.15; in favour of an action on the award in exceptional circumstances Schwab/Walter (2005), Chap. 26 para.4; Musielak-Voit (2013), 1060 paras 4 and 7.
442
set of proceedings should only be allowed in exceptional circumstances.92 Examples given

are that the operative part of the award (Tenor) is drafted in a way that it is not susceptible to
enforcement or that the successful party has doubts as to the legal validity of the award in its
present form. In light of 1059 (5) ZPO, an arbitral tribunal, not the courts, would in general
have jurisdiction for such a retrial.93
XII. Costs of the Proceeding and Amount in Dispute

54 Costs are allocated in accordance with 91 et seq. ZPO on the principle that costs follow
the event. Costs are generally calculated on the basis of the amount in dispute.94 Any subsequent withdrawal of an application to have an award declared enforceable has the cost-effects
provided for in 269 (3) ZPO unless the parties have otherwise agreed. Thus, the applicant
must bear all costs associated with the application.95
92
93
94
95
Stein/Jonas-Schlosser (2002), 1060 para.15; Musielak-Voit (2013), 1060 paras 4 and 7.

For details see infra, Krll, 1061 paras185 et seq.
OLG Mnchen 29.01.2008 34 Sch 01/08.; id. 08.08.2008 34 Sch 11/08 (withdrawal after discovery
that award had been complied with); OLG Mnchen 08.11.2011 34 Sch 4/11.
1061 Foreign Awards

(1) Recognition and enforcement of foreign arbitral awards shall be granted in accordance with the Convention on the Recognition and Enforcement of Foreign Arbitral
Awards of 10 June 1958 (Bundesgesetzblatt BGBl 1961, Part II, p. 121). The
provisions of other treaties on the recognition and enforcement of arbitral awards
shall remain unaffected.
(2) If the declaration of enforceability is to be refused, the court shall rule that the
arbitral award is not to be recognized in Germany.
(3) If the award is set aside abroad after having been declared enforceable, application
for setting aside the declaration of enforceability may be made.
Short Bibliography: Aden, Verfahrensversto und Urschlichkeit fr den Schiedsspruch im Aufhebungsverfahren nach 1059 Abs. 2 Nr. 1d ZPO, DZWiR 2013, 149; Bachmann/Breidenbach, in:
Bachmann/Breidenbach et. al. (eds), FS-Schlosser, Tbingen 2005; van den Berg, The New York
Convention of 1958 Towards a Uniform Judicial Interpretation, Deventer 1996; Berger, Das neue
Recht der Schiedsgerichtsbarkeit, Kln 1998; Berger, The Creeping Codification of the Lex Mercatoria, The Hague 1998; von Bernuth, Die Doppelkontrolle von Schiedssprchen durch staatliche
Gerichte, Frankfurt am Main 1995; Borges, Das Doppelexequatur von Schiedssprchen, Kln 1997;
Borges, Die Anerkennung und Vollstreckung von Schiedssprchen nach dem neuen Schiedsverfahrensrecht, ZZP 1998, 487; Borris/Schmidt, Vollstreckbarkeit von Schiedssprchen und materiellrechtliche Einwendungen des Schiedsbeklagten, SchiedsVZ 2004, 273; Bredow, in: Geimer/
Schtze, Internationaler Rechtsverkehr in Zivil- und Handelsachen, 2005, Vol. IV, 714, p.1; Dolinar,
Vollstreckung aus einem auslndischen, einen Schiedsspruch besttigenden Exequatururteil Gedanken zur Merger-Theorie, in: Geimer (ed.), FS-Schtze, 1999, p.187; Ebbing, Private Zivilgerichte: Mglichkeit und Grenzen privater (schiedsgerichtlicher) Zivilrechtsprechung, Mnchen 2003;
Ehricke, Die Beschleunigung der Finalitt von Schiedssprchen nach dem neuen deutschen Schiedsverfahrensrecht, ZZP 2000, 453; Flther, Auswirkungen des inlndischen Insolvenzverfahrens auf
Schiedsverfahren und Schiedsabrede, Kln 2001; Haas, Die Anerkennung und Vollstreckung auslndischer und internationaler Schiedssprche, Berlin 1990; Haas, in: Weigand (Hrsg.), Practitioners
Handbook on International Arbitration, Mnchen/Copenhagen 2002; Hausmann, Die Aufhebung
von Schiedssprchen nach neuem deutschem Schiedsverfahrensrecht, in: Hohloch (eds), FS-Stoll,
Tbingen 2001; Heidbrink/von der Groeben, Insolvenz und Schiedsverfahren, ZIP 2006, 265; Holtzmann/Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration,
Deventer 1989; Kilgus, Zur Anerkennung englischer Schiedssprche in Deutschland, Berlin 1995;
Krapfl, Die Dokumentenvorlage im internationalen Schiedsverfahren, Frankfurt am Main 2007;
Kreindler/Schfer/Wolff, Schiedsgerichtsbarkeit Kompendium fr die Praxis, Frankfurt 2006;
Krll, Recognition and enforcement of foreign arbitral awards in Germany, (2002) Int.A.L.R. 160;
Krll, Antragsvoraussetzungen und Prklusion im Verfahren zur Vollstreckbarerklrung auslndischer Schiedssprche, IPRax 2002, 384; Krll, Party Pursuing Bias Claim Against Arbitrator Must
Do So At Place Of Arbitration, German Supreme Court Rules, (2002) 17 (8) Mealeys I.A.R. 34;
Krll, Die Schiedsvereinbarung im Verfahren zur Anerkennung und Vollstreckbarerklrung auslndischer Schiedssprche, ZZP 2004, 453; Krll, Die Prklusion von Versagungsgrnden bei der
Vollstreckbarerklrung auslndischer Schiedssprche, IPrax 2007, 430; Krll/Marenkov, The principle of good faith in enforcement of foreign arbitral awards the taming of another unruly horse
in German law, Stockholm International Arbitration Review 2009:1, 195; Lachmann, Handbuch
fr die Schiedsgerichtspraxis, Kln 2008; Mallmann, Die Bedeutung der Schiedsvereinbarung im
Verfahren zur Anerkennung und Vollstreckbarerklrung auslndischer Schiedssprche, SchiedsVZ
444
2004, 152; Mnch, Das Exequatur von Schiedssprchen: materielle Einwendungen zur prozessualen
Verteidigung?, in: Ishikawa/Lke/Mikami (eds), FS-Ishikawa, 2001, p. 335; Nelle, Anspruch, Titel
und Vollstreckung im internationalen Rechtsverkehr, Tbingen 2000; Nienaber, Die Anerkennung
und Vollstreckung im Sitzstaat aufgehobener Schiedssprche, Frankfurt am Main 2002; Peters, Materiell-rechtliche Einwendungen gegen den Schiedsspruch, JZ 2001, 598; Quinke, 1061 ZPO und
der Meistbegnstigungsgrundsatz des UN, SchiedsVZ 2011, 169; Sandrock, Zum ordre public
bei der Anerkennung und Vollstreckung auslndischer Schiedssprche Local remedies, Unparteilichkeit und Unabhngigkeit von Schiedsrichtern, IPRax 2001, 550; Sandrock, Scharfer ordre
public interne und laxer ordre public international? Die Unterscheidung zwischen ordre public
interne und ordre public international ist nicht gerechtfertigt, in: Coester/Martiny/von Gessaphe
(eds), FS-Sonnenberger, Mnchen 2004; Satmer, Verweigerung der Anerkennung auslndischer
Schiedssprche wegen Verfahrensmngeln, Zrich 1994; Schlosser, Das Recht der internationalen
privaten Schiedsgerichtsbarkeit, Tbingen 1989; Schtze, Schiedsgericht und Schiedsverfahren,
Mnchen 2012; Schtze/Tscherning/Wais, Handbuch des Schiedsverfahrens Praxis der deutschen
und internationalen Schiedsgerichtsbarkeit, Berlin 1990; Schwab/Walter, Schiedsgerichtsbarkeit,
Mnchen 2005; Solomon, Die Verbindlichkeit von Schiedssprchen in der internationalen privaten
Schiedsgerichtsbarkeit, Mnchen 2007.
Para.
I. Legislative Function and Basic Principles . 1
III. The Need for Recognition and
Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
IV. Admissibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
A. General Principles . . . . . . . . . . . . . . . . . . . 8
B. Existence of a Foreign Award . . . . . . . . 10
1. Award . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2. Foreign . . . . . . . . . . . . . . . . . . . . . . . . . 15
3. Final . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
C. Legitimate Legal Interest . . . . . . . . . . . . 19
D. Relation to other Proceedings . . . . . . . 21
E. Application . . . . . . . . . . . . . . . . . . . . . . . . . 24
V. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
VI. Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
B. Oral Hearing . . . . . . . . . . . . . . . . . . . . . . . 35
C. Legal Representation . . . . . . . . . . . . . . . 38
D. Security for Costs . . . . . . . . . . . . . . . . . . . 40
VII. Merits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
B. Burden of Pleading and Burden of
Proof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
C. Factual Basis . . . . . . . . . . . . . . . . . . . . . . . . 52
D. Preclusion . . . . . . . . . . . . . . . . . . . . . . . . . . 53
1. Participation in Arbitration
Proceedings without Objections . . 53
2. Failure to Make Use of
Remedies at Place of Arbitration . 55
E. Grounds to Refuse Enforcement . . . . 58
F. Grounds That Must be Pleaded by
a Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Para.
1. Lack of a Valid Arbitration
Agreement ArticleV (1)(a)
NYC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
2. Violations of the Right to be
Heard ArticleV (1)(b) NYC . . . 80
3. Excess of Authority ArticleV
(1)(c) NYC . . . . . . . . . . . . . . . . . . . .101
4. Irregularities in the
Constitution of the Arbitral
Tribunal or the Proceedings
ArticleV (1)(d) NYC . . . . . . . . . . .108
5. Lack of a Final and Binding
Award ArticleV (1)(e) NYC . .126
G. Grounds That Must be Considered
ex officio . . . . . . . . . . . . . . . . . . . . . . . . . .132
1. Lack of Objective Arbitrability
ArticleV (2)(a) NYC . . . . . . . . .134
2. Violation of Public Policy
ArticleV (2)(b) NYC . . . . . . . . . .136
VIII. Additional Defences . . . . . . . . . . . . . . . . . . .160
IV. Decision and Means of Recourse . . . . . .165
A. Negative Decisions . . . . . . . . . . . . . . . .166
B. Positive Decisions . . . . . . . . . . . . . . . . .167
X. Provisional Measures . . . . . . . . . . . . . . . . . .171
XI. Annulment of the Declaration of
Enforceability . . . . . . . . . . . . . . . . . . . . . . . . .172
XII. Alternative Judicial Proceedings . . . . . . . .175
XIII. More Favourable Provisions in other
Treaties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .182
XIV. Costs of the Proceedings and the
Amount in Dispute . . . . . . . . . . . . . . . . . . . .185
1061 Krll
I.
445
Legislative Function and Basic Principles1
1061 Code of Civil Procedure (Zivilprozessordnung ZPO) regulates the recognition and 1
enforcement2 of foreign awards in Germany. For such awards, it fulfils the same function as
1055, 1060 ZPO for domestic awards. At least concerning the enforcement, i.e. the granting of a declaration of enforceability, 1061 ZPO is largely based on the same principles as
1060 ZPO,3 but with some important differences primarily in the drafting technique. Instead of providing for a completely separate national regime for recognition and enforcement
of foreign awards, including a list of possible grounds for refusal, 1061 (1) sentence 1 ZPO
merely refers to the New York Convention 1958 (NYC).4 1061 (1) sentence 2 ZPO has
a purely declaratory character. The possibility of relying on the more favourable provisions
of other treaties for the recognition and enforcement of foreign awards already follows from
the public international law character of such treaties superseding national law. 1061 (2)
ZPO defines the content and extent of decisions refusing recognition and enforcement in
Germany, while 1061 (3) ZPO deals with the possible effects of a setting aside of the award
in its country of origin on a declaration of enforceability rendered in Germany. Procedural
questions are, pursuant to 1025 (4) ZPO, primarily governed by 1062 et seq. ZPO.
The recognition of foreign awards, i.e. recognition of their legal effects as distinct from the 2
question of enforcement, is not dependent on a separate recognition procedure or on a
declaration of enforceability.5 Recognition occurs automatically, provided that no grounds
to resist enforcement exist. Unlike the position with foreign court decisions, no reciprocity
is required. Whenever a party tries to rely on the effects of a foreign award in court or other
administrative proceedings, the relevant state body will decide on the recognition of the
award in Germany as an incidental question.6 Such incidental decisions generally have no
binding effects for later proceedings. However, in court proceedings, a party may request an
interlocutory declaratory judgment determining that the award is to be recognized, which
then has res judicata effect.
The enforcement of foreign awards, i.e. their execution, is only possible after they have been 3
declared enforceable. The consequence of the reference to the New York Convention 1958
is that such a declaration must be granted pursuant to ArticleIII NYC unless one of the
defences to resist enforcement enumerated in ArticleV NYC exists. Whether the applicable
substantive law requires such a declaration or considers it admissible is irrelevant.7 The decision declaring the award enforceable has, at the same time, res judicata effect in relation to
all subsequent proceedings, determining that no grounds to refuse recognition and enforcement exist. In relation to the conditions under which a declaration of enforceability will be
1
2
5
6
7
In fact, 1061 only regulates leave for enforcement, while the actual enforcement proceedings in the
sense of executing the award are regulated in the 8th Book of the ZPO. For these see Part IV, Rtzel/
Krapfl, Enforcement of Decisions Declaring Awards Enforceable in Germany. When referring in the text
to enforcement proceedings in the sense of executing the award, the term enforcement proceedings in
the proper sense will be used while the term enforcement will have the meaning assigned to it by 1061.
Schwab/Walter (2005), Chap. 30 para.1; for differences in relation to recognition see supra, Krll, Introduction to 1060, 1061 paras8 seq.
For the limited scope of the reference see MnchKommZPO-Mnch (2013), 1061 para.7; Kreindler/
Schfer/Wolff (2006), para.1126; Quinke, SchiedsVZ 2011, 169 (170 et seq.).
OLG Mnchen 01.09.2009 34 Sch 14/09.
446
granted, foreign awards are largely submitted to the same regime as domestic awards, both
procedurally and substantively.
II.
Legislative History
4 1061 ZPO deviates in its structure and legislative approach considerably from Article36
UNCITRAL Model Law (ML) and 1044 ZPO pre-1998, its predecessor in the old German law. Unlike these two norms, 1061 ZPO does not provide for an autonomous regime
of recognition and enforcement of foreign awards, nor does it provide its own list of possible
defences. Rather, it merely refers to the New York Convention 1958 for the recognition and
enforcement of foreign awards. In practice, however, the differences in relation to Article36
ML are minor. Article36 ML was primarily intended to be a model for states which are not
signatories to the New York Convention 1958.8 Its list of possible defences is taken directly
from ArticleV NYC. The decision by the German legislature not to adopt Article36 ML
but instead to refer directly to the New York Convention 1958 was not intended to lead to a
change in substance, but was based on other grounds.9
5 Greater differences exist in relation to the old German law. The separate list of possible
grounds for refusal contained in 1044 ZPO pre-199810 made the autonomous national
enforcement regime a true alternative to the regime of the New York Convention 1958,
despite the similarities between the two regimes.11 That is no longer the case. Furthermore,
8
10
11
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.62; Holtzmann/Neuhaus (1989), pp.1059 et
seq.
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.62; as the legislator wanted to maintain the
preferential treatment of domestic awards in relation to recognition, it made little sense to adopt Art. 36
ML for foreign awards in the light of the already existing and largely identical obligation to recognize and
enforce foreign awards under the NYC. Therefore, merely the previously existing reciprocity reservation
was withdrawn.
1044. [Foreign Awards]
(1) A foreign award which has become final in accordance with the law which is applicable to it shall,
except insofar as treaties entered into with States do not contain provisions to the contrary, be
declared enforceable in accordance with the procedure prescribed for domestic awards. Section
1039 shall not apply.
(2) An application for an order for enforcement shall be rejected:
1. if the arbitration award is not valid in law; for the validity in law of an award, and insofar as
treaties entered into with States do not contain provisions to the contrary, the law regulating
the arbitration procedure shall apply;
2. if recognition of the arbitration award would offend against morality or public policy, or more
particularly, if the award orders a party to carry out an act forbidden by German law;
3. if the party was not duly represented, insofar as the party has not expressly or tacitly accepted
the continuation of the proceedings;
4. if the party has not obtained the legal right to be heard in the proceedings.
(3) The setting aside of the award is replaced by a declaration that the award cannot be recognized
within the area of jurisdiction of the country.
(4) If, after having been declared enforceable, the award is set aside in a foreign country, an action can
be started for the setting aside of the order for enforcement. To such action the provisions of Section 1043 (2) and (3) apply by analogy, subject to the reservation that the time limit commences
on the day on which the party has knowledge of the fact that the setting aside of the award had
force of law.
BGH 10.05.1984, NJW 1984, 2763 (2764); OLG Frankfurt 29.06.1989, RIW 1989, 911 (911 seq.) =
Yearbook XVI (1991), 546 (547 et seq.); Schtze/Tscherning/Wais (1990), para.638.
1061 Krll
447
the classification of an award as foreign is no longer dependent on the law applicable to the
arbitral proceedings, but instead depends on the place of arbitration. It can be deduced from
1025 (1) and (4) ZPO that an award is regarded as foreign if the place of arbitration is not
located in Germany.12 Furthermore, the sometimes cumbersome enforcement proceedings
under the old law have been replaced by a much less formal and simplified procedure under
the new law.13
III. The Need for Recognition and Enforcement

As stated above, apart from the question of constituting a title for enforcement, foreign 6
awards become automatically effective in Germany when issued without the need for express recognition.
The only requirement for such automatic recognition is that no ground should exist for refus- 7
ing recognition in the sense of ArticleV NYC. Thus, proceedings under 1061 ZPO are, in
principle, only required where a party wants to enforce the award in Germany.14
IV. Admissibility
A.
General Principles
To be admissible, an application for the recognition and enforcement of an award must 8

primarily fulfil the specific requirements of 1061 et seq. ZPO. In addition, the general admissibility requirement for court proceedings must be fulfilled where they are not in conflict
with the provisions of the 10th Book of the ZPO.15 Functional and local jurisdiction for the
exequatur proceedings lies with the Higher Regional Court (Oberlandesgericht OLG) in
whose district the debtor or its assets are located.16 If none of these places is in Germany, the
Kammergericht (which is a special term for the OLG in Berlin) Berlin has subsidiary jurisdiction.17 Counsel must be duly authorized and prove their authorization by submitting the
original of the power of attorney for the court files. A photocopy or telecopy of their power of
attorney is not sufficient.18 Furthermore, the party resisting the declaration of enforceability
must still be in existence.19
The admissibility of the application has to be verified by the courts at all stages ex officio. 9
Pursuant to 139 ZPO, the court must inform the parties of existing reservations as to
the fulfilment of any of these requirements for admissibility. The relevant date at which all
requirements for the admissibility have to be met is the date of the last oral hearing. Until
12
13
14
15
16
17
18
19
For the procedural theory under the old law cf. BGH 03.10.1956, BGHZ 21, 365 (367 seq.); id.
26.09.1985, BGHZ 96, 40 (41).
See Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, pp.62 et seq.
For details see supra, Krll, 1060 paras8 et seq.
For details see infra, Schroeder/Wortmann, Introduction to 10621065, paras16 et seq.
1062 (1) ZPO (it is not required that there are sufficient assets for execution); see OLG Kln 15.02.2000,
Yearbook XXIX (2004), 715 (717).
1062 (2) ZPO; it is, however, controversial whether the international jurisdiction of the KG requires
additional connections of the case with Germany; in favour of such an additional requirement KG Berlin
10.08.2006, SchiedsVZ 2007, 108, 112; Escher/Reichert Die subsidire Zustngigkeit des Kammergerichts Berlin nach 1062 Abs. 2 a.E. ZPO: Globale Allzustndigkeit oder minimaler Inlandsbezug,
SchiedsVZ 2007, 71 et seq.; for details see infra, Schroeder/Wortmann, 1062 paras 16 et seq.
BGH 23.02.2006, SchiedsVZ 2006, 161 (162) = IHR 2006, 125 = (2006) Int.A.L.R. N-59.
OLG Dresden 16.02.2000 11 Sch 07/99.
448
that time, pre-existing insufficiencies may be cured. The burden of proof for the different
requirements lies with the applicant. That does not apply for the finality of the award. The
lack of finality in the awards country of origin is mentioned as a defence in ArticleV (1)(e)
NYC and thus must be proven by the party resisting enforcement.20
B.
Existence of a Foreign Award
1.
Award
10 1061 ZPO only regulates the enforcement of awards. It does not extend to other types of
binding decisions rendered by third parties, in particular in the various forms of expert determination, such as adjudication, valuation or the German type Schiedsgutachten. Whether
or not a decision may be considered to be an award for the purposes of 1061 ZPO is a
question which has to be determined primarily on the basis of German law.21 However,
regard is given to the autonomous interpretation of the notion of an award under the New
York Convention 1958 and the characterization of a decision in its country of origin.22 Thus,
decisions which do not constitute an award in the country of origin cannot be considered to
be an award in the sense of 1061 ZPO. This applies in particular to decisions by state courts
irrespective of the names given to the court or its decision.23 The law of the country of origin
also determines the formal requirements which have to be met if a decision is to amount to
a valid award. 1054 ZPO, which defines the formal requirements for awards rendered in
Germany, is irrelevant in this respect.24
11 Awards on costs and awards on agreed terms, where permitted at the place of arbitration,
may be declared enforceable in Germany. Concerning their enforcement, they are, in principle, treated like any other award.25 By contrast, it is not possible to have simple settlements
reached in foreign arbitral proceedings declared enforceable in proceedings under 1061
ZPO. A declaration of enforceability may, however, be possible under one of the various
20
21
22
23
24
25
Musielak-Voit (2013), 1061 paras5, 29; cf. Nienaber (2002), pp.79, 145 et seq.
For the relevant criteria see supra, Sachs/Lrcher, 1054paras 6 et seq.; OLG Rostock 22.11.2001, IPRax
2002, 401 (403) = Yearbook XXIX (2004), 732 (735) = (2002) Int.A.L.R. N-31; id. 28.10.1999,
RPS 1/2000, 20 (22) = Yearbook XXV (2000), 717 (not reproduced in this regard); OLG Dsseldorf
19.01.2005, SchiedsVZ 2005, 214 (215) = Yearbook XXXI (2006), 663 (665); Zller-Geimer (2014),
1061 para.4; cf. Musielak-Voit (2013), 1061 para.3.
BGH 08.10.1981, NJW 1982, 1224 (1225) = Yearbook VIII (1983), 366 (367 seq.); Schwab/Walter
(2005), Chap. 30 para.11; cf. Zller-Geimer (2014), 1061 paras4 seq. (double qualification required);
for an overview on how the various forms of binding third party decisions are distinguished see Krll
(1998), 247 et seq.
OLG Hamburg 04.11.2008 6 Sch 7/08 (decision of European Court of Kosice no award); decisions by
Russian Arbitrage Courts are not considered to be awards OLG Mnchen 28.02.2012 34 Sch 30/10.
OLG Celle 06.10.2005 8 Sch 06/05; MnchKommZPO-Mnch (2013), 1061 para. 5; Kreindler/
Schfer/Wolff (2006), para. 1130; see also OLG Mnchen 22.06.2009 34 Sch 26/08 = OLGR
Mnchen2009, 679-682 considering itself bound by the classification of a decision by the courts of the
place of arbitration (lack of one signature).
OLG Mnchen 25.10.2006 34 Sch 24/06; BGH 02.11.2000, BGHZ 145, 376 (381) = NJW 2001, 373
= note by Boecker, EWiR 2001, 345 = note by Voit, ZZP 2001, 355 et seq. = (2002) Int.A.L.R. N-12 (concerning a domestic award but also relevant for foreign awards); Stein/Jonas-Schlosser (2002), Anhang
1061 para.21; cf. for an award on agreed terms Lrcher, Schiedsspruch mit vereinbartem Wortlaut
Notizen zur Vollstreckbarkeit im Ausland, RPS 2/2000, 2 et seq.
1061 Krll
449
bilateral treaties.26 In exceptional cases, where the settlement fulfils the requirements of a
lawyers settlement under 796a ZPO, they may also fall directly within the ambit of 796a
ZPO, which is not limited to settlements concluded in Germany.27
Partial awards may be declared enforceable without the need to wait until the final award is 12
rendered. In light of the foreign practice, interlocutory awards28 or interim awards should be
also considered to be suitable for proceedings under 1061 ZPO (controversial).29
Another controversial issue is the treatment of provisional measures ordered by arbitral 13
tribunals. While some authors have argued that these may be declared enforceable under
1061 ZPO where rendered in the form of an interim award,30 the prevailing view is that,
due to their provisional nature, such measures do not fall within the ambit of 1061 ZPO,
irrespective of the form in which they were rendered. It has, however, been submitted that in
light of the wide conferral of jurisdiction in 1062 (2) ZPO, enforcement of such measures
is possible under the special enforcement procedure provided for under 1041 (2) ZPO,
although 1042 ZPO is not mentioned in 1025 (2) ZPO as one of the provisions applicable where the place of arbitration is abroad.31
Decisions which do not constitute a final and binding determination of a dispute replacing a 14
decision by the courts, but which have only contractual force between the parties and merely
provide the basis for further court action, are not considered as awards in the sense of 1061
ZPO.32
2.
Foreign
Whether the award constitutes a foreign award in the sense of 1061 ZPO depends solely 15
on the place of arbitration. All awards rendered in proceedings that do not have their place
of arbitration in Germany are considered to be foreign, even when they are rendered on
the basis of German procedural or substantive law.33 The concept of anational awards not
associated with any country is alien to German law. Thus such awards, if one considers
them to be possible,34 could only arise out of proceedings with a place of arbitration outside
26
27
28
29
30
31
32
33
34
BayObLG 05.07.2004, BayObLGR 2004, 381 = Yearbook XXX (2005), 563 et seq.; cf. infra, paras 183 et
seq.
For details see Schwab/Walter (2005), Chap. 30 paras42 seq.
Stein/Jonas-Schlosser (2002), Anhang 1061 paras11 et seq. (interlocutory awards which are equivalent
to partial awards); also in favour on the basis of the old law LG Kln 29.11.1982, IPRax 1984, 90 (for an
award on the arbitral tribunals jurisdiction); Haas (1990), p.151; left open by BGH 18.01.2007 III ZB
35/06; against Schwab/Walter (2005), Chap. 30 para.11.
Musielak-Voit (2013), 1061 para.3; see also OLG Hamburg 14.03.2006 6 Sch 11/05; confirmed by
BGH 18.01.2007 III ZB 35/06 (cost decision in partial award on arbitral tribunals jurisdiction declared enforceable).
In favour Musielak-Voit (2013), 1061 para.3; cf. supra, Krll/Kraft, 1059 para. 14.
BayObLG 22.11.2002, SchiedsVZ 2003, 142 (143) = NJW-RR 2003, 502 (503) = Yearbook XXIX
(2004), 754 (757) (confirmation required for award under Californian law); BGH 08.10.1981, NJW
1982, 1224 (1225) = Yearbook VIII (1983), 366 (Italian lodo di arbitrato irrituale no award); Zller-Geimer (2014), 1061 para.4.
MnchKommZPO-Mnch (2013), 1061 para.4; Musielak-Voit (2013), 1061 para.4; for a different
view Schtze (2012), para.532 f.; cf. Borges, ZZP 1998, 487 (503 et seq.) for the relevant criteria in determining the nationality of an award.
Rensmann, Anational Awards Legal Phenomenon or Academic Phantom?, 15 (2) J.Int.Arb. 37 (63 et
seq.).
450
Germany and would be considered to be foreign awards for the purpose of recognition and
enforcement.35 If anational awards were made inside Germany, they would be considered to
constitute domestic awards.
3.
Final
16 The award must be final in its country of origin and no longer open to appeal either before
a second arbitral instance or before the state courts.36 As can be deduced from 1061 (3)
ZPO, the finality of an award is not affected by the availability of extraordinary means of
recourse, such as the possibility of applying for the setting aside of the award in its country of
origin. Even where such setting aside proceedings have already been initiated, they do not (as
such) affect the finality or the award.37
17 By contrast, where an award has been set aside in its country of origin, it will generally not
be declared enforceable in Germany.38 The fact that the setting aside decision is open to challenge, or that such a challenge has already been initiated, is irrelevant. With the annulment of
the setting aside decision, the award becomes final again.
18 Where the law at the place of arbitration requires a formal recognition by the courts for the
award to become final, such recognition must be obtained before the award can be declared
enforceable in Germany.39 However, it is not required that the award has been declared enforceable in its country of origin.40 That courts in a third country have refused to declare the
award enforceable does not affect its finality.
C.
Legitimate Legal Interest
19 The existence of a legitimate legal interest in a declaration of enforceability does not depend
on the enforceable content of the award in question. Thus, foreign declaratory awards or
awards with content not specific enough for enforcement may also be declared enforceable
in Germany.41 A declaration of enforceability implies the recognition of an award. Thus, the
decision excludes any further discussion in subsequent proceedings as to whether the effects
35
36
37
38
39
40
41
Zller-Geimer (2014), 1061 para.11; Weigand-Haas (2002), NYC, Art. I para.24.

BayObLG 22.11.2002, SchiedsVZ 2003, 142 (144) = Yearbook XXIX (2004), 754 (758); Musielak-Voit
(2013), 1061 para.5; cf. BGH 26.06.1969, BGHZ 52, 184 (188) = NJW 1969, 2093; id. 10.05.1984,
NJW 1984, 2763 (2764); id. 14.04.1988, BGHZ 104, 178 (180) = NJW 1988, 3090 (3091) = Yearbook
XV (1990), 450 (452).
BayObLG 22.11.2002, SchiedsVZ 2003, 142 (144) = Yearbook XXIX (2004), 754 (758); OLG Celle
20.11.2003, Yearbook XXX (2005), 547 (550) = (2004) Int.A.L.R. N-58 (not reproduced in this regard); cf. OLG Hamburg 27.08.2002 6 Sch 04/02; cf. infra, para.21.
OLG Rostock 28.10.2000, RPS 1/2000, 20 (23); exception may exist under Art. IX European Convention; cf. Nienaber (2002), p.23.
BayObLG 22.11.2002, SchiedsVZ 2003, 142 (143) = Yearbook XXIX (2004), 754 (757) (confirmation
required for award under Californian law).
OLG Karlsruhe 29.11.2002 9 Sch 01/02.
Controversial; in favour BGH 30.11.2011 III ZB 19/11, SchiedsVZ 2012, 41; BayObLG 22.11.2002,
SchiedsVZ 2003, 142 (144) = Yearbook XXIX (2004), 754 (757); id. 27.07.1999, BB 1999, 1948; OLG
Dsseldorf 15.12.2009 I-4 Sch 10/09, Yearbook XXXV (2010), 386; Lachmann (2008), para.2532;
Borges, ZZP 1998, 487 (511 seq.); critical Musielak-Voit (2013), 1061 para.2 (who favours a declaratory
decision by the court that extends the binding effect of the award to German territory); opposing Stein/
Jonas-Schlosser (2002), Anhang 1061 para.9; KG Berlin 10.08.2006, SchiedsVZ 2007, 108 (112); cf. for
the discussion in the context of domestic awards supra, Krll, 1060 paras 20 et seq.
1061 Krll
451
of the award should be recognized, i.e. whether defences in the sense of ArticleV NYC exist.42
In such cases of non-enforceable content, some authors favour an action for a declaration
that the award is to be recognized in Germany,43 which however, under the new law, would
be in conflict with 1026 ZPO.
It is controversial whether the existence of a legitimate legal interest presupposes that the 20
defendant has, or is likely in the future to have, assets in Germany.44 The fact that the award
orders payments in instalment or that the parties have reached an agreement does not exclude a legitimate legal interest to have the complete award declared enforceable.45
D.
Relation to other Proceedings
The admissibility of proceedings for a declaration of enforceability in Germany is not affected 21

by the fact that setting aside proceedings are pending at the place of arbitration. In appropriate cases, courts may, however, stay the proceedings pursuant to 148 ZPO, ArticleVI NYC
to await the outcome of the foreign setting aside proceedings, as the annulment of the award
in its country of origin constitutes a ground for refusal (ArticleV (1)(e) NYC). Such a stay
is, however, by no means mandatory and will only be granted if the court is of the view that
the setting aside proceedings have a chance of success.46
The admissibility of proceedings to have a foreign award declared enforceable is also unaf- 22
fected by comparable proceedings in a third country or the rejection of such a declaration.47
The decision as to whether a foreign award will be enforced has to be taken separately for
each country.
Furthermore, the initiation of insolvency proceedings against the debtor has no influence on 23
the admissibility of proceedings under 1061 ZPO.48 They are not yet part of the execution
proceedings, so the prohibitions against execution measures by individual creditors in 88,
89 of the Insolvency Act (Insolvenzordnung InsO) do not apply.49 However, pursuant to
240 ZPO,50 the initiation of insolvency proceedings in the course of a proceeding to have an
award declared enforceable may result in a stay of these proceedings.51 However, 240 ZPO
42
43
44
45
46
47
48
49
50
51
Different KG Berlin 10.08.2006, SchiedsVZ 2007, 108 (112).

In favour of such a view KG Berlin 10.08.2006, SchiedsVZ 2007, 108 (112).
OLG Mnchen 11.05.2009 = SchiedsVZ2009, 343-344 = Yearbook XXXV (2010), 367.
See BayObLG 22.11.2002, SchiedsVZ 2003, 142 (144) = Yearbook XXIX (2004), 754 (760).
OLG Hamburg 23.01.2003, SchiedsVZ 2003, 284 (286); KG Berlin 10.08.2006, SchiedsVZ 2007, 108;
for details see supra, Krll, 1060 para.25 seq.
OLG Brandenburg 02.09.1999, RPS 1/2001, 21 = Yearbook XXIX (2004), 697.
OLG Dresden 25.09.1998 11 Sch 01/98; OLG Brandenburg 02.09.1999, RPS 1/2001, 21 = Yearbook
XXIX (2004), 697 (foreign award); Flther (2001), p.50.
240 ZPO Stay of Proceedings due to Insolvency Proceedings provides: If insolvency proceedings
have been initiated in regard to assets of a party, the lawsuit shall be stayed if it relates to assets affected by
the insolvency proceedings, until it is resumed under the provisions applicable to the insolvency proceedings or until the insolvency proceedings are terminated. The same applies if the authority to administer
the assets of the debtor and the power of disposition in regard to the assets of the debtor is transferred to
a preliminary insolvency administrator.
OLG Kln 19.03.2004 9 Sch 10/03 (declaration of enforceability of a domestic award); Flther
(2001), p.51 seq.; Heidbrink/von der Groeben, ZIP 2006, 265 (271); possibly different OLG Brandenburg
02.09.1999, RPS 1/2001, 21 = Yearbook XXIX (2004), 697 (239 et seq. ZPO generally not applicable
to proceedings to have an award declared enforceable); Schwab-Walter (2005), Chap. 16 para.49 limited
to cases where defences are raised and an oral hearing is necessary.
452
is not applicable if the proceeding to have the award declared enforceable was initiated after
the insolvency proceedings have started.52
E.
Application
24 The application must either be made in writing or be put on record at the court registry
( 1063 (4) ZPO). It follows from the latter that applications may be made by the parties
personally and that no counsel is needed at that stage. In light of the beneficial effects of an
application for the applicant, the use of a companys letter head and its seal is sufficient to
identify the applicant and the apparent authority of the person acting.53
25 The application must be directed at having the foreign award declared enforceable in Germany. Even without an explicit limitation to this effect, applications are generally interpreted
to cover only that part which is favourable to the applicant.54 However, to avoid any doubts
it is advisable to clearly define the exact scope of the remedy sought, particularly since it may
affect the costs of the proceedings.55
26 The defendant can only ask that the requested declaration be refused. Further applications
to set aside the award are not admissible since the courts lack the necessary power to annul
foreign awards.56
27 The documents to be annexed to the application are specified in 1064 (1) ZPO, which
is considered to be a more favourable national provision in the sense of ArticleVII NYC.
Consequently, 1064 ZPO prevails over the stricter requirements of Article IV NYC,57
which is anyway interpreted broadly by German courts.58 Thus, it is sufficient if the award or
a certified copy thereof is supplied and the certification may be made by the partys counsel
(1064 (1) sentence 2 ZPO).
28 A translation of the award is not a mandatory requirement for admissibility. It should be provided as a matter of courtesy, particularly since the court may request a translation pursuant
52
53
54
55
56
57
58
OLG Dresden 27.01.2005, SchiedsVZ 2005, 159; OLG Brandenburg 02.09.1999, RPS 1/2001, 21 = Yearbook XXIX (2004), 697.
OLG Stuttgart 20.09.2001, Yearbook XXIX (2004), 729 (731) (Signature: General Director B. W. W.).
OLG Karlsruhe 29.11.2002 9 Sch 01/02; cf. supra, Krll, 1060 paras 28 et seq.
Cf. infra, paras 185 et seq.
OLG Celle 14.12.2006 6 Sch 11/05; OLG Bremen 30.10.2008 2 Sch 2/08; OLG Thringen 13.01.2011,
Yearbook XXXVII (2012), 220.
Yearbook XXIX (2004), 767 = (2004) Int.A.L.R. N-21; BayObLG 11.08.2000, RPS 2/2000, 10 (11) =
RIW 2001, 140 (141) = Yearbook XXVII (2002), 451 (453); OLG Kln 23.04.2004, SchiedsVZ 2005,
163 (164 seq.) = Yearbook XXX (2005), 557 (559); OLG Dsseldorf 15.12.2009, Yearbook XXXV
(2010), 386; OLG Mnchen 21.06.2012 34 Sch 7/12; for a different view see MnchKommZPO-Mnch
(2012), 1061 para.11; OLG Rostock 22.11.2001, IPRax 2002, 401 (403) = Yearbook XXIX (2004),
732 (735) = (2002) Int.A.L.R. N-31; on this problem see Krll, (2002) Int.A.L.R. 160 (162 seq.).
Pursuant to the prevailing view in Germany Art. IV NYC contains evidentiary rules which regulate how
the existence of the arbitration agreement and the award are to be proven if they are contested but does
not stipulate general requirements for the admissibility of an application which have to be complied with
even if not contested; see OLG Mnchen 17.12.2008, Yearbook XXXV (2010), 359 (certification of copy
by Lithuanian notary sufficient if authenticy of copy not contested); id., 06.03.2012 34 Sch 3/10; OLG
Hamburg 03.02.2012 6 Sch 2/11.
1061 Krll
453
to 142 (3) ZPO.59 As the declaration of enforceability is necessarily issued in German, at

least the operative part of the award should be translated.60 1064 (1) ZPO does not require
the arbitration agreement to be annexed but, again, the court may request its submission
under 142 (1) ZPO.61
V.
Parties
In general, the parties mentioned in the award are the appropriate parties to proceedings 29
to have the award declared enforceable. However, applicants who at the time of initiating
the proceedings are no longer the owner of the claim may only initiate proceedings with
the authorization of the new owner if they have a legitimate legal interest (gewillkrte
Prozestandschaft).62
The application must generally be directed against the party against which the award has been 30
rendered. In exceptional cases, the application may also be directed against other parties. To
this extent, the provisions on rewriting titles, i.e. making existing titles enforceable against
successors, must be applied mutatis mutandis. Thus, where the award has been rendered
against a partnership that has in the meantime been liquidated, an application to have the
award declared enforceable may be directed against its former partners.63
In cases of legal succession, the application should, in principle, be made by or against the 31
successor. Although 727 ZPO which allows the issuance of the declaration of enforcement directly in favour or against a successor only directly covers enforcement proceedings
proper. The underlying rationale is also applicable in proceedings under 1061 ZPO.64 Succession must be proved by the submission of the relevant documents. However, the restrictions concerning the admissible evidence contained in 727 ZPO (only official or officially
certified documents) and other provisions of the 8th Book of the ZPO are not applicable.
Proceedings under 1061 ZPO are not part of enforcement proceedings and the rationale
for these restrictions as to the admissible evidence in enforcement proceedings (legal certainty) do not apply to proceedings for a declaration of enforceability.65
No proceedings for a declaration of enforceability may be brought against legal persons that 32
have been dissolved and extinguished from the register before the proceedings have been
59
60
61
62
63
64
65
OLG Mnchen 25.10.2006 34 Sch 24/06; OLG Mnchen 27.02.2009, Yearbook XXXV (2010), 365; it
is then no longer a question of admissibility but of the merits, KG Berlin 10.08.2006, SchiedsVZ 2007,
108 (111); cf. OLG Hamburg 14.03.2006 6 Sch 11/05.
For a detailed discussion of this problem see Gebhard, IDR 2004, 43 (46) (note on BGH 25.09.2003,
IDR 2004, 42 seq.).
See also infra, Schroeder/Wortmann, 1064 para.16.
OLG Hamburg 26.05.2000, RPS 2/2000, 13; KG Berlin 16.02.2001, SchiedsVZ 2004, 109 (112); cf. OLG
Hamm 06.07.1994, IPRax 1995, 386 = RIW 1994, 1052 (1053) = Yearbook XXII (1997), 702 (703
seq.).
BGH 06.03.1969, KTS 1970, 30 (32) = BB 1969, 892 = WM 1969, 671 et seq. (in which the court under
the old law allowed for an action for fulfilment of a foreign award).
BGH 08.03.2007 III ZB 21/06; cf. BGH 06.03.1969, KTS 1970, 30 (32) = BB 1969, 892 = WM 1969,
671 et seq.
OLG Stuttgart 24.05.2000, OLGR Stuttgart 2000, 386 (387); Schwab/Walter (2005), Chap. 27 para.5;
for stricter requirements Stein/Jonas-Schlosser (2002), 1060 para.14.
454
initiated.66 The same applies, in principle, for dissolution during the proceedings unless available assets still exist.67
33 By contrast, the mere initiation of insolvency proceedings does not prevent the initiation
of proceedings under 1061 ZPO. Such proceedings are not yet part of the enforcement
proceedings and are therefore not covered by the prohibition under insolvency law against
execution measures by single creditors against the debtors estate pursuant to 89 InsO. The
law applicable to the legal person determines whether it can still be a party to court proceedings or whether the insolvency administrator becomes the party.68
VI. Proceedings
A.
General Principles
34 The procedure for the recognition and enforcement of foreign awards is regulated primarily
in 1063 and 1064 ZPO and is identical to that for the declaration of enforceability of
domestic awards.69 In addition to 1063 and 1064 ZPO, the general principles of procedure
apply as far as they are compatible with the specific requirements of the 10th Book of the
ZPO.70 The application may be amended or withdrawn at any time71 and an acknowledgment by the party is possible at any stage, unless the award is contrary to public policy.72
B.
Oral Hearing
35 In proceedings to have the award declared enforceable, every party must have the opportunity to present its case. However, an oral hearing is only required where the party opposing
the application raises grounds for resisting the declaration of enforceability73 or, on the basis
of the materials submitted, the enforcement of the award might be contrary to public policy.
In the former case, it is necessary but also sufficient that the grounds raised are not obviously
irrelevant.74 On the one hand, a mere request to refuse a declaration of enforceability is not
sufficient to necessitate the ordering of an oral hearing. In this respect, the first alternative
of 1063 (2) ZPO only applies to setting aside proceedings under 1059 ZPO, but not if
the grounds are raised as defences in proceedings for a declaration of enforceability.75 On
the other hand, whether such grounds actually exist is, in principle, to be determined on the
66
67
68
69
70
71
72
73
74
75
OLG Dresden 16.02.2000 11 Sch 07/99.

OLG Braunschweig 18.11.2002 7 Sch 01/02.
OLG Hamburg 03.02.2012 6 Sch 2/11 (concerning an insolvent Russian OAO).
For details see infra, Schroeder/Wortmann, 1063 and 1064.
Lachmann (2008), para.2720; Zller-Geimer (2014), 1060 para.3.
OLG Frankfurt 31.05.2001, RPS 1/2001, 23; Schwab/Walter (2005), Chap. 27 para.29.
While 1063 (2) ZPO only refers to the ground in 1059 ZPO, it is undisputed that the same applies if defences under Art. V NYC are raised; also included are material defences against the judgment
claims if one considers them to be admissible (see infra, paras35 et seq.); Schwab/Walter (2005), Chap.
27 para.19; cf. under the old law BGH 22.11.1962, JZ 1963, 642 (643) note by Schwab, 643.
by Ehricke, ZZP 2000, 453 = RPS 1/2000, 12; BayObLG 24.02.1999, RPS 2/2000, 24 = BayObLGZ
1999, 55 = NJW-RR 2000, 807 = CLOUT case No. 437.
by Ehricke, ZZP 2000, 453 = RPS 1/2000, 12; Lachmann (2008), para.2755.
1061 Krll
455
basis of an oral hearing but has no bearing on it being ordered unless the defences raised are
obviously irrelevant.76
To avoid delaying tactics, courts are fairly generous in finding that the grounds raised are ob- 36
viously irrelevant.77 The German Supreme Court made clear that a parties right to be heard
does not necessarily require an oral hearing.78 However, given that the judge usually lacks
familiarity with the foreign arbitration law on which the proceedings were based, there is, in
principle, a greater need for oral hearings than in the case of the declaration of enforceability
of domestic awards.79
The fact that the application is made by the legal successor and the succession is challenged is 37
not in itself a reason to order an oral hearing.80 Furthermore, pursuant to 128 (2) ZPO, the
parties may always waive the need for an oral hearing.
C.
Legal Representation
Whenever parties are represented by counsel, the latters power of attorney has to be proven 38
in accordance with 80 ZPO. This generally requires the submission of the original or a duly
certified copy of the power of attorney. A delegated authorization needs to lead back to the
party itself and not just to the holder of the principal authorization, which means that the
latters authorization must be proven as well.81
As long as no oral hearing has been ordered, parties do not have to be represented by counsel 39
but may put all the necessary applications and declarations on record at the court registry
(1063 (4), 78 (3) ZPO). However, once an oral hearing has been ordered, the parties
must be represented by counsel. The non-appearance of a party or its non-representation by
counsel will not lead to the application of the default provisions (330 et seq. ZPO). In such
cases, the court will base its decision on the partys written applications where they exist.82
The consequence of this and the above mentioned option to have the application recorded
at the courts registry is that a party may de facto have a foreign award declared enforceable
in Germany without the need to resort to counsel. However, proceeding without counsel,
although permissible, should generally only be considered if it is likely that no objection will
be raised. Once defences are raised, counsel should be involved.
D.
Security for Costs
Security for costs may not be requested in proceedings to have a foreign award declared en- 40
forceable.83 The proceedings are meant to be a fast track procedure and, as such, should not
76
77
78
79
80
81
82
83
Stricter OLG Celle 02.10.2001, (2003) Int.A.L.R. N-59.

OLG Hamburg 14.03.2006 6 Sch 11/05; OLG Karlsruhe 03.07.2006, SchiedsVZ 2006, 281 (283)
= (2006) Int.A.L.R. N-68; KG Berlin 13.03.2002 23/29 Sch 20/01; OLG Mnchen 11.04.2012,
SchiedsVZ 2012, 15.
BGH 20.12.2012 III ZB 8/12.
Schwab/Walter (2005), Chap. 30 para.28; Kreindler/Schfer/Wolff (2006), para.1145.
OLG Stuttgart 24.05.2000, OLGR Stuttgart 2000, 386 (387).
BGH 27.03.2002, NJW-RR 2002, 933 = RIW 2002, 476 (477).
BGH 23.02.2006, SchiedsVZ 2006, 161 = IHR 2006, 125 = (2006) Int.A.L.R. N-59; OLG Dsseldorf
15.12.2009, Yearbook XXXV (2010), 386; different still OLG Hamm 11.10.2006 8 Sch 05/06;
BayObLG 24.02.1999, RPS 2/2000, 24 = BayObLGZ 1999, 55 = NJW-RR 2000, 807 = CLOUT case
No. 437; for details see infra, Schroeder/Wortmann, 1063 para.4.
BGH 22.09.1969; BGHZ 52, 321 (324 seq.); OLG Stuttgart 20.09.2001, Yearbook XXIX (2004), 729
(731); OLG Hamburg 12.03.1998, IPRspr 1999, No. 178 = Yearbook XXIX (2004), 663 (665 seq.).
456
be slowed down by a party being required to provide security for costs, especially given that
in light of the general rule that the declaration should be granted the defendant may well
be considered to be the true claimant.84 Furthermore, it has been held that security for costs
for the enforcement of foreign awards may conflict with ArticleIII NYC, which prohibits
proceedings for the enforcement of foreign awards being made subject to requirements that
are stricter than those to which domestic awards would be subject.85
VII. Merits
A.
General Principles
41 In line with the general principle underlying the New York Convention 1958,86 German law
is based on the assumption that foreign awards should normally be enforced in Germany. A
court can only refuse to declare an award enforceable if the party opposing such a declaration
can prove that one of the few grounds to resist enforcement enumerated in ArticleV NYC
exists.
42 ArticleV NYC provides:
1. Recognition and enforcement of the award may be refused, at the request of the
party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:
(a) The parties to the agreement referred to in ArticleII were, under the law applicable to them, under some incapacity, or the said agreement is not valid under
the law to which the parties have subjected it or, failing any indication thereon,
under the law of the country where the award was made; or
(b) The party against whom the award is invoked was not given proper notice of the
appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or
(c) The award deals with a difference not contemplated by or not falling within the
terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions
on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to
arbitration may be recognised and enforced; or
(d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not
in accordance with the law of the country where the arbitration took place; or
(e) The award has not yet become binding on the parties, or has been set aside or
suspended by a competent authority of the country in which, or under the law
of which, that award was made.
2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds
that:
84
85
86

OLG Hamburg 12.03.1998, IPRspr 1999, No. 178 = Yearbook XXIX (2004), 663 (665 seq.).
On this scheme see van den Berg (1996), p.267.
1061 Krll
457
(a) The subject matter of the difference is not capable of settlement by arbitration
under the law of that country; or
(b) The recognition or enforcement of the award would be contrary to the public
policy of that country.
Beyond these grounds that are intended to protect certain vital interests of the state and the 43
party opposing enforcement, no further examination of the award is possible. In particular,
the courts will not scrutinize the award as to its correctness, as any rvision au fond is not
permitted.
Concerning the structure and the wording of the various defences, ArticleV NYC albeit 44
indirectly via Articles34 and 36 ML is the model for 1059 (2) ZPO, which regulates the
enforcement of domestic awards. Thus, with the exception of the additional defence in ArticleV (1)(e) NYC (which makes no sense in relation to domestic awards), the declaration of
enforceability is submitted largely to the same defences. In interpreting the various defences
in Article V NYC, German courts though aware that an autonomous interpretation of
the various concepts is necessary87 rarely refer directly to foreign decisions or literature.
However, as the relevant material is extensively discussed in the various German commentaries and the other legal literature used by the courts, the interpretation of the NYC in other
Contracting States at least indirectly influences the position taken by German courts.88
Notwithstanding that ArticleV NYC provides that the declaration of enforceability may be 45
refused if one of the grounds to refuse enforcement exists, the prevailing view is that German
courts do not have discretion in this respect, but must instead refuse leave for enforcement.
May is interpreted as shall.89 However, in practice the consequences of this difference in
approach are minor. German courts have interpreted the various defences mentioned in
Article V NYC so narrowly that they already denied the existence of a defence in most of
the cases where foreign courts have relied on their discretion to declare awards enforceable
despite existing defences. By imposing the additional requirement of a causal nexus between
the award and the procedural defect (infra, paras 48 and 99) and by assuming wide ranging
preclusion of defences (infra, para. 55), German courts have reached the same results by
different means.90
Partial recognition and enforcement of an award is possible where the grounds to refuse 46
only affect certain parts of the award. To this extent, ArticleV (1)(c) NYC codifies a general
principle not limited to the excess of competence defence.91
Agreements that the award shall be complied with without undue delay and that all rights 47
to appeal are waived (or the agreement on arbitration rules containing such provisions) are
not, in general, considered to constitute a waiver of all (or at least certain) defences. On the
contrary, the prevailing view in Germany is that the New York Convention 1958 provides
87
88
89
90
91
BGH 08.10.1981, NJW 1982, 1224 (1225) = Yearbook VIII (1983), 366 (367 seq.).
For that reason where appropriate reference is also made to decisions of foreign courts which in the
authors view support the position submitted for German law.
Bill on the New York Convention, BT-Drs. 3/2160, p. 26; MnchKommZPO-Mnch (2013), 1061
para.28; for a different view with convincing arguments Nienaber (2002), p.109 et seq.; Stein/JonasSchlosser (2002), Anhang 1061 para.73; cf. supra, Krll/Kraft, 1059 para. 44.
On the different ways to reach comparable results Nienaber (2002), pp.162 et seq.
Weigand-Haas (2002), NYC, Art. V paras12 et seq.
458
for a minimum standard of protection that may only be waived once the party has gained
knowledge of the content of the award.92
B.
Burden of Pleading and Burden of Proof
48 The burden of pleading for all factors affecting the admissibility of an application, in particular the existence of an award, is borne by the applicant. By contrast, the party opposing the
application bears the burden of pleading concerning the existence of a ground for refusing a
declaration. In this respect, ArticleV NYC distinguishes between the grounds mentioned in
subsection 2, namely the lack of objective arbitrability and public policy, and those in subsection 1. The former are to be observed by the court ex officio at all stages of the proceedings. In
principle,93 they do not have to be specifically pleaded and can also be invoked at the appeal
stage for the first time. By contrast, all grounds mentioned in ArticleV (1) NYC must be
pleaded by the party wishing to rely on them.
49 Courts have been fairly strict concerning the requirements for such pleading. In particular,
where a causal nexus between the defect and the outcome of the proceedings is required,
a party must clearly state how the defect has affected the award.94 Moreover, in connection
with domestic awards, the German Supreme Court (Bundesgerichtshof BGH) has even
required the parties to state clearly the specific ground on which they rely, considering the
mere statement of the relevant facts to be insufficient.95 The strictness of this obligation is,
however, mitigated by the fact that a number of the grounds mentioned in ArticleV (1) NYC
also constitute a violation of the ordre public, such that they must be reviewed ex officio in the
context of ArticleV (2) NYC.96 Furthermore, in light of considerable overlap between the
various grounds and the principle that of jura novit curia (the judge knows the law), a wrong
allocation of a set of facts to one of the grounds should not affect the chances of success in
raising the defences.97
50 Irrespective of the burden of pleading, the burden of proof for the various defences is generally borne by the party resisting enforcement. Although public policy has to be taken into
account ex officio, the burden of proof stays with the party opposing enforcement.98
51 Different views exist as to who has to bear the burden of proof concerning the conclusion of
a valid arbitration agreement. The prevailing view appears to be that the applicant must prove
92
93
94
95
96
97
98
Weigand-Haas (2002), NYC, Art. V para.8; cf. BayObLG 15.12.1999 = (2000) Int.A.L.R. N-69, denied
a waiver of grounds to set aside a German award on the basis of Art. 24 (2) ICC Rules (1998); Schwab/
Walter (2005), 1059 Chap. 24 para.53; Zller-Geimer (2014), 1059 paras79 et seq.
But see OLG Celle 20.11.2003, Yearbook XXX (2005), 547 (550) = (2004) Int.A.L.R. N-58 requesting
sufficient pleading for those parts of public policy which primarily protect private interests.
OLG Celle 19.02.2004, OLGR Celle 2004, 396 (397) obligation to state what a party would have submitted if its right to be heard had not been violated and how that would have changed the outcome; c.f.
OLG Karlsruhe 29.11.2002 9 Sch 01/02; in the context of a domestic award OLG Mnchen 08.05.2006
34 Sch 38/05.
Cf. in the context of domestic awards BGH 02.11.2000, BGHZ 145, 376 (381) = NJW 2001, 373 = note
by Boecker, EWiR 2001, 345 = note by Voit, ZZP 2001, 355 et seq. = (2002) Int.A.L.R. N-12; Ehricke,
ZZP 2000, 453 (459).
Cf. supra, Krll/Kraft, 1059 paras45 et seq.; see also the Hong Kong Court of Final Appeal Hebei Import &
Export Corp. v. Polytek Engineering Co. Ltd., Yearbook XXIV (1999), 652 (667 seq.).
See in connection with domestic awards OLG Mnchen 22.06.2005, SchiedsVZ 2005, 308 (309).
OLG Dsseldorf 21.07.2004 VI Sch(Kart) 01/02; OLG Saarbrcken 30.05.2011, SchiedsVZ 2012, 4;
OLG Mnchen 11.06.2011, SchiedsVZ 2011, 337; Stein/Jonas-Schlosser (2002), Anhang 1061 para.74.
1061 Krll
459
the conclusion of the arbitration agreement as a prerequisite for enforcement.99 ArticleV (1)
(a) NYC, which clearly allocates the burden of proof to the party opposing the arbitration,
is considered to cover only the validity of the agreement in a narrow sense, but not its conclusion. However, the better view is to require of the applicant only the submission of the
arbitration agreement upon which the arbitral tribunal has based its decision, and ultimately
leave the burden of proof of its invalidity, including the lack of consent of the parties to the
agreement submitted, with the party opposing recognition and enforcement.100
C.
Factual Basis
According to the general principles of German procedural law, courts must base their deci- 52
sions on the facts pleaded and the evidence submitted to them by the parties. That also applies to the proceedings to have foreign awards declared enforceable. In determining whether
one of the defences in ArticleV NYC exists, the courts are not bound by the facts established
by the arbitral tribunal.101 Even in connection with substantive public policy the focal point
of discussion the danger that the courts review of the factual determinations will result
in a rvision au fond is so limited that there is no need to restrict the factual review to cases
with defects also in the fact finding process.102 Equally, the courts are not bound by the legal
reasoning of the arbitral tribunal.103
D.
Preclusion
1.
Participation in Arbitration Proceedings without Objections
Most of the defects underlying the various defences in ArticleV NYC can already be invoked 53
in the arbitral proceedings or would justify annulment proceedings at the place of arbitration. Thus, a party which has participated in the arbitral proceedings without objecting to
a known defect before the arbitral tribunal will not, in general, be able to rely on this defect
as a defence in the proceedings to have the award declared enforceable. In most cases, the
99
100
101
102
103
OLG Celle 04.09.2003, SchiedsVZ 2004, 165 (167) = Yearbook XXX (2005), 528 (531) = (2004)
Int.A.L.R. N-21; OLG Rostock 22.11.2001, IPRax 2002, 401 (403) = Yearbook XXIX (2004), 732
(736) = (2002) Int.A.L.R. N-31; OLG Schleswig 30.03.2000, RIW 2000, 706 (707) = Yearbook XXXI
(2006), 652 (655 seq.); OLG Mnchen 19.01.2009 34 Sch 04/08; id. 31.8.2009 = SchiedsVZ2009,
340-343; OLG Frankfurt 27.08.2009 26 Sch 3/09; in the context of domestic awards, OLG Mnchen 16.12.2011 34 Sch 30/11; OLG Koblenz 31.01.2012 2 Sch 12/10; not clearly differentiating
BayObLG 12.12.2002, RIW 2003, 383 (384) = Yearbook XXIX (2004), 761 (764); Stein/Jonas-Schlosser
(2002), Anhang 1061 para.74; Schwab/Walter (2005), Chap. 30 para.26; cf. in the context of the NYC
Weigand-Haas (2002), NYC, Art. V para.5.
Krll, ZZP 2004, 453 (464 et seq.); see also supra, Krll/Kraft, 1059 paras48 et seq.
Stein/Jonas-Schlosser (2002), 1063 para.8a; cf. OLG Rostock 22.11.2001, IPRax 2002, 401 (403) = Yearbook XXIX (2004), 732 (736 seq.) = (2002) Int.A.L.R. N-31; OLG Celle 04.09.2003, SchiedsVZ 2004,
165 (168) = Yearbook XXX (2005), 528 (533 seq.) = (2004) Int.A.L.R. N-21; OLG Celle 14.12.2006;
OLG Dsseldorf 21.07.2004 VI Sch(Kart) 01/02; OLG Koblenz 31.01.2012 2 Sch 12/10; OLG Bremen 14.09.2012 2 Sch 2/12.
In favour of such a limitation Zller-Geimer (2014), 1059 para.53; Trappe, Rvision au fondbei der
Vollstreckung eines Schiedsspruchs eine Anmerkung, RPS 1/2000, 7 (8 seq.); in the same direction but
finally left open OLG Hamburg 12.03.1998, IPRspr 1999, No. 178 = Yearbook XXIX (2004), 663 (669
seq.).
For details see supra, Krll/Kraft, 1059 paras 52 et seq.
460
defect will either be considered to be cured under the relevant law104 or the right to rely on it
will have been waived or at least precluded under the lex arbitri.105 In line with Article4 ML,
the various national arbitration laws often provide that a party will lose its right to rely on
procedural defects if it proceeds with the arbitration and fails to raise its objection without
undue delay. Such provisions will, in general, be respected by German courts. That raising
objections, in particular concerning the tribunals conduct, may antagonize the arbitral tribunal is not considered to be a justification for such behaviour.106
54 Irrespective of a possible cure or preclusion under the lex arbitri, German courts have also
held that reliance on defects to which no objection has been made in the arbitral proceedings
would violate the principle of venire contra factum proprium, which is considered to form part
of the NYC.107 Naturally, a party which has not participated in arbitration proceedings at all
is not excluded from invoking defences. There is no obligation to participate in proceedings
merely to challenge the jurisdiction of the tribunal.108
2.
Failure to Make Use of Remedies at Place of Arbitration
55 By contrast, it is highly controversial whether defences may also be precluded where parties
who have participated in the proceedings have not made use of existing remedies against the
award at the place of arbitration within the statutorily prescribed time limits. Under the old
law, preclusion was assumed for the defence of non-existence of an arbitration agreement109
but rejected for other defences.110 The New York Convention 1958 does not explicitly provide for such a preclusion of defences. Some courts have deduced from the absence of such
an explicit regulation that no preclusion is possible under the New York Convention 1958.111
In support of this argument, it is submitted that the opposite view would de facto leave it
to the foreign legislature to determine whether defences are precluded by inserting a time
limit for the remedies against the award. Other courts have adopted a far reaching preclusion
104
105
106
107
108
109
110
111
E.g. OLG Hamburg 30.07.1998, RPS 1/1999, 13 (15) = Yearbook XXV (2000), 714 (715) (subsequent
conclusion of an arbitration agreement); OLG Schleswig 30.03.2000, RIW 2000, 706 (707 seq.) = Yearbook XXXI (2006), 652 (660).
For the different requirements in regard to the arbitration agreement Weigand-Haas (2002), NYC, Art. II
paras89 et seq.
OLG Karlsruhe 04.01.2012, SchiedsVZ 2012, 101.
BayObLG 23.09.2004 = Syrian Trading Company v. BMW AG, Yearbook XXX (2005), 568 (571 seq.).
OLG Bremen 30.10.2008 2 Sch 2/08.
BGH 07.01.1971, BGHZ 55, 162 (167 et seq.); id. 21.10.1971, BGHZ 57, 153 (157); id. 10.05.1984,
NJW 1984, 2763 (2674) (the court relies primarily on the wording of the old 1044 (2) No. 1 ZPO
according to which enforcement could only be refused if the award was not legally valid in its country
of origin); for a different view see Schwab/Walter (2005), Chap. 30 para.19; Blow, Der Schiedsvertrag
in dem Verfahren der Vollstreckbarerklrung eines auslndischen Schiedsspruches, NJW 1971, 486; id.,
Der Schiedsvertrag im Exequaturverfahren, NJW 1972, 415.
BGH 14.05.1992, NJW 1992, 2299; id. 26.04.1990, Yearbook XXI (1996), 532 (533).
BayObLG 16.03.2000, RPS 2/2000, 15 (16) = NJW-RR 2001, 431 = Yearbook XXVII (2002), 445
(449) (enforcement under Art. 8 of the German-Soviet Treaty of 1958); OLG Celle 04.09.2003, SchiedsVZ 2004, 165 (168) = Yearbook XXX (2005), 528 (534) = (2004) Int.A.L.R. N-21; OLG Schleswig
30.03.2000, RIW 2000, 706 (707) = Yearbook XXXI (2006), 652 (658); OLG Rostock 22.11.2001, IPRax 2002, 401 (405) = Yearbook XXIX (2004), 732 (740) = (2002) Int.A.L.R. N-31 critical comment
Krll, IPRax 2002, 384 (387); see also Stein/Jonas-Schlosser (2002), Anhang 1061 para.75; WeigandHaas (2002), NYC, Art. V para.11.
1061 Krll
461
policy.112 They have basically prevented any award debtor which did not make use of the
remedies available at the place of arbitration from relying on these defences in enforcement
proceedings in Germany.
The German Supreme Court correctly supports a middle ground, allowing for preclusion 56
under narrow circumstances. Preclusion requires first, that a party has agreed to arbitrate in
the country where the award was rendered. If a party already contests ever having submitted
to arbitration in a particular country, it cannot be required to make use of the remedies in
that country.113 Second, it is necessary that the remedies available at the place of arbitration
provide for an equal standard of protection as that afforded by the German provisions. Third,
the further requirements for a preclusion must be met, i.e. the other party must have relied
on a partys behaviour.114 In such cases, the use of the word may in ArticleV NYC, as well
as ArticleVII NYC, provides a sufficient legal basis for allowing preclusion under the New
York Convention 1958. Furthermore, it is difficult to see why foreign awards should in this
respect be treated differently from domestic awards. As long as it is ensured that the existing
remedies at the place of arbitration guarantee an equal level of protection, the same preclusion principles should apply.115 Exceptions to this rule are cases where a party has already
been prevented from participating in the arbitral proceedings at the place of arbitration.116
Decisions rendered in arbitration-related court proceedings at the place of arbitration 57
may contain recognizable findings binding for the German exequatur court which de facto
excludes a successful invocation of the same defence in the German enforcement proceedings. This applies in particular to the defence of the lack of a valid arbitration agreement
under ArticleV (1)(a) NYC117 and may also relate to the question of whether there exists
112
113
114
115
116
117
KG Berlin 10.08.2006 SchiedsVZ 2007, 108; KG Berlin 17.04.2008 20 Sch 02/08; see also OLG Karlsruhe IPRax 2007, 455 with note Krll, IPRax 2007, 430 et seq.; Krll/Marenkov, SIA 2009/01, 195 et seq.
OLG Mnchen 31.08.2009 = SchiedsVZ2009, 340-343; BGH 16.12.2010 III ZB 100/09, SchiedsVZ
2011, 105.
Denied in BGH 17.04.2008 III ZB 97/06, SchiedsVZ 2008, 196; see on the decision Krll, Treu und
Glauben bei der Vollstreckbarerklrung auslndischer Schiedssprche, IPRax 2009, 145.
OLG Karlsruhe 27.03.2006, SchiedsVZ 2006, 281 (283) with note by Gruber; for commentary see also
Krll, IPrax 2007, 430; OLG Karlsruhe, 04.01.2012, SchiedsVZ 2012, 101 OLG Stuttgart 14.10.2003
= (2005) Int.A.L.R. N-48; for a more detailed analysis see Krll, (2002) Int.A.L.R. 160 (175 seq.); in
favour also Musielak-Voit (2013), 1061 para.20; different Zller-Geimer (2014), 1061 para.26 seq.
(defences that could have been but were not invoked in the course of the arbitral proceedings are precluded); OLG Hamburg 30.07.1998, RPS 1/1999, 13 (17); BayObLG 20.11.2003, IHR 2004, 81 (83) =
Yearbook XXIX (2004), 771 (775) (with the exception of the public policy defence); BGH 01.02.2001,
RPS 1/2001, 14 (16) = Yearbook XXIX (2004), 700 (712 seq.) (in the context of the public policy defence also in favour of an obligation to make use of the available remedies at the place of arbitration);
Sandrock, IPRax 2001, 550 (552 seq.); Krll, (2002) 17 (8) Mealeys I.A.R. 34 (36 seq.).
BayObLG 16.03.2000, RPS 2/2000, 15 (16) = Yearbook XXVII (2002), 445 (449).
Cf. OLG Bremen 30.09.1999, RPS 2/2000, 18 = Yearbook XXXI (2006), 640 (644 seq.) = (2001)
Int.A.L.R. N-26; KG Berlin 18.05.2006, SchiedsVZ 2007, 100 with a critical note by Neelmeier; cf. High
Court Andra Pradesh 09.09.2002, International Investor KCSC v. Sanghi Polyesters Ltd., Yearbook XXX
(2005), 577 (586); High Court of Singapore 04.06.2001, Newspeed International Ltd. v. Citus Trading Pte
Ltd., Yearbook XXVIII (2003), 829 (833) (arguing that party had a choice where to raise defence but that
decision rendered in these proceedings is binding for other proceedings); different Cour dAppel [Court
of Appeal] Paris 12.02.1993, Socit Unichips Finanziaria SpA and Unichips International BV v. Franois
Gesnouin and Michle Gesnouin Yearbook XIX (1994), 658 (660); cf. on the effects of decisions at the
place of arbitration on the German proceedings Solomon (2007), pp. 513 et seq.
462
an enforceable award at all.118 However, the preclusive effects of foreign decisions must be
determined on the basis of the narrow German concept of res judicata. It only extends to the
dispositive part of a decision but not to the underlying facts, as does, for example, the English
concept of issues estoppel.119 In addition, actions to have an award declared enforceable or
set aside in a foreign country have a different matter in dispute than proceedings to have
the award declared in Germany. Moreover, the German exequatur court is not bound if the
decision cannot be recognized in Germany (328 ZPO) or if the party was deprived of any
efficient protection.120 The German exequatur court is, however, bound by earlier decisions
of German courts regarding the existence of an arbitration agreement.121
E.
Grounds to Refuse Enforcement
58 The wording of ArticleV NYC clearly distinguishes between the grounds to be pleaded by
the party opposing recognition in ArticleV (1) NYC and those to be taken into account by
the courts ex officio in ArticleV (2) NYC. However, most of the defences enumerated in ArticleV (1) NYC can, in principle, also constitute violations of procedural public policy under
ArticleV (2)(b) NYC. This applies to the right to be heard in ArticleV (1)(b) NYC, as well
as to the requirements concerning a valid submission to arbitration in ArticleV (1)(a) and
(c) NYC, without which no one can be deprived of his day in court. The inclusion of these
particular aspects of public policy in the list of grounds in Article V (1) NYC to be pleaded
by a party does not exclude them from the ambit of public policy under ArticleV (2)(b)
NYC. Thus, gross violations of the public policy aspects of the procedural rights protected by
ArticleV (1) NYC can also be taken into account by the courts ex officio.122
F.
Grounds That Must be Pleaded by a Party
1.
Lack of a Valid Arbitration Agreement ArticleV (1)(a) NYC123
59 The valid submission to arbitration is an indispensable precondition for any arbitration and
consequently also for the recognition of awards. In this respect, ArticleV (1)(a) NYC covers
the various aspects of the existence of an arbitration agreement between the parties in general, while ArticleV (1)(c) NYC deals with the submission of the actual dispute to the arbitral
tribunal and the related conferral of powers. No party can be deprived of its constitutionally
guaranteed access to its lawful judge without its consent, as evidenced in a valid arbitration
agreement. Consequently, the enforcement of an award not based on such an agreement is
also contrary to public policy in the sense of ArticleV (2)(b) NYC.124
118
119
120
121
122
123
124
See OLG Mnchen 22.06.2009 = OLGR Mnchen2009, 679-682 (binding force of a Spanish decision
that a lack of one signature does not affect the validity of the award).
For the different concepts of res judicata see 71st ILA Berlin Conference Report (2004), Committee
on International Commercial Arbitration, Interim Report: Res judicata and arbitration, pp.826 (833 et
seq.).
BGH 01.02.2001, RPS 1/2001, 14 (16 seq.) = Yearbook XXIX (2004), 700 (712 et seq.) = note by Sandrock, IPRax 2001, 550 (553 seq.); Musielak-Voit (2013), 1061 para.20.
OLG Celle 31.05.2007 8 Sch 06/06.
Cf. supra, Krll/Kraft, 1059 paras45 et seq.
For a detailed analysis of the various problems see Krll, ZZP 2004, 453 et seq.; Mallmann, SchiedsVZ
2004, 152 et seq.
OLG Rostock 22.11.2001, IPRax 2002, 401 (405) = Yearbook XXIX (2004), 732 (739) = (2002)
Int.A.L.R. N-31.
1061 Krll
463
Given that there cannot be any arbitration without an arbitration agreement, the existence 60
of the latter is, in general, already verified by the arbitral tribunal, particularly when its jurisdiction is challenged by one of the parties. In those cases, a preliminary award/ruling on
jurisdiction will often be rendered. These findings of the arbitral tribunal, however, do not
generally bind the German enforcement court. It can enter into a full investigation of the facts
and the law.125 In contrast to the former German arbitration law, the parties may no longer
confer the power to settle disputes as to its jurisdiction on the arbitral tribunal with binding
effect for the state courts.126 The dispute as to the correctness of the arbitral tribunals decision on its jurisdiction can no longer be considered to be arbitrable in Germany. As the issue
of the arbitrability of a dispute is determined by the law of the exequatur state, a German
court will go so far as to enter into a full investigation of the facts and the law in cases where
the law applicable to the arbitration allows for a binding Kompetenz-Kompetenz.127
The same applies to decisions of foreign courts concerning the validity of the arbitration 61
agreement, in particular referrals of the parties to arbitration under ArticleII NYC. Even
if these decisions relate not merely to the jurisdiction of the foreign courts but determine
positively that a valid arbitration agreement exists, they are not binding on the German
exequatur court.128 A decision which incorrectly assumes the existence of a valid arbitration
agreement and thereby deprives a party of its day in court is contrary to public policy and
cannot therefore be recognized in Germany.129
a. Incapacity of a Party: An award shall be set aside if a party to the arbitration agreement was 62
under some incapacity pursuant to the law applicable to it. Where enforcement is sought in
Germany, the law applicable to a party is determined on the basis of the relevant German
conflict of laws provisions. In the case of a natural person, Article7 (1) sentence 1 Introductory Law to the Civil Code (Einfhrungsgesetz zum Brgerlichen Gesetzbuch EGBGB)
declares the law of nationality to be applicable. For legal persons, the capacity to arbitrate
is determined by the law of their seat or, in the case of companies from other EU member
states, the law of the place of incorporation.130 The capacity of a party must exist at the moment of the conclusion of the arbitration agreement.131
The practical relevance of this ground to refuse recognition is limited. Restrictions of the 63
subjective arbitrability are rare and in those few cases where they exist, a party will often be
125
126
127
128
129
130
131
E.g. OLG Rostock 22.11.2001, IPRax 2002, 401 (404) = Yearbook XXIX (2004), 732 (736 seq.) = (2002)
Int.A.L.R. N-31; OLG Celle 14.12.2006; controversial for a different view OLG Kln 26.10.2004 = Yearbook XXX (2005), 574 (576).
1040 (3) ZPO; Berger (1998), p.46, fn. 4.
But see for a different view OLG Schleswig 24.06.1999, Yearbook XXIX (2004), 687 (691 seq.) (where
still under the old arbitration law the court considered itself bound by the decision of the arbitral
tribunal on its jurisdiction since the arbitration clause provided for a binding Kompetenz-Kompetenz).
Stein/Jonas-Schlosser (2002), Anhang 1061 para.76; for the opposite view OLG Bremen 30.09.1999,
RPS 2/2000, 18 = Yearbook XXXI (2006), 640 (644 seq.) = (2001) Int.A.L.R. N-26.
The situation may be different for decisions in which the existence of an arbitration agreement is denied
see KG Berlin 18.05.2006, SchiedsVZ 2007, 100.
Reithmann/Martiny-Hausmann (2004), para.3467; cf. but without the reservation for legal persons from
other EU Member States BGH 23.04.1998, NJW 1998, 2452 = Yearbook XXIV (1999), 928; Schwab/
Walter (2005), Chap. 24 para. 18; Musielak-Voit (2013), 1061 para. 14 in connection with 1059
para.6; Lachmann (2008), para.2553; MnchKommZPO-Mnch (2013), 1059 para.6; Stein/JonasSchlosser (2002), Anhang 1061 para.79.
Lachmann (2008), para.2554; Stein/Jonas-Schlosser (2002), Anhang 1061 para.79.
464
prevented from relying on them. It is widely accepted that, under the principles of good faith,
a state or state owned companies or agencies may not rely on their own law to avoid obligations freely entered into.132 Contrary to what has been decided by the German Supreme
Court under the old law,133 this principle should, in general, apply not only to states and state
enterprises but also to other legal persons which have entered into arbitration agreements
knowing that they do not have the capacity to do so. At the very least, where a party has
not invoked the lack of capacity during the arbitral proceedings, it should be precluded from
doing so at the enforcement stage under the principle of venire contra factum proprium.
64 Where the agreement is concluded in a country with both parties present, Article12 EGBGB
furthermore limits reliance on the lack of capacity to those restrictions known in the law of
that country; this is justified by reference to the principles of good faith and legitimate expectation.134 Irrespective of this, before determining that a party lacks the necessary capacity
to enter into an arbitration agreement or that particular requirements must be fulfilled, it is
necessary to determine whether the restrictions in question extend to the arbitration agreement or whether they may be limited to the substantive contract.135
65 A closely related but distinct issue from that of subjective arbitrability is whether the person
acting was validly empowered to enter into an arbitration agreement for a party.136 At least in
connection with legal persons, this issue will be governed by the same law, the law applicable
to the legal person in question. For natural persons the law applicable to the empowerment
of the agent will apply.137
66 b. Invalidity of the Arbitration Agreement: i. General Principles: The defence of the lack of
a valid arbitration agreement plays an important role in practice.138 The notion of validity
should be interpreted broadly to cover both questions as to whether the agreement was
concluded at all and questions as to the validity of the agreement in the proper sense. In
particular, in relation to the formal requirements which are closely interwoven with questions of consent, it is often difficult to distinguish meaningfully between the issues of validity
and consent. Consequently but contrary to the prevailing view in German literature and
jurisprudence the burden of proof for both conclusion and validity in the proper sense
should be borne by the party opposing enforcement. The majority view, however, is that on
the basis of the reference in ArticleV (1)(a) NYC to an agreement referred to in ArticleII
132
133
134
135
136
137
138
Schwab/Walter (2005), Chap. 24 para.5; cf. Berger, The Creeping Codification of the Lex Mercatoria, The
Hague 1999, p.296.
BGH 23.04.1998, NJW 1998, 2452 (denying subjective arbitrability of a Croatian company for the lack
of the right to engage in foreign trade under Croatian law); concurring Musielak-Voit (2013), 1059
para.6; MnchKommZPO-Mnch (2013), 1059 para.6; in favour of the position submitted here Schtze, Zur partiellen Rechtsfhigkeit in internationalen Schiedsverfahren, IPRax 1999, 87 (88) (note on
BGH 23.04.1998, IPRax 1999, 104).
Whether Art.12 EGBGB is limited to natural persons as its wording suggests was left open by BGH
23.04.1998, NJW 1998, 2452 (2453) = Yearbook XXIV (1999), 928.
Cf. Bermuda Court of Appeal 07.07.1989, Sojuznefteexport (SNE) (USSR) v. Joc Oil (Bermuda), Yearbook
XV (1990), 384 (406) relying on the doctrine of separability.
Cf. Tribunal Supremo (Spanish Supreme Court) 17.02.1998, Unin de Cooperativay Agrcolas Epis-Centre
v. La Palentina SA, Yearbook XXVII (2002), 533 (535); for the opposite view Corte di Cassazione [Supreme Court of Italy] 23.04.1997, Dalmine S.p.A. v. M. & M. Sheet Metal Forming Machinery A.G., Yearbook XXIV (1999), 709 (710).
Cf. Stein/Jonas-Schlosser (2002), Anhang 1061 para.44; see also supra, Trittmann/Hanefeld, 1029
para.12.
For a more detailed analysis cf. Krll, ZZP 2004, 453 et seq.; Mallmann, SchiedsVZ 2004, 152 et seq.
1061 Krll
465
the applicant must prove the conclusion of the agreement while the opposing party then
has to prove the invalidity of the concluded agreement.139
A party who has participated in the arbitral proceedings without challenging the jurisdiction 67
of the arbitral tribunal is prevented from relying on ArticleV (1)(a) NYC. Either its participation will have led to the subsequent conclusion of an arbitration agreement under the law
applicable to the arbitral proceedings, or reliance on the lack of a valid agreement would be
contrary to good faith (venire contra factum proprium).140
ii. Formal Reasons: The invalidity of the agreement may be the result of the non-fulfilment of 68
the relevant requirements as to the form of the arbitration agreement.141 Different views exist
as to the law governing the form requirement. According to the narrowest view, the arbitration agreement must meet the form requirements of ArticleII NYC if it is to be formally
valid.142 This is deduced from the reference in ArticleV (1)(a) NYC to an agreement referred
to in Article II. By contrast, the BGH, relying on Article VII NYC, considers arbitration
agreements to be formally valid if they either meet the form requirement of ArticleII NYC,
of 1031 ZPO or of the law determined by the ordinary conflict of laws rule for the formal
validity of agreements in general, Article 11 EGBGB.143 These are either the form requirements of the law applicable to the arbitration agreement as such or the law of the place where
the arbitration agreement was concluded.
Systematically, the most convincing view is to consider all those agreements that meet the 69
form requirements of 1031 ZPO to be formally valid.144 If the legislature considered such
139
140
141
142
143
144
OLG Mnchen 23.11.2009 34 Sch 01/09; id. 31.08.2009 = SchiedsVZ2009, 340-343; id., 19.1.2009
34 Sch 04/08; OLG Frankfurt 27.08.2009 26 Sch 3/09; OLG Celle 04.09.2003, SchiedsVZ 2004, 165
(167) = Yearbook XXX (2005), 528 (531) = (2004) Int.A.L.R. N-21; OLG Rostock 22.11.2001, IPRax
2002, 401 (403) = Yearbook XXIX (2004), 732 (735) = (2002) Int.A.L.R. N-31; BayObLG 12.12.2002,
RIW 2003, 383 (384) = Yearbook XXIX (2004), 761 (764); Stein/Jonas-Schlosser (2002), Anhang
1061 para.74; Musielak-Voit (2013), 1061 para.14.
For a subsequent conclusion of the arbitration agreement OLG Hamburg 30.07.1998, RPS 1/1999,
13 (15) = Yearbook XXV (2000), 714 (715); OLG Stuttgart 06.12.2000, Yearbook XXIX (2004),
742 (744); OLG Schleswig 30.03.2000, RIW 2000, 706 (708) = Yearbook XXXI (2006), 652 (657);
OLG Mnchen 22.10.2012, SchiedsVZ 2013, 62; preclusion under good faith consideration BayObLG
23.09.2004 = Syrian Trading Company v. BMW AG, Yearbook XXX (2005), 568 (571 seq.); OLG Braunschweig 18.11.2002; cf. Mallmann, SchiedsVZ 2004, 152 (157); not where the defences on the merits
was merely auxiliary to a challenge of the tribunals jurisdiction see OLG Mnchen 19.01.2009 34 Sch
04/08.
OLG Mnchen 23.11.2009 34 Sch 01/09; OLG Frankfurt 27.08.2009 26 SchH 03/09; OLG Koblenz
31.01.2012 2 Sch 12/10 (contested authenticity of signature).
E.g. OLG Schleswig 30.03.2000, RIW 2000, 706 (707) = Yearbook XXXI (2006), 652 (656); OLG Hamburg 30.07.1998, RPS 1/1999, 13 (14) = Yearbook XXV (2000), 714; OLG Celle 18.09.2003, Yearbook
XXX (2005), 536 (538) = (2005) Int.A.L.R. N-51; Musielak-Voit (2013), 1061 para.14; Schwab/
Walter (2005), Chap. 30, para.18; MnchKommZPO-Mnch (2012), 1061 para.14; Moller, Schiedsverfahrensnovelle und Vollstreckung auslndischer Schiedssprche, NZG 1999, 143 (145 seq.); against
Krll, (2002) Int.A.L.R. 160 (165 et seq.).
BGH 21.09.2005, SchiedsVZ 2005, 306 (307) = Yearbook XXXI (2006), 679 = (2006) Int.A.L.R.
N-24; BGH 30.09.2010, SchiedsVZ 2010, 332 f; OLG Celle 14.12.2006; OLG Mnchen 31.08.2009 =
SchiedsVZ2009, 340-343; OLG Frankfurt 27.08.2009 26 SchH 03/09.
In favour of such a view also MnchKommZPO-Mnch (2013), 1031 paras10 seq.; Thmmel, FS-Schtze (1999), 935 (938 seq.); Krll, ZZP 2004, 453 (470 et seq.); cf. Stein/Jonas-Schlosser (2002), Anhang
1061 para.76 (discretion of enforcement court to declare award enforceable despite non-fulfilment of
Art. II NYC).
466
form requirements to be necessary to protect the parties from being submitted to arbitration
without actually consenting to it, the same standard should apply at all stages of the arbitration proceedings. The idea of equal standards at all procedural stages underlies the New York
Convention 1958 as well as the Model Law. Comparably to the above mentioned reference
to an agreement in ArticleII in the New York Convention 1958, Article36 ML refers to
an arbitration agreement referred to in Article7, i.e. in both cases the reference is made to
an agreement fulfilling the form requirements also established for the pre-award phase. The
deviation from this idea in the text of the German arbitration law was not intentional but
merely due to the drafting technique adopted by the German legislature, which decided to
submit the recognition and enforcement of foreign awards to the New York Convention
1958 without making the necessary amendments.145 Irrespective of whether one follows
the second or third view, arbitration agreements contained in confirmation letters will be
formally valid, provided that the confirmation letter has been received by the other party.146
70 Moreover, some authors suggest that the arbitration agreement must additionally fulfil the
form requirements of the law applicable to the arbitration agreement as such.147
71 Beyond purely oral arbitration agreements, arbitration clauses contained for the first time in
confirmation letters may also be problematic: if no further document from the other party
exists which could be considered to constitute a written acceptance, they do not comply with
the form requirements of Article II (2) NYC. A mere notice of non-conformity referring
to the confirmation letter is in this regard not sufficient, as it fails to evidence any intent of
the party to agree on terms of the contract.148 Such clauses may, however, comply with the
more lenient form requirements of the German arbitration law, provided there is a usage
that the content of such letters becomes part of the contract.149 The form-requirement is
also not met if the authenticity of the documents containing the arbitration clause or of the
signatures contained therein cannot be proven, even if the parties have started performing
the underlying contract.150
72 iii. Material Validity: Questions of material validity in the sense of ArticleV (1)(a) NYC are
governed by the law chosen by the parties for the arbitration agreement or, in the absence of
such a choice, by the law of the place of arbitration.151 In practice, choice of law clauses for
the main contract are often extended without any further discussion to the arbitration clause
contained in it, irrespective of the recognized separability of the arbitration agreement.152
73 Efforts to deduce the invalidity of the arbitration clause from the invalidity of the main contract containing the clause have in the absence of special circumstances generally been
145
146
147
148
149
150
151
152
See for a more detailed discussion Quinke, SchiedsVZ 2011, 169 (172 seq.).
For a case where receipt was controversial OLG Rostock 22.11.2001, IPRax 2002, 401 = Yearbook XXIX
(2004), 732 = (2002) Int.A.L.R. N-31; differently but on the basis of the first view BayObLG 12.12.2002,
RIW 2003, 383 (384) = Yearbook XXIX (2004), 761 (764).
OLG Mnchen 23.11.2009 34 Sch 01/09.
This would be sufficient to comply with the more lenient form requirements under German law applicable by virtue of Art. VII NYC; see OLG Frankfurt 27.08.2009 26 SchH 03/09.
OLG Koblenz 31.01.2012 2 Sch 12/10.
OLG Schleswig 30.03.2000, RIW 2000, 706 (708) = Yearbook XXXI (2006), 652 (660).
OLG Frankfurt 24.10.2006; Thringer Oberlandesgericht 13.01.2011 1 Sch 1/08.
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rejected by German courts. In this regard, courts have normally adhered to the doctrine of
separability.153
The arbitration agreement is materially not valid in the sense of ArticleV (1)(a) NYC if the 74
parties never reached agreement about arbitration.154 However, the consent must not necessarily be explicit, insofar as a general reference to documents containing an arbitration clause
may be considered to be sufficient if it reveals the intent of a party to make the content of such
document part of its own contract. This was, for example, assumed in a case where a party
in a side letter approved the content of an agreement between two other parties. Whether
it had actual knowledge of the arbitration clause or not was considered to be irrelevant.155
Equally, silence to confirmation letters may suffice to assume the conclusion of an arbitration
agreement.156
The defence may also succeed if the arbitration agreement was validly challenged or termi- 75
nated. The latter may, for example, be assumed where a party fails to raise the arbitration
agreement in court proceedings before the first oral hearing on the merits. An intent,
however, to terminate the arbitration agreement or to consent to such an offer by the other
party must always be positively established. Thus, only initiation or participation in court
proceedings that clearly contradict the arbitration clause can be considered to reveal such an
intent.157 By contrast, mere requests for interim relief do not constitute a termination of the
arbitration agreement. Also, due to the doctrine of separability, the termination of the main
contract does not lead ipso jure to a termination of the arbitration agreement. The same applies to the invalidity of the contract.158 Changes in a framework contract do not necessarily
affect the validity of an arbitration agreement in a separate agreement concluded under such
a framework contract.159
The expiration of time limits for rendering the award will only lead to the termination of 76
the arbitration agreement where this is clearly stated in the arbitration agreement.160 In
particular, time limits contained in the applicable arbitration rules that can be extended by
the institution usually serve a different purpose. Their main object is to prevent delay in the
arbitral proceedings. In most cases, it would be contrary to that purpose and the interests
153
154
155
156
157
158
159
160
OLG Dresden 18.02.2009 11 Sch 07/08; OLG Saarbrcken 30.05.2011, SchiedsVZ 2012, 4.
OLG Rostock 22.11.2001, IPRax 2002, 401 (403 seq.) = Yearbook XXIX (2004), 732 (736 seq.) = (2002)
Int.A.L.R. N-31; cf. note by Krll, IPRax 2002, 384 (385); for an unsuccessful allegation that the agreement reached was a mere fake OLG Mnchen 11.06.2011, SchiedsVZ 2011, 337 et seq.; while it is clear
that the lack of an arbitration agreement constitutes a ground to resist enforcement, it is controversial
whether that constitutes a question of validity; see supra, para. 51.
OLG Dresden 26.07.2012 3 Sch 3/12.
BGH 30.09.2010, SchiedsVZ 2010, 332 seq.
OLG Dresden 18.02.2009 11 Sch 07/08; OLG Hamburg 12.03.1998, IPRspr 1999, No. 178 = Yearbook
XXIX (2004), 663 (667); OLG Celle 02.10.2001, (2003) Int.A.L.R. N-59; OLG Koblenz 28.07.2005,
SchiedsVZ 2005, 260 = Yearbook XXXI (2006), 673 (675) (joint termination of sales agreement not
sufficient); see also OLG Kln 22.06.1999 9 Sch 8/98; where it was held in relation to a sale transaction that even if the main contract should have been void lacking the required number of signatures
under Ukrainian foreign trade law that would not have affected the arbitration agreement which met the
requirements of Art. II NYC.
OLG Hamm 28.11.2008 25 Sch 6/08, 7/08, 8/08 und 9/08.
KG Berlin 06.05.2002 23/29 Sch 21/01; cf. Musielak-Voit (2013), 1061 para.16 who considers (c) to
be applicable in the rare cases where the parties intended to limit the competence of the arbitral tribunal.
468
of the parties to consider the arbitration agreement terminated at the expiration of the time
limit with the need to start completely new proceedings.161
77 Where the person concluding the agreement lacked the necessary power of representation,
the party allegedly represented is, in general, not bound.162 Non-signatories are only bound
by an arbitration agreement if the agreement can be interpreted as also extending to them.
That question is normally governed by the law applicable to the arbitration agreement.
German arbitration law does not recognize any type of groups-of-company-doctrine that
goes beyond the ordinary principles of contract interpretation.163 However, discrepancies
between the actual name of a party and the name appearing in the arbitration agreement will
not, in general, suffice to successfully invoke the lack of a valid arbitration agreement if such
discrepancies can be explained or result from subsequent changes in the companys name.164
An arbitration agreement in a contract of sale between the seller and a lessor may also extend
to the lessee where the lessee has signed the sales contract.165
78 German courts have been very reluctant to consider pathological arbitration agreements to
be invalid for an alleged lack of certainty, for the referral to a non-existing institution or because they are contradictory.166 In the case of seemingly conflicting dispute resolution clauses
referring, for example, both to the courts of a certain country and to arbitration courts
generally interpret the clauses in a way that the forum selection clause relates either to the
court proceedings in support of arbitration or to court proceedings only in those cases not
covered by the arbitration clause.167 This applies even to cases where the arbitration clause
and the forum selection clause refer to different countries and it is therefore more difficult to
interpret the forum selection clause as regulating the jurisdiction for procedures in support
of arbitration, which are normally initiated at the place of arbitration.168
161
162
163
164
165
166
167
168
BayObLG 23.09.2004 = Syrian Trading Company v. BMW AG, Yearbook XXX (2005), 568 (572 seq.) the
arbitration agreement foresaw a maximum of 15 months for the arbitral proceeding; BGH 14.04.1988,
BGHZ 104, 178 (180) = NJW 1988, 3090 = Yearbook XV (1990), 450 (453); see also MnchKommZPO-Mnch (2012), 1059 para.14 at the end and fn. 36 who is in the view that such exceeding of
time limit can fall under (a); differently Schwab/Walter (2005), Chap. 24 para.16 falls under (2) No. 1
(a) invalid arbitration agreement.
See OLG Mnchen 19.01.2009 34 Sch 04/08.
Sandrock, Intra and ExtraEntity Agreements to Arbitrate and their Extension to NonSignatories
Under German Law, J.Int.Arb. 2002, 423 et seq.; Busse, Privity to an Arbitration Agreement, (2005)
Int.A.L.R. 95 (97 et seq.).
OLG Bremen 30.09.1999, RPS 2/2000, 18 (19) = Yearbook XXXI (2006), 640 (644) = (2001) Int.A.L.R.
N-26; BayObLG 23.09.2004 = Syrian Trading Company v. BMW AG, Yearbook XXX (2005), 568 (not
reproduced in this regard).
OLG Stuttgart 14.10.2003 = (2005) Int.A.L.R. N-48.
KG Berlin 15.10.1999, RPS 1/2000, 13 et seq. = (2000) Int.A.L.R. N-70 seq. (setting aside of a domestic
award); cf. OLG Kln 26.10.2004 = Yearbook XXX (2005), 574 (576) (Russian Arbitration Institution);
generally on the treatment of such clauses see Krll, Pathological arbitration agreements before German
Courts, IHR 2006, 255; Wilske/Krapfl, Pathological Designation of Arbitration Institutions: two Recent
Decisions on a Contract Drafters Nightmare, (2006) Int.A.L.R. 80 etseq.
OLG Hamm 27.09.2005, SchiedsVZ 2006, 106 (109) = Yearbook XXXI (2006), 685 (693) = (2006)
Int.A.L.R. N-5; OLG Celle 25.08.2005, SchiedsVZ 2006, 52; BGH 12.01.2006, SchiedsVZ 2006, 101;
OLG Dresden 26.07.2012 3 Sch 3/12; see also the very far reaching decision of BGH 25.01.2007.
BGH 12.01.2006, SchiedsVZ 2006, 101 (place of arbitration Geneva; non exclusive jurisdiction of German courts); see also the previous instance OLG Celle 25.08.2005, SchiedsVZ 2006, 52.
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Where the arbitration agreement is contained in the standard conditions of one party, its 79
invalidity may result from the applicable law regulating standard terms and conditions. The
mere fact that a party may choose between arbitration and another form of dispute resolution will not generally be sufficient in itself to render an arbitration agreement invalid, at least
where the agreement is subject to German law.169 In the absence of a consistent jurisprudence to the contrary, it appears likely that German courts would also interpret foreign laws
on general terms in this direction. However, in cases of unequal bargaining power, assumed
for example in franchise agreements, German courts have considered arbitration agreements
providing for arbitration under foreign law and at distant places to be unconscionable and
invalid.170
2.
Violations of the Right to be Heard ArticleV (1)(b) NYC
a. General Principles: The various defences in ArticleV (1)(b) NYC are special emanations 80
of the right to be heard. As the latter forms part of the procedural public policy, there is a
considerable overlap with the public policy defence in ArticleV (2)(b) NYC. For enforcement proceedings under the NYC, ArticleV (1)(b) NYC is the more specific rule such that,
in principle, those violations of the right to be heard covered by it should be pleaded by the
parties.171 By contrast, where enforcement is sought under a treaty allowing only the public
policy defence, the observance of the principles underlying ArticleV (1)(b) NYC can be
ensured within the public policy defence to be taken into account ex officio.172 Furthermore,
according to the German understanding, not every infringement of the right to be heard
necessarily violates the very narrow international ordre public; as such, the defences in (b)
have an importance of their own.173
Different views exist as to the relevant standard to determine whether a party was given an 81
adequate opportunity to present its case. While some authors submit that this should be determined autonomously, the prevailing view is that German law determines the standard of
due process protected by (b).174 However, as (b) only guarantees a minimum standard, this
169
170
171
172
173
174
Baumbach/Lauterbach (2014), 1029 para.15; BGH 10.10.1999, BGHZ 115, 324 (325); id. 18.12.1975,
WM 1976, 331 (332); but see id. 24.09.1998 (invalid if choice lies with the defendant and no obligation
to make such choice when requested by other side); cf. supra, Trittmann/Hanefeld, 1029 para. 16.
Thringer Oberlandesgericht 13.01.2011 1 Sch 1/08 (Subway place of arbitration in New York for
franchise agreement between German franchisee and Netherland company).
But see OLG Bremen 30.09.1999, RPS 2/2000, 18 (19) = Yearbook XXXI (2006), 640 (644 seq.) =
(2001) Int.A.L.R. N-26 (unjustified rejection of particular submission of evidence only covered by public policy defence); for the relationship between the various defences relating to the right to be heard see
also Krapfl (2007), p.150; cf. supra, Krll/Kraft, 1059 paras 45 et seq.
See e.g. BayObLG 16.03.2000, RPS 2/2000, 15 = NJW-RR 2001, 431 = Yearbook XXVII (2002), 445
(449) (enforcement under Art. 8 of the German-Soviet Treaty of 1958); cf. BGH 21.10.1971, BGHZ
57, 153 = NJW 1972, 1449 (enforcement under German-U.S. Friendship Treaty); Stein/Jonas-Schlosser
(2002), 1061 para.81.
Not every violation of the right to be heard is a violation of public policy BGH 21.10.1971, BGHZ 57,
153 (158) = NJW 1972, 1449; OLG Mnchen 06.03.2012 34 Sch 3/10, id., 11.04.2012 34 Sch 21/11,
SchiedsVZ 2012, 156; OLG Kln 02.12.1970, MDR 1971, 402; OLG Hamburg 03.04.1975, AWD 1975,
432 = Yearbook II (1977), 241; Borges, ZZP 1998, 487 (491).
OLG Hamburg 12.07.1978, Yearbook IV (1979), 266 (267); Schwab/Walter (2005), Chap. 57 para.9;
Stein/Jonas-Schlosser (2002), Anhang 1061 para.83a; cf. Weigand-Haas (2002), NYC, Art. V paras27 et
seq.; cf. US Court of Appeal (2nd Cir.) 23.12.1974, Parsons & Whittemore Overseas Co Inc v. Socit Gnrale
de lIndustriedu Papier (RAKTA), Yearbook I (1976), 205 (215).
470
does not mean that the proceedings have to conform in all respects with German arbitration
law. For example, time limits for submissions, preparations for a hearing or the appointment
of arbitrators may be shorter as long as the parties have had sufficient time to react. Under
(b), it is also irrelevant whether the proceedings have been in line with the applicable lex
arbitri, i.e. the law of the place of arbitration. The latter only provides the relevant standard
for the correctness of the procedure under (d). However, as most arbitration laws protect
the parties rights to be heard, a violation of (b) will, in general, also be based on an incorrect
procedure under (d), irrespective of the different standard applicable ((b): German law (d)
law of the place of arbitration).
82 In so far as it is protected by (b), the right to be heard, in essence, entails a passive right to
information about the proceedings, as well as a right of active participation. The latter has
two elements: first, the right of a party to present submissions on everything it considers
relevant for the decision of the case175 and second, its right to answer all submissions made
by the other side176 in other legal systems often referred to as the principle of adversarial or
contradictory proceedings. In summary, each party must be given the chance to participate
in the proceedings, to present its own legal argument, to offer evidence and to comment on
the relevant facts, evidence and the legal reasoning upon which the court wishes to rely in
its decision.177 Whether a party makes use of that opportunity or not is at its own discretion
but does not affect the right to be heard.178 The prevailing view in Germany is that (b) may
be invoked in relation to each particular submission or part of the proceedings and does not
only involve an overall evaluation of the right to present ones case or due process.179
83 To comply with the right to be heard does not necessarily require the tribunal to hold an oral
hearing or the presence of a party at such a hearing. The parties may also present their case
through written submissions180 and via their legal representatives.181 Moreover, the constitutionally protected right to be heard does not require compliance by the tribunal with all
investigation and information requirements existing under national procedural law.182
175
176
177
178
179
180
181
182
BGH 10.10.1951, BGHZ 3, 215 (218); id. 11.11.1982, BGHZ 85, 288 (291); id. 08.10.1959, BGHZ 31,
288 (291); OLG Mnchen 22.06.2009 = OLGR Mnchen2009, 679-682; cf. Schweizerisches Bundesgericht 30.09.2003, BGE 130 III 35 with a detailed analysis of the various nuances of that concept.
OLG Hamburg 03.04.1975, AWD 1975, 432 = Yearbook II (1977), 241; BGH 18.01.1990, BGHZ 110,
104 (not reproduced in this regard) = NJW 1990, 2199 (2200 seq.) = Yearbook XVII (1992), 503 (508);
LG Bremen 20.01.1983, Yearbook XII (1987), 486 (487); cf. Schweizerisches Bundesgericht 19.12.1990,
BGE 116 II 639.
OLG Hamburg 14.05.1999, OLGR Hamburg 2000, 19 (21) = CLOUT case No. 457.
OLG Hamburg 30.07.1998, RPS 1/1999, 13 (15) = Yearbook XXV (2000), 714 (716); OLG Dsseldorf
15.12.2009 I-4 Sch 10/09 = Yearbook XXXV (2010), 386; cf. Supreme Court of Canada 03.05.2001,
Corporacion Transnacional de Inversiones SA de CV v. STET International SpA and STET International
Netherlands, 2001 S.C.C. Bulletin 831; previous instance in CLOUT case No. 391.
Stein/Jonas-Schlosser (2002), Anhang 1061 para.83; for a different view that the denial of particular
submission to present evidence cannot be subsumed under Art. V (1)(b) NYC OLG Bremen 30.09.1999,
RPS 2/2000, 18 (19) = Yearbook XXXI (2006), 640 (644 seq.) = (2001) Int.A.L.R. N-26; cf. for the
equivalent view under 1059 ZPO OLG Hamburg 14.05.1999, OLGR Hamburg 2000, 19 (21) =
CLOUT case No. 457; OLG Mnchen 08.05.2006 34 Sch 38/05; Zller-Geimer (2014), 1059
para.40.
OLG Frankfurt 27.08.2009 26 SchH 3/09; cf. in a domestic context OLG Frankfurt 30.06.2011 26
Sch 04/11.
OLG Mnchen 07.05.2008 34 Sch 26/07; id., 22.06.2009 = OLGR Mnchen2009, 679-682.
OLG Mnchen 06.03.2012 34 Sch 3/10, id., 11.4.2012, SchiedsVZ 2012, 156.
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471
b. Proper Notification: Proper notification in the sense of (b) means that the necessary 84
information is provided in a timely manner. Timely in respect to the notification about the
arbitral tribunals appointment does not require that the one month period of 1035 (3)
ZPO is fulfilled, but only that a party has sufficient time to appoint its own arbitrator.183 Furthermore, a party is only properly notified about the appointment of the arbitral tribunal if
the names of the arbitrators are given to the parties and each can decide whether to challenge
an arbitrator.184 The lack of notification about the proceedings covers cases where a party has
not at all been informed of the proceedings, as well as the lack of notification about separate
parts of the proceedings (such as evidentiary hearings). As long as the notification occurs in
the language of the proceedings, it is irrelevant of whether a party understands it or not.185
For proper notification under (b), it is sufficient that the party has received the information, 85
irrespective of whether the rules on service have been fulfilled. In this context, information
may also be transmitted to a person appointed as a service agent. 186 Substituted service
under the lex arbitri may be sufficient for a proper notification.187 This is not the case if the
requirements for such a legal fiction are not observed.188 Even when these requirements are
met, there will be no proper notification if these requirements are more lenient than those of
1028 ZPO, which defines the standard for admissible service fictions.189
c. Right to Present Case: The right to be heard is violated whenever the proceedings or parts 86
thereof are conducted in a way that a party has no chance to adequately present its case, in
particular, to prepare a meaningful defence. As stated above, adequate presentation of ones
case first presupposes appropriate and timely information about all the factual or legal arguments of relevance to the case. Second, it requires the possibility to actively participate in the
proceedings by submitting ones own view and commenting on all potentially relevant issues.
Consequently, the right to be heard is violated if a party is not informed about the factual
and legal arguments of the other side,190 in particular the evidence presented, or is otherwise
prevented from participating in those parts of the proceedings in which relevant facts or legal
issues are determined. The right to participate in the taking of evidence and to comment
183
184
185
186
187
188
189
190
In this direction see also Obergericht Basel 03.06.1971, Yearbook IV (1979), 309 (310); Corte di Appello
(Court of Appeal) Napoli 20.01.1975, Yearbook IV (1979), 275 (276) one week sufficient.
OLG Kln 10.06.1976, ZZP 1978, 318 et seq. with note by Kornblum, 323 = Yearbook IV (1979), 258.
OLG Mnchen 18.10.2010 34 Sch 18/09.
By contrast, it is not sufficient if they have reached a parties lawyer if the latter is not duly authorized to
act in these proceedings; for such as case see OLG Frankfurt 22.10.2009 26 Sch 5/09.
KG Berlin 17.04.2008 20 Sch 02/08 (substituted service under Ukrainian law after award debtor prevented service at its address by not collecting the relevant documents from the post); OLG Mnchen
21.06.2012 34 Sch 7/12 (substitute service on a service agent appointed according to the applicable
arbitration rules).
BayObLG 16.03.2000, RPS 2/2000, 15 (16) = NJW-RR 2001, 431 = Yearbook XXVII (2002), 445
(449) (fictional service of the request for arbitration on the basis of Art. 3 on the Russian Law on International Commercial Arbitration).
But see Stein/Jonas-Schlosser (2002), Anhang 1061 para.86 (no correct information unless address was
changed to prevent service).
LG Bremen 20.01.1983, Yearbook XII (1987), 486 (487); OLG Hamburg 03.04.1975, AWD 1975, 432 =
Yearbook II (1977), 241; Schwab/Walter (2005), Chap. 57 para.11; cf. English Court of Appeal 21.02.2006
Ajay Kanoria and others v. Tony Francis Guinness, [2006] EWCA Civ 222 available at <www.hmcourtsservice.gov.uk/judgmentsfiles/j4018/kanoria_v_guinness_0206.htm> (enforcement refused because
party not informed about fraud claim against it).
472
on such evidence relates to witnesses,191 documents used and all other means of evidence
presented by the parties.192
87 In exceptional cases, the need to protect business secrets may make it necessary to adopt
procedures where a party has no direct access to evidence presented either to an arbitral
tribunal or an independent expert. As long as considerable efforts are undertaken to reduce
the restrictions of the right to information to a minimum, such procedures do not fall within
the ambit of ArticleV (1)(b) NYC.193
88 Concerning the relevant facts, a party must also be informed about and be given the opportunity to comment on the arbitral tribunals own investigations or expert knowledge
when they form the basis of the decision. Consequently, the arbitral tribunals reliance on its
own knowledge or on factual issues not discussed during the proceedings without informing
the parties and giving them a chance to comment may also violate the right to present ones
case.194
89 The same applies if the arbitral tribunal wants to deviate from factual or legal positions previously communicated to the parties in which they trust.195 Such preliminary assessments are
often a useful tool to structure and focus the case. These assessments do not violate the right
to be heard or justify concerns as to the arbitrators impartiality, as long as it is clear that they
are based on the submissions made so far and subject to a different evaluation in the light of
further evidence presented.196 That the arbitral tribunal in the end follows its preliminary
appraisal is, by itself, not a sign that it did not take the evidence submitted subsequently
into account. The decision is often based on the evaluation of such evidence. The fact that
a tribunal initially rejected a claim as presently inadmissible does not prevent it from later
granting that claim after new evidence has been presented without informing a party about
its intention to do so.197
90 To what extent the right to be heard may also be violated if the arbitral tribunal bases its
awards on a legal reasoning different from that submitted by the parties is controversial. In
general, German law is governed by the principle iura novit curia, i.e. that the legal evaluation of a case is the task of the judge or arbitrator who is not bound in this respect by the
submission of the parties. However, in court proceedings, 139 (2) ZPO requires that a
judge who wants to rely on a legal argument not raised by the parties must inform them
about this argument and discuss it with the parties. Notwithstanding an older decision by
191
192
193
194
195
196
197
OLG Hamburg 16.09.2004 6 Sch 01/04.

Krapfl (2007), p.153 in regard to documents.
Krapfl (2007), p.153 in regard to documents.
Lachmann (2002), para. 1196; Stein/Jonas-Schlosser (2002), Anhang 1061 para. 92; OLG Stuttgart 06.12.2000, Yearbook XXIX (2004), 742 (745 seq.); BGH 08.10.1958, BGHZ 31, 43 (46); id.
11.11.1982, BGHZ 85, 288 (291); cf. English Queens Bench Division (Commercial Court) 20.01.1999,
Minmetals Germany GmbH v. Ferco Steel Ltd Yearbook XXIV (1999), 739 (742 seq.) (in case rejected as
party failed to make use of its opportunity to request information).
OLG Frankfurt 30.03.2006 26 Sch 12/05; see OLG Mnchen 29.10.2009 34 Sch 15/09 which summarizes the situation in which the tribunal has to inform the parties in a domestic context; cf. US Court of
Appeals (2nd Cir.) 24.11.1992, Iran Aircraft Industries and Iran Helicopter Support and Renewal Company
v. Avco Corporation, Yearbook XVIII (1993), 596 (601 seq.).
See in the context of domestic awards OLG Naumburg 21.05.2004 = (2006) Int.A.L.R. N-61; OLG Dresden 26.07.2012 3 Sch 3/12.
OLG Mnchen 14.03.11 34 Sch8/10.
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the German Supreme Court to the contrary,198 it is submitted that the principles underlying
139 (2) ZPO also apply to arbitral proceedings, in particular where the parties come from
different legal backgrounds. Therefore, an arbitral tribunal must inform the parties if it wants
to base its decision on a legal argument not raised by the parties and its failure to do so results
in a violation of the right to be heard.199 It is, however, necessary that the argument is also not
implicit in the other sides submission and has merely been overlooked or misinterpreted.200
Furthermore, the obligation to inform the parties about unpleaded arguments does not
amount to a general duty of the arbitral tribunal to discuss its legal views with the parties or
to give them a preliminary legal assessment of the case.201
The right to be heard may also be violated if the arbitral tribunal awards more than requested 91
by the parties. In such a case, the aggrieved party has no chance to defend itself against the
claim because it comes as a surprise. However, in determining whether a decision is ultra
petita and surprising, not only the wording of the application itself but also the submission as
a whole, as well as the applicable law, should be considered.202
In principle, the arbitral tribunals use of a language not understood by one party can also 92
constitute a violation of the right to be heard, provided that the parties have not at least
implicitly agreed on the use of such language, e.g. by selecting the place of arbitration or a
particular institution.203 In the latter case, it is for the parties (or the party needing the translation) to ensure the necessary translations.204
Moreover, a party may be prevented from adequately presenting its case where time limits 93
imposed for submissions or other acts are too short to take the necessary steps or to prepare
a meaningful defence;205 this also applies if the arbitral tribunal decides before the expiration
of time limits set for submissions.206 In this context, it should be kept in mind that the time
limits of the German arbitration law only constitute a first indication of when no violation
exists but are not the standard which must be met in every case.207 The length of the required
time may be affected by a number of factors, including the general vacations or the current
absence or sickness of decision makers.208 However, in principle, each party is under an
198
199
200
201
202
203
204
205
206
207
208
BGH 11.11.1982, BGHZ 85, 288 (291 et seq.); id. 08.10.1958, WM 1959, 1373 (1375) in so far not in
BGHZ 31, 43.
See in connection with domestic awards OLG Stuttgart 18.08.2006 1 Sch 1/06; see also Schlosser, FSBGH, 399 (405 et seq.); cf. Schweizerisches Bundesgericht 30.09.2003, BGE 130 III 35 (38).
OLG Naumburg 04.03.2011 10 Sch 4/10, SchiedsVZ 2011, 228.
OLG Mnchen 22.01.2007 34 Sch 18/06; OLG Mnchen 29.10.2009 34 Sch 15/09.
OLG Hamburg 30.07.1998, RPS 1/1999, 13 (16) = Yearbook XXV (2000), 714 (716) (post award
interest awarded without specific application but covered by discretion under applicable law); OLG
Stuttgart 06.12.2000, Yearbook XXIX (2004), 742 (746) (miscalculation in application).
BayObLG 09.11.2004 4 Z Sch 17/04 (denied because parties had agreed on Czech language); OLG
Celle 02.10.2001, (2003) Int.A.L.R. N-59 (despite bilingual contract denied because parties agreed on
Russian arbitration institution and thereby implicitly on Russian as the language of the arbitral proceeding); cf. OLG Hamm 28.11.2008 25 Sch 6/08; Krll, SchiedsVZ 2004, 103 (104).
BayObLG 09.11.2004 4 Z Sch 17/04; OLG Celle 02.10.2001, (2003) Int.A.L.R. N-59.
Different Lachmann (2002), para.1195 (d).
OLG Hamburg 16.09.2004 6 Sch 01/04.
OLG Hamburg 06.09.1984, RIW 1985, 490 (492) ten days sufficient for reaction as extension of time
could have been requested; cf. OLG Hamm 26.06.1997, RIW 1997, 962 (963).
E.g. natural catastrophes; cf. Corte di Appello [Court of Appeal] Napoli 18.05.1982, Bauer & Grobmann
OHG v. Fratelli Cerrone Alfredo e Raffaele, Yearbook X (1985), 461 (462) (earthquake in region where
defendant had its place of business).
474
obligation to ensure that the required decisions can be taken within a reasonable time.209
Furthermore, while arbitral tribunals normally fix time limits for submissions, they are not
necessarily required to do so. ArticleV (1)(b) NYC only requires that the parties have sufficient time to react to the arguments presented by the other party.210
94 The right to present ones case is also violated where submissions or offers to adduce evidence
are rejected without justification. For example, submissions may not be rejected as belated
where grounds exist to excuse the delay. There may also be the need to postpone or repeat
an evidentiary hearing where a party or a crucial witness cannot participate for good cause
(such as health problems).
95 However, the right to be heard does not protect a party against a decision of the arbitral tribunal to reject offers for the production of evidence for formal or material legal reasons.211 Consequently, not every offer or application to adduce evidence must be granted.212 The arbitral
tribunal has considerable discretion in evaluating the need for evidence and its relevance.213
Thus, the rejection of requests for expert reports does not constitute a violation of the right
to be heard where the arbitral tribunal has held that it had the necessary expertise itself or
considered the issue not to be relevant for its decision.214 The same applies for witnesses or
documents presented or other offers to submit evidence. Consequently, the arbitral tribunal
is not required to deal with submissions or offers to adduce evidence which it considers irrelevant. If, for example, the arbitral tribunal finds that the terms of a contract are fixed by a
letter of confirmation that was not objected to, the arbitral tribunal does not violate the right
to be heard if it does not deal with submissions as to the preceding negotiations.215 Only
where the arbitral tribunal rejects a partys submission or its offer to present evidence without
even considering its possible relevance might this constitute an infringement of the right to
be heard.216 However, it is generally assumed that the arbitral tribunal has taken its decision
not to pursue the evidence presented on an informed evaluation of the need for evidence,
even if no explicit reasons are given for the rejection.217 The right to be heard cannot be used
209
210
211
212
213
214
215
216
217
OLG Hamburg 30.07.1998, RPS 1/1999, 13 (15) = Yearbook XXV (2000), 714 (715).
BGH 14.05.1992, NJW 1992, 2299 (2300); OLG Kln 16.12.1992, RIW 1993, 499 (501) = Yearbook
XXI (1996), 535 (540); critical Lachmann (2002), para.1212; cf. Corte di Cassazione [Supreme Court of
Italy] 23.04.1997, Dalmine S.p.A. v. M. & M. Sheet Metal Forming Machinery A.G., Yearbook XXIV (1999),
709 (713).
BGH 14.05.1992, NJW 1992, 2299 with further references; OLG Stuttgart 06.12.2000, Yearbook XXIX
(2004), 742 (745); cf. for the refusal to hear witnesses on points considered irrelevant OLG Naumburg
21.05.2004 = (2006) Int.A.L.R. N-61; OLG Hamburg 31.07.2003, OLGR Hamburg 2004, 97 (98) (the
arbitral tribunal does not have to consider witness statements in its reasoning of the award if they are
irrelevant for the arbitral tribunals decision); OLG Bremen 10.11.2005, OLGR Bremen 2006, 263 (265)
(the arbitral tribunal had refused to re-hear witnesses); Baumbach/Lauterbach (2014), 1059 para.14.
OLG Mnchen 12.04.2011, SchiedsVZ 2011, 230; cf. OLG Hamburg 26.04.2011 6 SchH 8/11.
OLG Mnchen 24.10.2011, SchiedsVZ 2012, 43 with note by Mller, jurisPR-HaGesR 4/2012 Anm. 4.
OLG Hamburg 14.05.1999, OLGR Hamburg 2000, 19 (21) = CLOUT case No. 457; cf. OLG Kln
24.04.2006 9 Sch 15/05.
OLG Kln 03.06.2003 9 Sch 6/03 (domestic award), cf. OLG Kln 26.11.2002 9 Sch 20/02 (domestic
award) (the court deduced an indication as to the fact that the arbitral tribunal had not considered defendants argument at all from the decisions on costs).
BayObLG 15.12.1999, RPS 2/2000, 16 (17) = CLOUT case No. 403.
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475
to review the arbitral tribunals free evaluation of evidence by state courts.218 The tribunals
evaluation may only be examined as to its compatibility with public policy, but not as to its
correctness.219
The right to be heard requires the arbitral tribunal not only to hear the parties, but also to con- 96
sider the parties submission in its decision-making.220 Consequently, the right to be heard is
violated where the arbitral tribunal has treated facts as uncontested despite submissions by a
party to the contrary.221 In principle, the mere consideration of the submissions and requests
made is sufficient, as the right to be heard does not entail an obligation to give reasons for the
award.222 As a consequence, where reasons are given, the arbitral tribunal is not required to
deal with every submission made by the parties. Unless there are indications to the contrary,
the arbitral tribunal is presumed to have also considered the arguments and evidence not
dealt with explicitly in the award.223 Notwithstanding that, under German arbitration law
the reasons for the award should deal with the main submissions and defences of the parties;
the mere fact that the award does not mention all such submissions is not, in itself, sufficient
to rebut the presumption. The lex arbitri may contain different reasoning requirements so
that one cannot conclude that the arbitral tribunal did not take those submissions into account from the mere fact that submissions made are not referred to in the grounds for the
award. By contrast, the explicit rejection of a particular submission is, in principle, sufficient
to prove that it has been considered by the arbitral tribunal, even if no grounds are given for
this rejection.224
A violation of the right to be heard can also not be deduced from the fact that the tribunal, 97
after reading the parties submissions, gave a preliminary evaluation of the case and did not
change that evaluation in the subsequent conduct of the proceedings.225 That may only be
different where it is obvious that it did not take any subsequently presented evidence into
account to reevaluate its legal position.
That a party enters into insolvency proceedings and therefore is put under state control 98
does not affect its ability to properly defend itself. This task is taken over by the insolvency
administrator.226 It may, however, be necessary to grant the administrator additional time to
familiarize himself with the case.
218
219
220
221
222
223
224
225
226
The arbitral tribunal is free in its consideration of evidence OLG Bremen 10.11.2005, OLGR Bremen
2006, 263. Independent hereof, courts tend to confirm the correctness of the arbitral tribunals evaluation
of evidence in a fall back position, see only OLG Celle 20.11.2003, Yearbook XXX (2005), 547 (552) =
(2004) Int.A.L.R. N-58.
OLG Mnchen 12.04.2011, SchiedsVZ 2011, 230-232; cf. OLG Hamburg 26.04.2011 6 SchH 8/11.
BGH 26.09.1985, BGHZ 96, 40 (48); id. 18.01.1990, BGHZ 110, 104 (not reproduced in this regard) =
NJW 1990, 2199 (2200 seq.) = Yearbook XVII (1992), 503 (508); id. 14.05.1992, NJW 1992, 2299.
BGH 26.09.1985, BGHZ 96, 40 (48 seq.).
Different BGH 18.01.1990, BGHZ 110, 104 (107) (not reproduced in this regard) = NJW 1990, 2199
(2200) = Yearbook XVII (1992), 503 (508 seq.) (award must deal with the key arguments); but see id.
14.05.1992, NJW 1992, 2299.
OLG Stuttgart 06.12.2001 = Yearbook XXIX (2004), 742 (745); BayObLG 15.12.1999, RPS 2/2000, 16
(18) = CLOUT case No. 403; see also BGH 14.05.1992, NJW 1992, 2299.
BGH 14.05.1992, NJW 1992, 2299.
OLG Mnchen 07.05.2008 34 Sch 26/07.
OLG Hamm 02.11.1983, IPRax 1985, 218 (219) = Yearbook XIV (1989), 629 (631 seq.); Flther
(2001), pp.17 et seq.; Heidbrink/von der Groeben, ZIP 2006, 265 (269 seq.); for examples in which a party
was considered to have been hindered from defending itself properly see Bredow, in: Geimer/Schtze,
Internationaler Rechtsverkehr in Zivil- und Handelsachen (2005), Vol. IV, 714, C I 3b, p.28.
476
99 d. Causal Nexus: The prevailing view in Germany is that, to constitute a defence, violations
of the right to be heard must have affected the award to the detriment of the party resisting
enforcement.227 However, the standard applied to this is very lenient. In general, it is sufficient
that it cannot be excluded that the award would have been different if the right to be heard
had not been violated.228 Thus, a party which wants to invoke a violation of the right to be
heard must set out in its submission what it would have said and how it might have affected
the decision if it had been heard.229 This also applies where the tribunal allegedly violated the
right to be heard by rendering a surprise decision.230 If the violation concerns the appointment of the arbitrators, a party must at least plead that a differently composed tribunal would
have been appointed had it been heard.231
100 Violations of the right to be heard are not causal if the party is not informed about evidence
which the arbitral tribunal did not take into account in making its decision.232 The same applies if submissions are rejected concerning issues or arguments which were considered by
the arbitral tribunal to be of no relevance for its decision. The required causal nexus is also
missing where the violation of the right to be heard only concerns one of several different
lines of reasoning, each of which by itself justifies the finding.233
3.
Excess of Authority ArticleV (1)(c) NYC
101 Enforcement may be refused if the award concerns a dispute which is not a subject of the
submission to arbitration or contains decisions beyond the scope of the arbitration agreement.234 In so far as it also deals with the arbitral tribunals jurisdiction, the defence in (c) is
closely connected with that of (a). The only difference is that, while in case of (a) the arbitration agreement as such is already non-existent or invalid, in the case of (c) a valid arbitration
227
228
229
230
231
232
233
234
Stein/Jonas-Schlosser (2002), 1061 para. 82; Musielak-Voit (2013), 1061 para. 15; Weigand-Haas
(2002), NYC, Art. V para. 37; Krapfl (2007), p. 150; OLG Karlsruhe 29.11.2002 9 Sch 01/02;
OLG Dsseldorf 15.12.2009 = Yearbook XXXV (2010), 386 (in the context of public policy); cf. BGH
26.09.1985, BGHZ 96, 40 (48); id. 14.05.1992, NJW 1992, 2299; id. 18.01.1990, BGHZ 110, 104 (107)
(not reproduced in this regard) = NJW 1990, 2199 = Yearbook XVII (1992), 503 (508) = IPRax 1991,
244 (246) with note by Schlosser, Auslndische Schiedssprche und ordre public international, 218;
BGH 08.10.1959, BGHZ 31, 43 (46 seq.) = NJW 1959, 2213; id. 09.10.1951, BGHZ 3, 215 (219) =
NJW 1952, 27; cf. US Court of Appeals (5th Cir.) 23.03.2004, Karaha Bodas Company LLC v. Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara, Yearbook XXIX (2004), 1262 (1291); for a different view
in the domestic context Aden, DZWiR 2013, 149.
OLG Hamburg 03.04.1975, AWD 1975, 432 = Yearbook II (1977), 241; BGH 15.01.2009 = SchiedsVZ
2009, 126.
BGH 15.05.1986, BGHZ 98, 70 (76) = NJW 1986, 3027 (3029) = Yearbook XII (1987), 489 (not reproduced in this regard); OLG Hamburg 26.01.1989, RIW 1991, 152 (154); OLG Schleswig 24.06.1999
= Yearbook XXIX (2004), 687 (694); OLG Bremen 30.09.1999, RPS 2/2000, 18 (20) = Yearbook XXXI
(2006), 640 (644 seq.) = (2001) Int.A.L.R. N-26; OLG Karlsruhe 29.11.2002 9 Sch 01/02; cf. OLG
Frankfurt 30.03.2006 26 Sch 12/05.
OLG Dresden 18.02.2009 11 Sch 07/08.
BGH 15.01.2009 = SchiedsVZ 2009, 126.
Stein/Jonas-Schlosser (2002), 1061 para.82; cf. Cour de Cassation 30.09.1999, Richard v. Socit bretonne
de Btiment, Rev.Arb. 2000, 269 et seq.
BGH 08.10.1959, BGHZ 31, 43 (48) = NJW 1959, 2213; Schweizerisches Bundesgericht 07.04.1993, Socit ENS v. Socit L, ASA Bulletin 1993, 525 et seq.; Stein/Jonas-Schlosser (2002), 1061 para.82.
There is no need to distinguish between the various alternatives under German law; cf. Stein/JonasSchlosser (2002), Anhang 1061 para.113.
1061 Krll
477
agreement exists, in principle, but does not cover the disputes between the parties.235 That
may be the case where the arbitration agreement explicitly excludes certain disputes from its
scope or is narrowly worded. In principle, however, German courts based on the assumption that the parties normally want to avoid split jurisdiction tend to interpret arbitration
agreements broadly so that disputes as to the validity of the contract will also be covered,
even if the arbitration agreement only refers to disputes arising out of the contract.
Subsection (c) also applies in those cases where the award goes beyond the requests of the 102
parties and where the arbitral tribunal exceeds the limits of its terms of reference, i.e. acts ultra
petita.236 In determining the extent of a request, not only the wording of the claim is relevant
but it must also be interpreted in light of the parties interest and the other materials submitted with the request for arbitration. If it becomes obvious that the claimed amount is based
on a miscalculation, the arbitral tribunal may also award the correct amount.237 Furthermore,
where the applicable rules and laws permit the arbitral tribunal to award interest at its discretion, it may even do so without a specific application.238 In cases where terms of reference
have been agreed, these define, in principle, the subject matter referred to arbitration. Thus,
unless they have later been amended, claims not covered by the terms will normally be outside the arbitral tribunals competence.239 That may be different where such claims would be
covered by the original arbitration agreement and the terms of reference cannot be seen as a
limitation of that agreement, e.g. because of the lack of specificity.
Awards rendered outside the time limit set by the parties either in their arbitration agree- 103
ment or the chosen rules are not ultra petita, but rather the result of an incorrect procedure
under (d) or rendered without a valid arbitration agreement (a).240 Neither do disputes as to
whether time limits for initiating arbitral proceedings have expired before the commencement of the proceedings and therefore the proceedings should have been excluded, fall under
(d). In most cases, such time limits affect the claim as such and not merely the jurisdiction
of the arbitral tribunal, which is dealt with in (d).241 Decisions rendered infra petita, i.e. not
dealing with the all the claims submitted, do not fall within ArticleV (1)(c) NYC.242 Unauthorized decisions ex aequo et bono and awards rendered on the basis of the wrong law are
discussed elsewhere.243
235
236
237
238
239
240
241
242
243
MnchKommZPO-Adolphsen (2013), UN, Art. V para. 37; cf. Weigand-Wagner (2002), Germany,
para.439 (who considers (c) to be largely superfluous).
Schwab/Walter (2005), Chap. 24 para.15; Stein/Jonas-Schlosser (2002), Anhang 1061 para.115; controversial cf. Musielak-Voit (2013), 1061 para.16 (considers (d) to be applicable); Eberl, As Night Follows Day, SchiedsVZ 2003, 109 (112 seq.) (in case of surprising decisions (b)).
OLG Stuttgart 06.12.2000, Yearbook XXIX (2004), 742 (746) (miscalculation in application); cf. OLG
Hamburg 30.07.1998, RPS 1/1999, 13 (16) = Yearbook XXV (2000), 714 (716) (post award interest
awarded on the basis of an interpretation of the request which did not explicitly mention interest).
OLG Hamburg 30.07.1998, RPS 1/1999, 13 (16) = Yearbook XXV (2000), 714 (716).
Weigand-Wagner (2002), Germany, para.440; Stein/Jonas-Schlosser (2002), Anhang 1061 paras116 seq.
Cf. supra, para.76. But see OLG Stuttgart 06.12.2000, Yearbook XXIX (2004), 742 (745) (in favour of
applying (c)).
BGH 12.02.1976, RIW 1976, 449 (450) = Yearbook II (1977), 242 (243).
Van den Berg (1996), pp.318 et seq. (NYC does not regulate the case of an incomplete award); Schwab/
Walter (2005), Chap. 24 para.15; Musielak-Voit (2013), 1061 para.16; for a different view see Stein/
Jonas-Schlosser (2002), Anhang 1061 para.115.
See infra, paras 121 seq.
478
104 The practical importance of ArticleV (1)(c) NYC is limited by the fact that German law does
not distinguish between a right and a remedy in the way that many Anglo-American legal
systems do. If the parties have submitted to arbitration disputes arising out of or in connection with a contract, this will include a tort claim244 provided for by the applicable substantive
law. The questions as to whether a party is obliged to pay damages, perform certain acts or
refrain from committing particular acts are all regarded as matters of substantive law. Thus,
a court or arbitral tribunal granting an inappropriate type of remedy does not exceed its
powers but simply misapplies the substantive law.245 However, if the reasoning comes as a
complete surprise to the parties because the whole proceedings were conducted on a legal
basis different from that later adopted by the arbitral tribunal, this may constitute a violation
of the right to be heard under ArticleV (1)(b) NYC.
105 The granting of remedies despite their exclusion in the parties contract does not necessarily
lead to an application of ArticleV (1)(c) NYC. Only where such exclusions are meant to
limit the mandate of the arbitral tribunal, i.e. pertain to its jurisdiction and not the claim as
such, can enforcement of the award be refused for exceeding authority. In all other cases,
it is merely a wrong application of the law.246 Equally, a tribunal is entitled to decide upon
disputes which have been submitted to it, even if that entails an incidental determination of
preliminary questions which are beyond the tribunals authority.247 Such determinations do
not have res iudicata effects and may not be rendered in form of a declaratory award.
106 Where the excess of authority relates to separable parts, the other parts of the award must
be declared enforceable.248 This is explicitly provided for in ArticleV (1)(c) NYC. In light of
the objectives of the NYC, to facilitate enforcement a generous interpretation of the notion
separable should be adopted.
107 A party may be precluded from relying on the defence in (c) if it has participated in the
arbitral proceedings without protesting the exceeding of authority or has not made use of
existing remedies at the place of arbitration. The same principles apply as for (a).249
4.
Irregularities in the Constitution of the Arbitral Tribunal or the Proceedings ArticleV (1)
(d) NYC
108 a. General Principles: The recognition and enforcement of an award may be refused for irregularities, either in the constitution of the arbitral tribunal or in the arbitral proceedings
in general. The relevant standard to determine the correctness in relation to both alternatives of (d) is provided primarily by the procedural agreements of the parties, including the
244
245
246
247
248
249
OLG Kln 19.12.2001 11 U 52/01.

Weigand-Wagner (2002), Germany, para. 439; cf. US District Court, Southern District of California
07.12.1998, The Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran v. Cubic
Defense Systems Inc., Yearbook XXIV (1999), 875 (878).
US District Court, Southern District of New York 28.03.2002, Fertilizer Corporation of India et al. v. IDI
Management, Inc., op. cit. and Millicom International V N. V. v. Motorola Inc., Yearbook XXVII (2002), 948;
Paulsson, Jurisdiction and admissibility, in ICC (ed.) Global Reflections on International Law, Commerce
and Dispute Resolution Liber Amicorum in Honour of Robert Briner (2005), 601 (616).
OLG Naumburg 04.03.2011, SchiedsVZ 2011, 228 (though in the case the preliminary question was
probably covered by the arbitration agreement).
Van den Berg (1996), pp.318 seq.; Schwab/Walter (2005), Chap. 24 para.15; MnchKommZPO-Adolphsen (2013), UN, Art. V para.45; Weigand/Haas (2002), NYC, Art. V para.39.
1061 Krll
479
chosen arbitration rules.250 The law of the place of arbitration applies in a subsidiary and
complementary manner. In cases of conflict between the agreement and the law of the place
of arbitration, the parties agreement prevails even if it derogates from mandatory provisions
of the applicable arbitration law. Those provisions are only protected indirectly via (e), as
their violation normally justifies the setting aside of the award at its place of origin, which
then constitutes a defence under (e). However, until the award has been set aside, the agreement of the parties prevails and determines the relevant standard in the context of (d).251
Mandatory provisions of German arbitration law on the composition of the arbitral tribunal
and the arbitral procedure are also irrelevant in the context of (d) but are solely protected via
the public policy defence.252
ArticleV (1)(d) NYC unlike its equivalent for domestic awards, 1059 (2) No. 1 (d) 109
ZPO does not explicitly require that the procedural defects have presumably affected the
award. Irrespective of this, the prevailing view in German law is that such a causal nexus is
required.253 It is considered to be contrary to the principles of procedural efficiency and
fairness to refuse recognition and enforcement of an award for mere formal defects if the
outcome would be the same without the procedural irregularities. The burden of proof for
the causal link lies with the party pleading the procedural irregularity. However, at least in
relation to the incorrect composition of the arbitral tribunal, it can rarely be excluded that
a differently composed arbitral tribunal would have rendered a different award.254 In light
of this additional requirement of causality, it is not necessary to limit (d) to grave defects or
grave consequences, as is done by some authors.255
In practice, reliance on both defences listed in (d) will often be precluded, as the party op- 110
posing the declaration of enforceability has not objected to the defects during the arbitral
proceedings or has not made use of the existing remedies against the award at the place of
arbitration. The steps to be taken are, in this respect, determined by the law of the place of
250
251
252
253
254
255
N-26. Musielak-Voit (2013), 1061 para.17; Zller-Geimer (2014), 1059 para.43; Baumbach/Lauterbach (2014), 1059 para.12; Krll, NJW 2001, 1173 (1182).
Stein/Jonas-Schlosser (2002), Anhang 1061 para.122; for an extensive discussion of the various choice
of law problems see Weigand-Haas (2002), NYC, Art. V paras64 et seq.
BGH 18.01.1990, BGHZ 110, 104 (106 et seq.) = NJW 1990, 2199 (2199 seq.) = Yearbook XVII (1992),
503 (505).
BayObLG 23.09.2004 = Syrian Trading Company v. BMW AG, Yearbook XXX (2005), 568 (572 seq.);
Weigand-Haas (2002), NYC, Art. V para.73; but see the criticism by Aden, DZWiR 2013, 149.
OLG Saarbrcken 29.10.2002, SchiedsVZ 2003, 92 (94) with further references; the more difficult question is whether the tribunal would have been differently composed.
Stein/Jonas-Schlosser (2002), Anhang 1061 para.121; Weigand-Haas (2002), NYC, Art. V paras72 seq.
(with a discussion of the various limitations); Musielak-Voit (2013), 1061 para.17, 1059 para.17;
Borges, ZZP 1998, 487 (493); see for an equation of both criteria BayObLG 23.09.2004 = Syrian Trading
Company v. BMW AG, Yearbook XXX (2005), 568 (573); see also in connection with 1059 Schwab/
Walter (2005), Chap. 24 para.21 (with further reference in favour of the additional requirement); Lachmann (2002), para.1210; Hausmann, FS-Stoll (2001), 593 (604).
480
arbitration.256 Equally, decisions by the courts of the place of arbitration denying procedural
defects may de facto exclude any reliance on presumed procedural defects.257
111 b. Incorrect Composition of the Arbitral Tribunal ArticleV (1)(d) alternative1 NYC: The
arbitral tribunal is incorrectly composed in the sense of (d) if the process of its composition deviates from the agreement of the parties. Examples for this are the appointment of an
arbitrator by the wrong appointing authority, the unjustified rejection of a suitable nominee
and his replacement by a different person258 or the decision by a sole arbitrator instead of the
agreed upon three member arbitral tribunal, unless provided for in the applicable rules.259
112 Deviation from the originally agreed appointment procedure or the required qualification of
the arbitrators by all parties may, however, be a sign of a later amendment of the appointment
procedure.260 A party who has not appointed its arbitrator in due time cannot rely on the
defence if the arbitrator appointed on its behalf by the appointing authority does not have
the requested qualification unilaterally imposed by it.261
113 The appointment of a government official or active judge who lacks the necessary permission, or to whom such permission was wrongly given, does not lead to an improperly
composed arbitral tribunal.262 The invalidity of the arbitrators contract does not, in itself,
constitute a defence. On the contrary, the conclusion of a contract with the arbitrators may
indicate assent to the composition of the arbitral tribunal and exclude any reliance on an
alleged incorrectness of the original constitution.263
114 Other possible scenarios for an incorrectly composed arbitral tribunal are the prevalence of
one party in the appointment of the arbitral tribunal (unless resulting from the other parties default),264 the participation of an arbitrator who is subject to an impediment for factual
(illness) or legal reasons (loss of the capacity to conclude contracts),265 the participation of
a successfully challenged arbitrator in the decision-making process266 and the non-partici256
257
258
259
260
261
262
263
264
265
266
OLG Dresden 20.10.1998, Yearbook XXIX (2004), 673 (676); Stein/Jonas-Schlosser (2002), Anhang
1061 para.124; Satmer (1994), p.89 (in favour of a preclusion independent of the provisions of the lex
arbitri); cf. Supreme Court of Hong Kong 13.07.1994, China Nanhai Oil Joint Service Corporation Shenzhen
Branch v. Gee Tai Holdings Co. Ltd., Yearbook (1995), 671.
OLG Mnchen 22.06.2009 = OLGR Mnchen2009, 679-682 (decision that no incorrect language used
but subsequent agreement on this language).
BayObLG 24.02.1999, BB 1999, 1187 = NJW-RR 2000, 360 (361) = CLOUT case No. 436.
BGH 01.02.2001, RPS 1/2001, 14 = Yearbook XXIX (2004), 700 (711 seq.); note by Sandrock, IPRax
2001, 550 (555 seq.).
OLG Dresden 20.02.2001 = CLOUT case No. 454; OLG Mnchen 15.03.2006 34 Sch 06/05.
OLG Dresden 20.10.1998, Yearbook XXIX (2004), 673 (675 et seq.).
See concerning 40 DRiG OLG Stuttgart 16.06.2002, SchiedsVZ 2003, 84 (87) with note by
Nacimiento/Geimer, SchiedsVZ 2003, 88 (91); MnchKommZPO-Mnch (2013), 1059 para.16; Lachmann (2002), paras1209, 551 et seq. (under exceptional circumstances public policy violation); BGH
11.02.1971, BGHZ 55, 313 (320) = NJW 1971, 755 (756 seq.) (left open), note by Breetzke, NJW 1971,
1458 seq.; cf. for a different view Schwab/Walter (2005), Chap. 24 para.18.
OLG Naumburg 21.05.2004 = (2006) Int.A.L.R. N-61.
OLG Naumburg 21.05.2004 = (2006) Int.A.L.R. N-61 (an appointing procedure for a three member
arbitral tribunal that allows the appointment of an arbitrator for defaulting party does not place the defaulting party at a disadvantage that would allow for the setting aside of an award); cf. BGH 15.05.1986,
BGHZ 98, 70 (74) = NJW 1986, 3027 (3028) = Yearbook XII (1987), 489 (490 seq.).
Stein/Jonas-Schlosser (2002), 1059 para.21; Baumbach/Lauterbach (2014), 1059 para.10; cf. BGH
05.05.1986, NJW 1986, 3079.
Under the old law RG 03.01.1939, RGZ 159, 92 (98).
1061 Krll
481
pation of a duly appointed arbitrator. By contrast, the expiration of time limits for rendering
the award does not, in general, lead to an incorrectly composed arbitral tribunal, as it does
not automatically terminate the mandate of the arbitral tribunal.267 Equally, the obligation to
select an arbitrator from a list maintained by an institution does not in itself justify a refusal
of enforcement, provided there are no further circumstances.268 The same applies where the
arbitrator falls asleep during the proceedings.269
The incorrect composition of the arbitral tribunal may also result from defects in the chal- 115
lenge proceedings, e.g. decisions about the challenge by the wrong institution,270 incorrect
treatment of challenges271 or the complete legal or factual exclusion of the right to challenge.272
By contrast, doubts as to the impartiality or independence of an arbitrator which, at the 116
pre-award stage, would have justified the challenge of an arbitrator do not ipso jure lead to
an incorrectly composed arbitral tribunal.273 In general, such grounds are to be raised in the
separate challenge proceedings which may, however, according to the German understanding, only be initiated until the award has been rendered. At the post award stage, the lack
of impartiality and independence of an arbitrator only constitutes a ground for refusing
enforcement of the award if it is established and has influenced the outcome of the proceedings, i.e. makes the award contrary to public policy.274 Mere financial or personal ties of the
arbitrator to one of the parties or its lawyers are not sufficient to assume such a violation. The
same applies to procedural or substantive mistakes made by the arbitrator, even if in sum they
would justify a challenge at the pre-award stage.275 Furthermore, violations by an arbitrator
of the disclosure obligation concerning pre-existing contacts with a party only constitute an
irregular procedure where they result in the participation of a biased arbitrator in the proceedings. In all other cases, the interest in the finality of an award prevails.276
267
268
269
270
271
272
273
274
275
276
See in relation to time limit in the ICC Rules BGH 14.04.1988, BGHZ 104, 178 (182) = NJW 1988,
3090 (3091) = Yearbook XV (1990), 450 (453) overruling OLG Stuttgart 22.12.1986, RIW 1988, 480
(482) which held the opposite.
OLG Frankfurt 27.8.2009 26 SchH 03/09.
OLG Karlsruhe 04.01.2012, SchiedsVZ 2012, 101, where the court relied primarily on a the defendants
failure to object to such behavior.
BayObLG 24.02.1999, BB 1999, 1187 = NJW-RR 2000, 360 (361) = CLOUT case No. 436 (arbitral
tribunal instead of court).
OLG Mnchen 28.06.2006 34 SchH 02/06 (refusal to decide on challenge); cf. Rechtbank [Court of First
Instance] of Amsterdam 27.08.2002, Goldtron Limited v. Media Most BV, Yearbook XXVIII (2003), 814
(818 seq.).
OLG Kln 10.06.1976, ZZP 1978, 318 seq. with note by Kornblum, 323 = Yearbook IV (1979), 258;
OLG Hamm 28.11.2008 25 Sch 6/08.
BGH 04.03.1999, BGHZ 141, 90 (95) = RPS 2/1999, 9 (10); OLG Naumburg 11.07.2008 10 Sch
3/07; OLG Hamm 28.11.2008 25 Sch 6/08, Yearbook XXXIV (2009), 536; Krll, ZZP 2003, 195
(211 et seq.); cf. on the causal nexus requirement BGH 15.05.1986, BGHZ 98, 70 (75) = NJW 1986,
3027 (3028) = Yearbook XII (1987), 489 (490). See also to the same effect the Austrian Supreme Court,
17.6.2013 20b 112/12b.
KG Berlin 13.03.2002 23/29 Sch 20/01; see generally also OLG Frankfurt 29.10.2009, SchiedsVZ2010,
52.
BGH 04.03.1999, BGHZ 141, 90 (95) = NJW 1999, 2370, note by Krll, EWiR 1999, 1087 seq.; Schwab/
Walter (2005), Chap. 24, para.18.
482
117 c. Incorrect Procedures Article V (1)(d) alternative 2 NYC: The defence of incorrect
procedure covers all aspects of the arbitral proceedings, from their initiation277 until the
rendering of an award, with the exception of the decision-making process as such. There is
a considerable overlap with the defence in (b) specifically regulating violations of particular
aspects of the right to be heard, which are normally also protected by the agreed procedural
rules. Furthermore, violations of the most basic procedural rules, such as the equal treatment
of all parties involved, will overlap with the public policy defence in ArticleV (2)(b) NYC.
In light of the arbitral tribunals wide discretion in conducting the arbitral proceedings under
most arbitration rules and laws, it will, in general, be difficult to establish the defence of incorrect procedure. This is even more so as deviations from previously relevant procedural rules
may evidence a subsequent agreement of the parties on a different procedure.278
118 The rendering of an award without an oral hearing might constitute a violation of the relevant
procedural rules or laws if they provide for a mandatory hearing at a partys request.279 By
contrast, if the applicable rules are silent on the issue or give the arbitral tribunal discretion
in determining whether or not to hold a hearing, no defence exists under ArticleV (1)(d)
NYC.280 Furthermore, where the arbitrator has informed the parties that the decision will be
made on a documents only basis, a party must object without undue delay.281 The arbitral
tribunals decision to re-open the proceedings to allow for an extension of the plaintiffs claim
does not constitute incorrect procedure, provided that the other party is heard in respect of
the new claims.282
119 Incorrect procedure can also exist where procedural decisions, such as the refusal to take
further evidence, are taken on the basis of unrelated or inadmissible considerations, in particular where the arbitral tribunal tries to enforce its own claim to fees or an advance on costs
by such means.283 The same applies where the arbitral tribunal has administered the oath
without being authorized to do so under the applicable rules.284
120 In numerous jurisdictions, the arbitration laws provide for court support to hear witnesses
who refuse to appear in front of the arbitral tribunal. The decision by the arbitral tribunal not
to make use of such support in case of recalcitrant witnesses does not automatically lead to
an incorrect procedure. If the arbitrator considers it unnecessary to hear these witnesses, he
is under no obligation to do so.285 Furthermore, the arbitral tribunal is not required to deal
277
278
279
280
281
282
283
284
285
See OLG Celle 06.10.2005 8 Sch 06/05 (imposing low requirements for the fulfilment of the contractually agreed settlement efforts).
See OLG Mnchen 22.06.2009 = OLGR Mnchen2009, 679-682 (different language applicable).
OLG Naumburg 21.02.2002, NJW-RR 2003, 71 (72) = CLOUT case No. 659; BGH 19.05.1994, NJW
1994, 2155 seq.
OLG Hamburg 30.07.1998, RPS 1/1999, 13 (15) = Yearbook XXV (2000), 714 (716); OLG Bremen
30.09.1999, RPS 2/2000, 18 (19 seq.) = Yearbook XXXI (2006), 640 (644 seq.) = (2001) Int.A.L.R.
N-26; KG Berlin 08.04.2002 23/29 Sch 13/01; OLG Stuttgart 03.06.2003 1 Sch 2/03; OLG Frankfurt
10.07.2003 26 Sch 01/03 (for refusal to order re-hearing); all referring to BVerfG 05.10.1976, BVerfGE
42, 364; id. 19.07.1967, BVerfGE 22, 267 (274); id. 04.07.1989, BVerfGE 80, 269 (286); Schwab/Walter
(2005), Chap. 24 para.24.
OLG Naumburg 21.02.2002, NJW-RR 2003, 71 (72) = CLOUT case No. 659.
OLG Dresden 18.11.2005 11 Sch 13/05.
BGH 07.03.1985, BGHZ 94, 92 (94 et seq.) = NJW 1985, 1904 (1905) = note by Schlosser, EWiR 1985,
419 seq.
Schwab/Walter (2005), Chap. 24 para. 24; Baumbach/Lauterbach (2014), 1059 para. 13; MnchKommZPO-Mnch (2013), 1059 para.20.
OLG Schleswig 24.06.1999 = Yearbook XXIX (2004), 687 (693 seq.).
1061 Krll
483
with and reject explicitly any request relating to evidence, so that the lack of such an explicit
decision cannot be considered per se a violation of the procedural rights.286
Unless the parties have agreed on a particular expert or a number of experts, decisions by 121
the arbitral tribunal to obtain an additional expert opinion or the refusal to do so287 do not
constitute a procedural irregularity. By contrast, recognition may be refused if the arbitral tribunal has either relied on an obviously unqualified or unsuitable expert288 or has completely
delegated its decision-making power to an expert.289 An alleged lack of consideration of the
expert opinion obtained does not justify a refusal to enforce the award, because only the
arbitral procedure but not the process of the decision-making can be reviewed.290 By contrast,
reliance on an expert report rendered in a way which violates the terms of reference agreed by
the parties may result in an incorrect procedure and constitute a ground for refusal.291
The application of a different law to the merits than that agreed on by the parties may also 122
constitute incorrect procedure in the sense of ArticleV (1)(d) NYC. The provisions on the
applicable law are also part of the relevant procedural rules.292 However, this is only the case
if the arbitral tribunal disregards the parties choice deliberately and not merely where the
arbitral tribunal applies the relevant conflict of laws provisions wrongly. Furthermore, the
very rare cases of the application of the wrong law must be clearly distinguished from those
cases where the correct law was merely wrongly applied. The latter is outside the review of
the courts and falls within the prohibition of the rvision au fond.293
Decisions ex aequo et bono without the required explicit authority are considered to be based 123
on an incorrect procedure.294 However, the mere reference by the arbitral tribunal in its
286
287
288
289
290
291
292
293
294
BayObLG 15.12.1999, RPS 2/2000, 16 (18) = CLOUT case No. 403; OLG Kln 04.01.1993, RIW 1993,
498 (501).
OLG Kln 21.11.2008 19 Sch 12/08 (reliance on party expert instead of appointing an independent
expert for the tribunal).
Musielak-Voit (2013), 1059 para.20; Schwab/Walter (2005), Chap. 24 para.24; Stein/Jonas-Schlosser
(2002), 1059 para.23; Baumbach/Lauterbach (2014), 1059 para.14.
OLG Dsseldorf 27.10.1975, BB 1976, 251; MnchKommZPO-Mnch (2013), 1059 para.20.
OLG Koblenz 19.02.2004; cf. Borges, ZZP 1998, 487 (493) (as for the exclusion of review of the decisionmaking process).
OLG Frankfurt 17.02.2011, SchiedsVZ.
BGH 26.09.1985, BGHZ 96, 40 (44 et seq.); OLG Franfurt 26.10.1983, RIW 1984, 400 seq. with note by
Dielmann, 401 (under old law); cf. OLG Hamburg 04.09.1998, OLGR Hamburg 1999, 76 (77) = NJWRR 2000, 806 = CLOUT case No. 455 (concerning procedural aspects); Musielak-Voit (2007), 1059
para. 18; Schwab/Walter (2005), Chap. 24 para. 22; Baumbach/Lauterbach (2014), 1059 para. 12;
Lachmann (2002), para.1214; Stein/Jonas-Schlosser (2002), Anhang 1061 para.119 (in favour of an
application of (c) to such cases); Hausmann, FS-Stoll (2001), 593 (600 seq.); cf. BayObLG 15.12.1999,
RPS 2/2000, 16 (17) = CLOUT case No. 403.
BGH 26.09.1985, BGHZ 96, 40 (46) = NJW 1986, 1436 (1437) = RIW 1985, 970 (972); see also
BayObLG 15.12.1999, RPS 2/2000, 16 (20) = EWiR 2000, 199 note by Berger, (the court held that
potential mistakes in the application of the applicable Italian patent law do not constitute a ground to refuse enforcement) = CLOUT case No. 403; Sandrock, Gewhnliche Fehler in Schiedssprchen: Wann
knnen sie zur Aufhebung des Schiedsspruchs fhren?, BB 2001, 2173 (2178 seq.); Lachmann (2002),
para.1214; Musielak-Voit (2013), 1059 para.18; Zller-Geimer (2014), 1059 para.43; Hausmann,
FS-Stoll (2001), 593 (604); Krll, NJW 2001, 1173 (1182); cf. OLG Hamburg 04.09.1998, OLGR Hamburg 1999, 76 (77) = NJW-RR 2000, 806 = CLOUT case No. 455 (concerning procedural aspects).
BGH 26.09.1985, BGHZ 96, 40 (45) = NJW 1986, 1436 (1437) = RIW 1985, 970 (972) with further
references; critical note by Sandrock, Zgigkeit und Leichtigkeit versus Grndlichkeit, JZ 1986, 370 (373
et seq.) (who is of the view that (d) covers only true flaws in procendo; the application of a law other than
484
award to common sense or good faith is not, in itself, sufficient to assume a decision ex
aequo et bono.295 Both concepts also play an important role in making decisions based on the
applicable law. The same applies as to estimates concerning the amount of damages incurred,
which alleviate the task for the tribunal to determine the amount of damage
124 The length of the arbitral proceedings or the rendering of an award several months after the
oral hearing does not, in principle, constitute incorrect procedure. This may be different
where the arbitration agreement or the applicable arbitration rules or laws explicitly provide
for a time limit within which the award must be rendered. In general, however, such time
limits serve to ensure that the proceedings are conducted in a speedy manner but should
not affect the award once it has been rendered.296 Moreover, in those cases it will often be
impossible for a party to prove that this delay has affected the outcome of the proceedings or
the party may be precluded from raising the defence as it has not been raised without undue
delay, i.e. directly after the period expired.297
125 The same applies, in principle, to alleged violations of an existing obligation under the lex
arbitri to give reasons for the award. Irrespective of this, one must keep in mind that under
(d), it is not the reasoning requirements of the German arbitration law but that of the place of
arbitration (which may be more lenient than 1054 (2) ZPO) that are relevant.298
5.
Lack of a Final and Binding Award ArticleV (1)(e) NYC
126 Recognition and enforcement of an award may be refused where the award has either not yet
become binding on the parties or has been set aside. The possibility to apply for the setting
aside of the award and even the initiation of such proceedings does not prevent the award
from being binding on the parties.299 This defence only covers cases where a true appeal on
the merits in the form of a second instance is still possible. In addition, it has been applied
to cases where the law of the place of arbitration only accords contractual force to an award
until it has been confirmed in court proceedings, with the consequence that such awards
will only become binding on confirmation by the courts.300 The law applicable to the arbitral
proceedings determines what is required for an award to become binding.301
127 The setting aside of an award at the place of arbitration will invariably result in the nonenforcement of the award in Germany. Unless the case is covered by ArticleIX European
295
296
297
298
299
300
301
the one agreed on by the parties however is a flaw in iudicando, the only ground that allows for the review
of a flaw in iudicando to a limited extent is Art. V (2) No. 2 (b) NYC (ordre public)); OLG Mnchen
22.06.2005, SchiedsVZ 2005, 308; Musielak-Voit (2013), 1059 para.18; Schwab/Walter (2005), Chap.
24 para.22; Zller-Geimer (2014), 1059 para.43; Weigand-Wagner (2002), Germany, para.443; Krll,
SchiedsVZ 2006, 203 (211).
BGH 26.09.1985, BGHZ 96, 40 (46).
BGH 14.04.1988, BGHZ 104, 178 (184) = NJW 1988, 3090 (3091) = Yearbook XV (1990), 450 (453).
BayObLG 23.09.2004 = Syrian Trading Company v. BMW AG, Yearbook XXX (2005), 568 (572 seq.).
OLG Dsseldorf 15.12.2009 I-4 Sch 10/09 = Yearbook XXXV (2010), 386.
BayObLG 22.11.2002, SchiedsVZ 2003, 142 (144) = Yearbook XXIX (2004), 754 (758); OLG Hamm
28.11.2008 25 Sch 6/08; OLG Frankfurt 16.10.2008 26 Sch 13/08; BGH 10.05.1984, NJW 1984,
2763 (2764); Musielak-Voit (20013), 1061 para.18; Solomon (2007), pp. 364 et seq.; Nelle (2000),
p.571; Nienaber (2002), p.19; cf. BGH 26.06.1969, BGHZ 52, 184 (188) = NJW 1969, 2093; BGH
14.04.1988, BGHZ 104, 178 (180) = NJW 1988, 3090 (3091) = Yearbook XV (1990), 450 (452).
In this direction see BayObLG 22.11.2002, SchiedsVZ 2003, 142 (143) = Yearbook XXIX (2004), 754
(757).
OLG Celle 06.10.2005 8 Sch 06/05.
1061 Krll
485
Convention,302 according to the prevailing view, it is irrelevant why the setting aside at the
place of arbitration occurred or whether such decision would be open to recognition in Germany.303 Article V (1)(e) NYC is considered to constitute an independent defence to refuse
enforcement and which is not submitted to any further requirements.304
If the case falls within the ambit of the European Convention, the setting aside of the award 128
at the place of arbitration is only relevant if it has been based upon one of the grounds
mentioned in Article IX (1) (a) (d) European Convention, which are largely identical to
the defences listed in Article V (1) (a)-(d) NYC. Again, according to the German Supreme
Court, it is irrelevant whether the decision setting aside the award for one of these grounds is
correct or could be recognized in Germany pursuant to 328 ZPO. 305
The mere fact that legal actions have been brought against the successful setting aside deci- 129
sion at the place of arbitration does not render the award binding again.306
The same applies to the opposite situation. The mere initiation of setting aside proceedings as 130
such does not affect the binding force of the award. It may only lead to a stay of the action to
have the award declared enforceable under ArticleVI NYC. German courts have, in general,
only made use of the opportunity to stay the proceedings to await the outcome of the setting
aside proceedings in the country of origin when the latter would presumably be successful.307
On the other hand, a non-appealable declaration of enforceability can be set aside afterwards 131
according to 1061 (3) ZPO if the award is at a later point in time set aside in a foreign country. The question is whether this rule applies to all countries or only the country of origin of
the award, and whether the judicial order to set aside must first be recognized in Germany.
In the context of ArticleV (1)(e) NYC, only an order to set aside rendered in the country
of origin is to be considered. The setting aside of the award in third countries is irrelevant.308
G.
Grounds That Must be Considered ex officio
Unlike the various grounds in ArticleV (1) NYC, which primarily protect private interests, 132
the two grounds mentioned in ArticleV (2) NYC are intended to protect the public interest.
Thus, they must in principle be considered ex officio. It is even submitted that courts are, to
a certain extent, required to engage in their own investigations if the facts submitted by the
302
303
304
305
306
307
308
The Convention may also be applicable in relation to parties from non-signatory states by virtue of most
favoured treatment clauses in treaties concluded between a signatory state and that non-signatory state;
see OLG Dresden 31.01.2007 11 Sch 18/05.
Controversial OLG Mnchen 30.07.2012 34 Sch 18/10 confirmed by BGH 23.04.2013 III ZB 59/12;
Schwab/Walter (2005), Chap. 30 para.14; von Bernuth (1995), pp.36 et seq.; with convincing arguments
in favour of a different approach Nienaber (2002), pp.106 et seq. Nelle (2000), pp.572 et seq. (limitation to
those cases where the foreign decision would be recognizable); Kuckenburg, Germany: Refusal to Allow
Enforcement of an Annulled Award How Long Can it Go On?, b-Arbitra 2013, 179.
BGH 23.04.2013 III ZB 59/12.
BGH 23.04.2013 III ZB 59/12.
OLG Rostock 28.10.1999, RPS 1/2000, 20 (23) = Yearbook XXV (2000), 717 (719) (applicant argued
that the decisions that set aside the award where still open to recourse in Russia).
OLG Celle 20.11.2003, Yearbook XXX (2005), 547 (554) = (2004) Int.A.L.R. N-58 (proceedings not
stayed); KG Berlin 06.05.2002 (23/29 Sch 21/01) (proceedings not stayed); OLG Schleswig 16.06.2008
16 Sch 2/07 (proceedings not stayed as success unlikely); Nienaber (2002), p.23.
KG Berlin 10.08.2006, SchiedsVZ 2007, 108; von Bernuth (1995), pp.36 et seq.
486
parties contain indications that one of the two grounds may be present.309 Irrespective of this,
a party trying to rely on a defence in ArticleV (2) NYC is at least required to submit facts
which make an infringement of public policy or the non-arbitrability of the dispute likely. For
certain aspects of public policy, such as the allegation that the award is based on fraudulent
evidence, courts have even imposed more extensive pleading requirements.310 Parties will be
required to submit the facts from which the alleged fraud can be derived and give information as to what evidence the arbitral tribunal should have requested.
133 Independent of the pleading requirements in a particular case, the burden of proof stays with
the party that opposes recognition and enforcement.311
1.
Lack of Objective Arbitrability ArticleV (2)(a) NYC
134 Enforcement of an award will be refused if the matter in dispute is not arbitrable. The wording makes clear that the standard to determine the objective arbitrability is German law, as
the law of the exequatur state, irrespective of which laws are applicable to the arbitration
agreement or the arbitral proceedings. Under the new German law, all claims involving an
economic interest are arbitrable unless the arbitrability is expressly limited or excluded by
special provisions (1030 (1) sentence 1 ZPO). Non-pecuniary claims are arbitrable whenever the parties may conclude a settlement on the issue in dispute (1030 (1) sentence 2
ZPO).312
135 In light of the few restrictions on objective arbitrability under German law, the defence in
ArticleV (2)(a) NYC is of limited practical importance. In particular, the arbitrability of
a dispute is not affected by the mere fact that it involves allegations of bribery. It is for the
arbitral tribunal to decide whether or not the claims are tainted by bribery or other forms of
illegality. Where the award de facto orders the fulfilment of such tainted claims, its enforcement is contrary to public policy in the sense of subsection 2 (b).313
2.
Violation of Public Policy ArticleV (2)(b) NYC
136 a. General Principles: The public policy exception defines the boundary between party
autonomy in the settlement of disputes on the one hand, and the enforcing states interest
in protecting its most fundamental principles on the other. Thus, irrespective of the place of
arbitration and the law applicable to the merits, the relevant standard for the recognition and
enforcement of foreign awards in Germany is German public policy.314 The prevailing view
is that foreign awards are, in this respect, subjected to the standard of German international
public policy, which is even narrower than that of national public policy.315 However, in
309
310
311
312
313
314
315
Schlosser (1989), paras925 seq.; Stein/Jonas-Schlosser (2002), Anhang 1061 para.74; Zller-Geimer
(2014), 1059 paras83 seq.; for the opposite view see MnchKommZPO-Mnch (2013), 1059 para.24.
OLG Celle 20.11.2003, Yearbook XXX (2005), 547 (551 seq.) = (2004) Int.A.L.R. N-58; cf. OLG
Mnchen 13.02.1995, OLGR Mnchen 1995, 57 (59) (a violation of German ordre public due to a violation of antitrust law could not be deduced from the parties submissions).
For details see supra, Trittmann/Hanefeld, 1030 para. 11.
OLG Hamburg 12.03.1998, IPRspr 1999, No. 178 = Yearbook XXIX (2004), 663 (669).
BayObLG 20.11.2003, IHR 2004, 81 = Yearbook XXIX (2004), 771 (773); cf. OLG Mnchen 13.02.1995,
OLGR Mnchen 1995, 57 (59) (a violation of the ordre public of the country in which the award was
rendered is irrelevant for the declaration of enforceability in Germany).
BGH 15.05.1986, BGHZ 98, 70 (73 et seq.) = NJW 1986, 3027 (3028) = Yearbook XII (1987), 489
(490) (party-appointed arbitrator acting as sole arbitrator); id. 18.01.1990, BGHZ 110, 104 (107) =
1061 Krll
487
German law, due to its very narrow concept of national public policy, the distinction between
national and international public policy is more one of degree than of substance.316 It takes
account of the fact that the German interest in ensuring compliance with the basic principles
of the German legal system, in particular in relation to procedural public policy, is smaller in
connection with foreign awards than with awards rendered in Germany.317
It is generally accepted that the mere misapplication or infringement of German mandatory 137
rules, whether procedural or substantive, is not in itself sufficient to constitute a violation
of public policy. Not every mandatory provision forms part of the ordre public, let alone the
international ordre public. International public policy is only infringed if the enforcement of
the award would be contrary to those mandatory rules which protect the fundamental principles of the German public and economic order, or which protect the most basic notions of
fairness.318
According to the clear wording of ArticleV (2)(b) NYC, it is not relevant whether the award 138
as such or the procedure upon which it is based is contrary to public policy, but whether
its enforcement in Germany would itself be contrary to public policy. Consequently, the
relevant point in time to determine the violation of public policy is the time of enforcement.
Legal changes that have occurred after the award was rendered must therefore be taken into
account.319 In addition, violations of the most basic procedural guarantees will only trigger the
public policy defence if they have affected the outcome of the proceedings, i.e. the content of
the award.320 Furthermore, in determining whether public policy is affected, German courts
have emphasized that the finality of the award as such is also protected by public policy.321
b. Substantive Public Policy: Substantive public policy is the only, albeit very limited, gate to 139
a review of the awards content. German courts have, however, consistently emphasized that
316
317
318
319
320
321
NJW 1991, 2199 seq. = Yearbook XVII (1992), 503 (505 et seq.) (external legal advisor for arbitral tribunal involved in proceedings); OLG Bremen 30.09.1999, RPS 2/2000, 18 (21) = Yearbook XXXI (2006),
640 (648) = (2001) Int.A.L.R. N-26; OLG Karlsruhe 04.01.2012, Yearbook XXXVIII (2013) 379 (insolvency regulations) cf. with further examples Stein/Jonas-Schlosser (2002), Anhang 1061 paras135;
Musielak-Voit (2013), 1061 paras23 et seq.
Critical to the distinction Sandrock, FS-Sonnenberger (2004), 615 et seq.; Schwab/Walter (2005), Chap.
30 para.21; see also Ebbing (2003), p 292.
Cf. supra, Krll/Kraft, 1059 paras 84 seq.; Schlosser, IPRax 1991, 218 et seq.; cf. Sandrock, FS-Sonnenberger (2004), 615 (632).
BGH 16.09.1993, BGHZ 123, 268 (270) = NJW 1993, 3269 = EuZW 1994, 29; OLG Bremen 30.09.1999,
RPS 2/2000, 18 (20) = Yearbook XXXI (2006), 640 (649) = (2001) Int.A.L.R. N-26 (for definition
of procedural ordre public); BayObLG 20.11.2003, IHR 2004, 81 et seq. = Yearbook XXIX (2004), 771
(773).
OLG Dsseldorf 21.07.2004 VI Sch(Kart) 01/02; Weigand-Haas (2002), NYC, Art. V para.107; cf.
MnchKommZPO-Mnch (2013), 1059 para.41; RG 28.03.1924, RGZ 108, 139 (142 seq.).
OLG Kln 23.04.2004, SchiedsVZ 2005, 163 (165) = Yearbook XXX (2005), 557 (not reproduced in
this regard); OLG Stuttgart 14.10.2003 = (2005) Int.A.L.R. N-48; OLG Dsseldorf 15.12.2009 I-4 Sch
10/09 = Yearbook XXXV (2010), 386; for one of the rare cases where such an effect was found to exist
OLG Hamburg 15.12.1998 9 U 36/98.
BGH 01.02.2001, RPS 1/2001, 14 (17) = Yearbook XXIX (2004), 700 (713 seq.); Sandrock, IPRax
2001, 550 (552); Krll, (2002) 17 (8) Mealeys I.A.R. 34; cf. for an emphasis on finality internationally
ILA, Final Report on Public Policy as a Bar to Enforcement of International Arbitral Awards, Recommendation 1 (a), reproduced in Art.Int. 2003, 249 (250); European Court of Justice, Eco Swiss China Time
Limited v. Benetton International NV, 01.06.1999, C-126/97,ECR 1999, I-3055 = EuZW 1999, 565 et seq.
= NJW 1999, 3549.
488
the public policy defence may not be used to control the arbitral tribunals application of the
law, but merely ensure that the enforcement of the award is not contrary to the most basic
principles of the German legal system.322 In particular, it is irrelevant whether, upon the application of the mandatory rules of German law, a different result would have been reached.
International public policy is only infringed where the enforcement of the award would be
in such sharp contradiction to the above mentioned fundamental provisions and principles
that it would be untenable and liable to destroy confidence in the predictability of legal decisions in general and the reliability of arbitral proceedings in particular.323 In determining
whether that is the case, the courts are not bound by the arbitral tribunals legal reasoning or
the facts established by it.324 While the tribunals evaluation of evidence and the subsequent
application of the law is in principle beyond control, a completely and obviously arbitrary
decision would violate public policy.325
140 Substantive public policy is violated where the fulfilment of the operative part of the award
would be contrary to the public order or good morals. This would be the case where the
fulfilment of the award would constitute a criminal offence326 or otherwise sanction prohibited activities such as piracy, terrorism, genocide, drug trafficking, money laundering or
smuggling, by e.g. granting damages for non-fulfilment or distributing gains.327 Awards that
order fulfilment of a contract to bribe a third person also fall into this category.328 However,
it is for the party relying on the defence to prove that the contract was not a mere consultancy contract or a contract to exert personal influence, but rather a contract to pay bribes.
In cases of doubt, a consultancy agreement or a contract to exert personal influence will be
assumed.329 For the violation of German public policy, it is irrelevant whether consultancy
contracts would be contrary to public policy in the country where the services were to be
rendered, since under German law they are not. 817 sentence 2 Civil Code (Brgerliches
322
323
324
325
326
327
328
329
OLG Hamburg 12.03.1998, IPRspr 1999, No. 178 = Yearbook XXIX (2004), 663 (669 seq.); OLG Kln
15.02.2000, Yearbook XXIX (2004), 715 (718); cf. BGH 15.07.1999, BGHZ 142, 204 (206) = NJW
1999, 2974 = ZZP 2000, 483 et seq. with note by Ehricke, ZZP 2000, 453 (458) = RPS 1/2000, 12.
OLG Brandenburg 02.09.1999, RPS 1/2001, 21 (22) = Yearbook XXIX (2004), 697; cf. OLG Kln
03.06.2003 9 Sch 23/02 (setting aside of a German award); MnchKommZPO-Mnch (2013), 1059
para.47.
BGH 25.10.1966, NJW 1967, 1178 (1179) with further references; id. 31.05.1972, NJW 1972, 2180
(2181); Stein/Jonas-Schlosser (2002), 1063 para.8a; but controversial Zller-Geimer (2014), 1059
paras49 et seq.; cf. for a domestic award BGH 26.10.1072, KTS 1973, 128 (131); see also supra, paras 52
et seq.
OLG Frankfurt 16.10.2008 26 Sch 13/08 (denied in the case).
OLG Hamburg 11.03.1953, NJW 1953, 1309 seq. for an award ordering the payment of damages that
could only have been avoided if the defendant had committed a criminal offence in fulfilling the underlying contract.
Musielak-Voit (2013), 1061 para.27; Schwab/Walter (2005), Chap. 24 para.41; Stein/Jonas-Schlosser
(2002), Anhang 1061 paras 138 et seq.; Lachmann (2002), para. 1226; MnchKommZPO-Mnch
(2013), 1059 para.47; cf. ILA, Interim Report on Public Policy as a Bar to Enforcement of International
Arbitral Awards, reproduced in Art.Int. 2003, 217 (235 seq.).
OLG Hamburg 12.03.1998, IPRspr 1999, No. 178 = Yearbook XXIX (2004), 663 (669); OLG Hamm
27.09.2005, SchiedsVZ 2006, 106 (109 et seq.) = Yearbook XXXI (2006), 685 (695) = (2006) Int.A.L.R.
N-5 (in both cases denied).
OLG Hamm 27.09.2005, SchiedsVZ 2006, 106 (110) = Yearbook XXXI (2006), 685 (698) = (2006)
Int.A.L.R. N-5; Stein/Jonas-Schlosser (2002), Anhang 1061 para.140; cf. England, Court of Appeal,
Westacre Investments Inc. v. Jugoimport-SDPR Holding Co Ltd (1999) 2 Lloyds Rep. 65 et seq.
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489
Gesetzbuch BGB), which prohibits the repayment of money paid for bribery, is not part of
German public policy.330
The mere fact that a litigation financing company takes 50 per cent of the amount awarded 141
is not, as such, contrary to good morals in the light of the risks involved.331 The same applies
to orders to pay the other sides legal costs, even if these are considerably higher than fees
payable in German court proceedings.332
Substantive public policy may also be affected where the award is contrary to mandatory 142
economic laws that protect fundamental interests of the state. Examples of this are awards
which contradict laws on price fixing,333 currency law,334 export or import laws (including
laws on the export of weapons),335 national competition law and European competition law
(Article81 (1) EC).336 In general, the mandatory provisions of European law that serve key
purposes of the common market in particular the four basic freedoms and the protection
of the weaker party are considered to be part of public policy.337 Also, the infringement
of international mandatory rules of third courts may justifiy a reliance on the public policy
defence.338 To constitute a violation of international public policy, it is necessary that the
content of the award is obviously contrary to such mandatory rules. As long as the finding of
the arbitral tribunal is in line with one possible and reasonable interpretation of the relevant
law, it is not sufficient that the court in question adopts a different interpretation.339
Laws on the protection of consumers can fall into the same category and have in the past 143
led to the setting aside of an award or the refusal of enforcement.340 Over the years, there has
been a certain relaxation of the standard applied by the courts, which was particularly evident
in relation to consumer protection in the area of trading in securities. It is now established
jurisprudence that such transactions do not violate the ordre public and awards ordering the
330
331
332
333
334
335
336
337
338
339
340
Stein/Jonas-Schlosser (2002), Anhang 1061 para.143.

KG Berlin 27.05.2002 23 Sch 06/02.
OLG Dresden 13.01.1999, Yearbook XXIX (2004), 679 (685) = CLOUT case No. 443.
BGH 12.05.1958, BGHZ 27, 249 (255) = NJW 1958, 1538; BGH 27.02.1964, KTS 1964, 172 (174);
RG 28.03.1924, RGZ 108, 139 (142 seq.); Musielak-Voit (2013), 1061 para.27, fn. 133; Schwab/Walter
(2005), Chap. 24 para.43; MnchKommZPO-Mnch (2013), 1059 para.47.
Lachmann (2002), para. 1217; Schwab/Walter (2005), Chap. 24 para. 43; MnchKommZPO-Mnch
(2013), 1059 para.47.
BGH 25.10.1966, BGHZ 46, 365 (367) (antitrust law); id. 31.05.1972, NJW 1972, 2180 (2181 seq.) (antitrust law Art. 85 EC); OLG Dsseldorf 21.07.2004 VI Sch(Kart) 01/02; OLG Dresden 20.04.2005,
SchiedsVZ 2005, 210 (212); see also European Court of Justice, Eco Swiss China Time limited vs. Benetton
International NV, 01.06.1999, C-126/97,ECR 1999, I-3055 = EuZW 1999, 565 et seq. = NJW 1999,
3549; Musielak-Voit (2025), 1061 para. 27; Lachmann (2002), para. 1217; Schwab/Walter (2005),
Chap. 24 paras44 seq.; MnchKommZPO-Mnch (2013), 1059 para.47.
BGH 27.02.1969, NJW 1969, 978 (797); Arts 85, 86 EC-Treaty (now Arts 81, 82) are part of the ordre
public of the member states; Weigand-Haas (2002), NYC, Art. V para.110; cf. OGH 23.02.1998, IPRax
2000, 314 (317) Arts 85, 86 (now Arts 81, 82) EC-Treaty are part of the ordre public of the member
states.
OLG Mnchen 30.07.2012 34 Sch 18/10 (award contrary to Ukraining competition law).
Stein/Jonas-Schlosser (2002), Anhang 1061 para.141 (distinguishing between clear core parts of provisions and boundaries susceptible to divergent interpretations); but see for a different view in the national
context BGH 25.10.1966, BGHZ 46, 365 (370) = NJW 1967, 1178 (1179).
490
consumer to pay debts resulting from such transactions can now be enforced.341 A violation
of the ordre public has further been assumed where the award violated laws on the protection
of the creditor.342 Infringements of insolvency law do not inevitably constitute a violation of
the ordre public.343
144 The enforcement of the award may also violate public policy where its content is contrary
to fundamental principles of law, such as pacta sunt servanda,344 the prohibition on arbitrary
expropriation or expropriation without full and prompt compensation, the principle of good
faith and the prohibition of abuse of rights.345 In the German legal order, one of the basic
principles is that civil law provides compensation but not punitive damages. Thus, the enforcement of awards ordering the payment of punitive damages is considered to be contrary
to public policy.346 However, the mere addition of interest for late payment after a certain
period, the ordering of liquidated damages or compound interest are not contrary to public
policy.347 The same applies to interest rates which are considerably above the ordinary rate in
Germany.348
145 Another fundamental principle is that of legal certainty, which is, inter alia, protected by the
rules on prescription. Thus, the complete exclusion of prescription or lengthy periods which
de facto exclude any prescription may therefore be contrary to public policy.349 However,
mere deviations from the German rules on prescription are not sufficient, even if they are
considerable. The same applies in relation to decisions on attorney fees. Even where the fees
were four times higher than the fees under the German law on attorney fees, courts have
refused to deny enforcement for a violation of public policy, at least where the fees were still
in a proper proportion to the amount in dispute.350
341
342
343
344
345
346
347
348
349
350
BGH 21.04.1998, NJW 1998, 2358; MnchKommZPO-Mnch (2012), 1059 para.31; as a reaction
the legislator has, however, limited the subjective arbitrabiliy of consumers in securities transactions in
37h Securities Trading Act (Wertpapierhandelsgesetz WpHG) to those cases where the agreement
was concluded after the dispute has arisen; for details see supra, Trittmann/Hanefeld, 1030 para. 18.
BayObLG 25.08.2004, SchiedsVZ 2004, 319 (applicant asserted that the claim awarded has been assigned to the party in violation of insolvency law); OLG Karlsruhe 04.01.2012 9 Sch 02/09, Yearbook
XXXVIII (2013) 379 (claims not properly registered with the insolvency administrator).
BayObLG 20.11.2003, IHR 2004, 81 (82) = Yearbook XXIX (2004), 771 (773 et seq.) (continuation of
arbitral proceedings despite out of court settlement of dispute).
Stein/Jonas-Schlosser (2002), Anhang 1061 paras142 et seq.
BGH 04.06.1992, BGHZ 118, 312 (338 et seq.) = NJW 1992, 3096 et seq. (concerning a U.S. Court judgement); Schwab/Walter (2005), Chap. 30 para.22, fn. 8; Stein, Punitive Damages eine Herausforderung
fr die Internationale Wirtschaftsschiedsgerichtsbarkeit, EuZW 1994, 18 (21); MnchKommZPOMnch (2013), 1059 para.47; where separable the order for compensatory damages may be enforced.
Stein/Jonas-Schlosser (2002), Anhang 1061 para.142; OLG Hamburg 30.07.1998, RPS 1/1999, 13 (17)
= Yearbook XXV (2000), 714 (716) (for compound interest); id. 05.11.1991, RIW 1992, 939 (940)
(for compound interest entailed in a foreign court judgement declaring an award enforceabale); cf. OLG
Hamburg 26.01.1989, RIW 1991, 152 (154 et seq.) = Yearbook XVII (1992), 491 (497 seq.); on the issue
see also OGH 26.01.2005 (3 OB 221/04b), at <www.ris.bka.gv.at/jus/>.
OLG Dresden 13.01.1999, Yearbook XXIX (2004), 679 (685) = CLOUT case No. 443 (the court argued
that interest in the amount of 14 per cent for an open account is not uncommon in Germany either);
OLG Hamburg 26.01.1989, RIW 1991, 152 (154) = Yearbook XVII (1992), 491 (497 seq.); MnchKommZPO-Mnch (2001), 1059 para.47.
N-26.
OLG Dresden 13.01.1999, Yearbook XXIX (2004), 679 (685) = CLOUT case No. 443.
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Moreover, a party may even be prevented from invoking the violation of fundamental princi- 146
ples by the award if it did not raise the relevant objections in the arbitral proceedings, insofar
as the idea underlying 767 (2) ZPO may exclude reliance on defences which could have
been invoked during the arbitral proceedings.351
c. Violations of Procedural Public Policy: Procedural public policy is violated if the award has 147
been rendered in proceedings which deviate from the basic principles of German procedural
law in a way that the procedure can no longer be considered to be in accordance with the
basic principles of a fair trial.352 That the proceedings were not in line with mandatory rules
of German arbitration law as such is not sufficient in this regard.353 Violations of the applicable foreign procedural rules are also irrelevant.354
That fact that the most important aspects of procedural public policy are specifically regulated 148
in the various defences of ArticleV (1) NYC limits the relevance of the defence in practice,
as parties often base their objections on one of the grounds in ArticleV (1) NYC. However,
the prevailing view in Germany which also finds support in the legislative materials of the
ML355 is that the specific regulation of certain aspects of public policy in subsection (1)
does not exclude the parallel application of ArticleV (2)(b) NYC for these aspects, nor does
it exclude them from the concept of procedural public policy under ArticleV (2) (b) NYC.356
That applies, in particular, to the lack of a valid arbitration agreement357 and violations of the
right to be heard,358 both of which relate to two of the core principles of procedural public
policy.
Irrespective of this, not every rejection of a submission, even if not justified, constitutes a 149
violation of public policy. For example, rejections based on misapplications of relevant procedural rules or incorrect evaluation of the relevance of submissions, by themselves, do not
necessarily constitute an infringement of public policy. Only where the reasoning is a pretext
351
352
353
354
355
356
357
358
OLG Saarbrcken 30.05.2011, SchiedsVZ 2012, 47 (concerning a purchase price which was allegedly in
no relation to the value of the goods and therefore contrary to 138 BGB).
BGH 15.05.1986, BGHZ 98, 70 (73 et seq.) = NJW 1986, 3027 (3028) = Yearbook XII (1987), 489
(490); BGH 23.02.2006, SchiedsVZ 2006, 161 (164) = IHR 2006, 125 = (2006) Int.A.L.R. N-59; OLG
Bremen 30.09.1999, RPS 2/2000, 18 (20) = Yearbook XXXI (2006), 640 (648) = (2001) Int.A.L.R.
N-26; OLG Brandenburg 02.09.1999, RPS 1/2001, 21 (22) = Yearbook XXIX (2004), 697; Musielak-Voit
(2013), 1061 para.24.
BGH 18.01.1990, BGHZ 110, 104 (106 et seq.) = NJW 1990, 2199 seq. = Yearbook XVII (1992), 503
(505 seq.).
Commissions Report UN Doc A/40/17 paras297, 303.
OLG Hamburg 12.03.1998, IPRspr 1999, No. 178 = Yearbook XXIX (2004), 663 (668); OLG Bremen
30.09.1999, RPS 2/2000, 18 (19 seq.) = Yearbook XXXI (2006), 640 (647) = (2001) Int.A.L.R. N-26
however, the defence that evidence was not taken into account is only to be considered under (2)(b);
OLG Stuttgart 22.11.1986, RIW 1988, 480 (482); OLG Hamm 02.11.1983, IPRax 1985, 218 (219) =
Yearbook XIV (1989), 629 (632); MnchKommZPO-Adolphsen (2013), UN, Art. V para.17; Schwab/
Walter (2005), Chap. 24 para.11 and Chap. 30 para.23; Weigand-Haas (2002), NYC, Art. V para.109;
Satmer (1994), p.147; different probably Stein/Jonas-Schlosser (2002), Anhang 1061 para.150 ((2)(b)
only subsidiary); in favour of a concurrent application internationally also van den Berg (1996), pp.299
et seq. and 376; Berger (1998), p.477 (concept of public policy only covers material ordre public) cf. in the
context of domestic awards OLG Kln 24.04.2006 -9 Sch 15/06.
BGH 26.06.1969, BGHZ 52 184 (191 seq.) = NJW 1969, 2093; id. 07.01.1971, NJW 1971, 986 (988);
LG Mnchen 20.06.1978, Yearbook V (1980), 260 (261).
See OLG Stuttgart 06.12.2000, Yearbook XXIX (2004), 742 (745).
492
for rejecting evidence offered, without any real justification, can a rejection be contrary to
public policy.359 Furthermore, notwithstanding the obligation to take violations of public
policy into account ex officio, German courts have required parties opposing recognition to
specify the alleged violation of the right to be heard and its effect on the award. For this, a
party is requested to state how it would have defended itself had it been granted sufficient
opportunity to do so.360
150 Procedural public policy is further affected where the award is the result of procedural fraud.
Examples are awards based on fraudulent documents, expert reports or witness statements
or where the award resulted from proceedings continued by the claimant without the
knowledge of the respondent, despite a settlement between the parties.361 While a party has
to prove that the award is based on fraud, it is not necessary that the fraudulent behaviour has
already led to the initiation of criminal proceedings or even a conviction.362 However, to avoid
that allegations of fraud are used to delay the enforcement of an award, they must be supported by appropriate evidence to be taken into account by the exequatur court.363 Moreover,
it must not have been possible to raise such allegations in the arbitral proceedings.364 Where
such allegations have been raised in the arbitral proceedings and have been rejected by the
arbitral tribunal, courts have been very cautious in reevaluating the facts to avoid a rvision au
fond. In addition, they have made clear that it is not the behaviour of the parties but that of
the arbitral tribunal which may render the enforcement of an award contrary to public policy.
Thus, allegations that one party has threatened the relevant witnesses and prevented them
from testifying in front of the arbitral tribunal only justify the invocation of the public policy
defences if the treatment of these allegations by the arbitral tribunals amounts to a violation
of the right to be heard.365
151 Equal influence of the parties on the composition of the arbitral tribunal and their equal
treatment during the proceedings forms part of German public policy.366 Irrespective of
359
360
361
362
363
364
365
366
OLG Kln 23.04.2004, SchiedsVZ 2005, 163 (165) = Yearbook XXX (2005), 557 (560 seq.).
OLG Bremen 30.09.1999, RPS 2/2000, 18 (20) = Yearbook XXXI (2006), 640 (648) = (2001)
Int.A.L.R. N26; OLG Hamburg 26.01.1989, RIW 1991, 152 (154) = Yearbook XVII (1992), 491 (497);
OLG Karlsruhe 29.11.2002 9 Sch 01/02; OLG Frankfurt 29.10.2009 = SchiedsVZ2010, 52-56; see also
Zller-Geimer (2014), 1061 para.33 in connection with 1059 para. 44.
BayObLG 20.11.2003, IHR 2004, 81 (83) = Yearbook XXIX (2004), 771 (775); cf. BGH 18.01.1990,
BGHZ 110, 104 (not reproduced in this regard) = NJW 1991, 2199 (2200) = Yearbook XVII (1992),
503 (506 seq.) (allegedly fraudulent witness).
BGH 18.01.1990, BGHZ 110, 104 (not reproduced in this regard) = NJW 1990, 2199 (2200) = Yearbook XVII (1992), 503 (507); cf. OLG Celle 20.11.2003, Yearbook XXX (2005), 547 (551) = (2004)
Int.A.L.R. N-58 (it is, however, not completely clear whether the court relied on the public policy defence or on a damage claim pursuant to 826 BGB); for the different view see OLG Mnchen 06.03.2012
34 Sch 3/10; in the context of domestic awards see BGH 02.11.2000, BGHZ 145, 376 (381) = NJW
2001, 373 = note by Boecker, EWiR 2001, 345 = note by Voit, ZZP 2001, 355 et seq. = (2002) Int.A.L.R.
N-12; for details see supra, Krll/Kraft, 1059 paras 91 et seq.
OLG Dresden 20.10.1998 = Yearbook XXIX (2004), 673 (677).
BGH 18.01.1990, BGHZ 110, 104 (not reproduced in this regard) = NJW 1990, 2199 (2200) = Yearbook XVII (1992), 503 (507 seq.).
OLG Hamburg 03.02.2012 6 Sch 2/11.
BGH 29.03.1996, BGHZ 132, 278 (equal influence on the composition of and right to chose ones arbitrator is a fundamental procedural right); OLG Frankfurt 24.11.2005, SchiedsVZ 2006, 219 (in casu
however denied as consent to multiparty arbitration was given) both citing with approval the decision
of the French Cour de Cassation, Chambre Civile No. 1, 07.01.1992, Siemens and BKMI v. Dutco, Rev.Arb.
1992, 470 et seq. = BB 1992 Beilage No. 15, 27; cf. BGH 15.05.1986, BGHZ 98, 70 (76) = NJW 1986,
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this fact, the practice that in cases of default of one party in appointing its arbitrator the
arbitrator appointed by the other side will decide as a sole arbitrator does not constitute a
violation of international public policy.367 However, where the prevailing influence of one
party on the composition of the arbitral tribunal is not the consequence of one partys default
but is provided for in the arbitration agreement, it may be contrary to public policy, at least
where the party has objected to this during the arbitral proceedings.368
The impartiality and neutrality of the arbitral tribunal belongs to the fundamental principles 152
of fair proceedings. Consequently, no one should be an arbitrator in his own affairs and the
appointment of one of the parties or its acting organs as arbitrator is, in principle, contrary to
public policy.369 The same applies to awards in which the arbitral tribunal orders the parties
directly to pay the arbitrators fees or indirectly tries to enforce its claim for fees.370 By contrast,
awards on costs, by which one party is ordered to reimburse the other party a certain amount
for the costs of the arbitral proceedings, are not contrary to public policy. Notwithstanding
that such awards presuppose an implicit determination of the costs of the arbitral tribunal,
they are not judicial decisions by the tribunal in its own cause.371 They constitute enforceable
titles with res iudicata effect solely in the relationship between parties. By contrast, in the
relationship between the arbitrators and the parties, they are unilateral determinations of the
fees to be paid in the sense of 317 BGB, with merely contractual force. 372
Public policy is also infringed if the arbitral tribunal lacked the required impartiality and 153
that has influenced the outcome of the proceedings. The mere existence of grounds which
would, at the pre-award stage, have justified a challenge to an arbitrator is not sufficient where
367
368
369
370
371
372
3027 (3029) = Yearbook XII (1987), 489 (490); critical Weber, Wider den Verlust des Bestellungsrechts
bei Nichteinigung der Mehrparteiengegenseite auf einen Schiedsrichter, in: Bachmann/Breidenbach et
al. (eds), FS-Schlosser (2005), 1061 (1072 et seq.) (for cases in which parties are obliged to appoint one
mutual arbitrator).
BGH 01.02.2001, RPS 1/2001, 14 (16) = Yearbook XXIX (2004), 700 (711); confirming BGH
15.05.1986, BGHZ 98, 70 = NJW 1986, 3027 = Yearbook XII (1987), 489 (490 et seq.); cf. Sandrock,
IPRax 2001, 550 (555 seq.); Krll, (2002) 17 (8) Mealeys I.A.R. 34 (37).
LG Hamburg 10.12.1985, Yearbook XII (1987), 487 (488) (only association members could be appointed as arbitrators in a dispute between a member and a non-member); cf. for a domestic award
in which the arbitration agreement was considered invalid pursuant to 138 BGB, BGH 26.01.1989,
JZ 1989, 588 (589 seq.); for a domestic award in which an agreement was not considered to be invalid
because defendant was found to have agreed to the composition of the arbitral tribunal OLG Hamburg
11.09.1969, BB 1970, 53; setting aside of a domestic award BGH 19.12.1968, BGHZ 51, 255 (259) (the
arbitration agreement of an association of importers only allowed for the appointment of members of the
association and provided that the president of the association had the right to appoint the chairperson in
case of default).
BGH 03.07.1975, JZ 1976, 245 (247) (not violated by consensual appointment of member of one partys
representative organ after a dispute has arisen).
OLG Mnchen 28.11.2005, SchiedsVZ 2006, 111 (112) (with wrong date) = Yearbook XXXI (2006),
722 (728); BGH 07.03.1985, BGHZ 94, 92 (cancellation of evidentiary hearing as sanction for nonpayment of advance on costs); Weigand-Haas (2002), NYC, Art. V para.109.
A different view has been supported until recently by a number of Higher Regional Courts on the basis
of an older decision by the German Supreme Court (BGH 25.11.1976, JZ 1977, 185 that already determining the amount in dispute may be contrary to public policy as the arbitrators fees depend on the
amount in dispute) see OLG Frankfurt 30.03.2006 26 Sch 12/05 (assumed incorrect procedure where
discretion existed as to fees of the arbitral tribunal); id. 24.10.2008 26 Sch 03/08.
BGH see also KG Berlin 06.05.2002 23/29 Sch 21/01; OLG Mnchen 23.02.2007 34 Sch 31/06; cf.
Wolff, SchiedsVZ 2006, 131 et seq.; cf. generally von Schlabrendorff/Sessler, 1057 paras 7 et seq.
494
actual bias cannot be proven.373 Moreover, in determining whether existing contacts with
one party infringe public policy, the failure to use available remedies strongly weighs against
an infringement. Thus, even involvement by an arbitral tribunal member in the same matter
at the pre-arbitration stage will not necessarily lead to a violation of public policy.374
154 In proceedings before an arbitral tribunal lacking the necessary legal qualification, the active
participation of an external legal advisor does not constitute a violation of procedural public
policy as long as the final decision is taken by the arbitral tribunal and not by the advisor.375
The same applies to the denial of a second instance normally existing under the applicable
rules.376 As long as the decision is not completely arbitrary, tribunals are free to decide
whether they have the necessary expertise or require support by external, tribunal appointed
experts.377
155 Equally, the decision by the tribunal not to render a preliminary ruling on jurisdiction (which
would have been favoured under the applicable law), but to determine its jurisdiction only in
the final award on the merits does not constitute a violation of public policy.378
156 Awards rendered in disregard of legally binding previous judgments or awards may constitute a violation of public policy. This is normally the case where the conflict relates to the
jurisdiction of the arbitral tribunal, e.g. cases in which a court has previously determined
the inadmissibility of arbitral proceedings or has declared the arbitration agreement to be
invalid.379 Where the conflict concerns the content of the award, the conflict must be obvious
to constitute a violation of public policy. In principle, whenever the arbitrator has taken the
judgment into account and has denied a conflict on the basis of a reasonable understanding
of the judgment, the arbitrators evaluation should not be overturned by the exequatur judge,
even if it interprets the judgment differently.380
157 Procedural public policy may also be infringed where the award uses evidence obtained in
breach of fundamental rights, such as the right to privacy. However, in such cases the determination of whether public policy is affected often involves a balancing of the conflicting
interests, as well as an evaluation of the importance of the tainted evidence on the outcome
of the award. Thus, an award that is based on video material taken without the knowledge of
the party opposing enforcement does not in every case violate the ordre public.381 By contrast,
the mere fact that an award is rendered more than one year after the final hearing does not
constitute a violation of public policy, even if it may affect the proper evaluation of the witness evidence given.382
373
374
375
376
377
378
379
380
381
382
OLG Hamm 28.11.2008, Yearbook XXXIV (2009), 536, cf. in relation to a domestic award the explanation given by OLG Naumburg 11.07.2008 10 Sch 3/07.
BGH 01.02.2001, RPS 1/2001, 14 = Yearbook XXIX (2004), 700 (712 seq.); Sandrock, IPRax 2001, 550
(552 seq.); Krll, (2002) 17 (8) Mealeys I.A.R. 34 (36).
BGH 18.01.1990, BGHZ 110, 104 (107) = NJW 1991, 2199 = Yearbook XVII (1992), 503 (505 seq.).
OLG Kln 21.11.2008 19 Sch 12/08 (reliance on party expert).
OLG Hamm 28.11.2008, Yearbook XXXIV (2009), 536.
Stein/Jonas-Schlosser (2002), Anhang 1061 para.154; cf. supra, Huber/Bach, 1032 paras 26 et seq.
Stein/Jonas-Schlosser (2002), Anhang 1061 para.154; different Gaul, FS-Sandrock (2000), 285 (315
etseq.).
OLG Bremen 10.11.2005, OLGR Bremen 2006, 263 (264 seq.).
OLG Karlsruhe 04.01.2012 9 Sch 02/09, Yearbook XXXVIII (2013) 379.
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It is a matter of controversy whether in cases where the law governing the arbitral proceed- 158
ings (lex arbitri) requires the arbitral tribunal to give reasons, a violation of this obligation
amounts to an infringement of public policy. The better and prevailing view rejects such
an infringement. As it is possible to waive the obligation to give reasons for arbitrations in
Germany, the requirement to give reasons does not form part of German procedural public
policy.383 Consequently, the appropriate ground to raise infringements of the reasoning obligation is ArticleV (1)(d) NYC and not the public policy defence. Irrespective of this, it is
generally accepted that reasons given do not have to meet the German requirements as to a
reasoning for court decisions.384
In evaluating whether the enforcement of an award rendered in proceedings infringing 159
fundamental procedural rules is contrary to public policy, the availability of remedies at the
place of arbitration may play a role.385 Most of the procedural guarantees primarily serve
to protect the parties, whose behaviour during the proceedings or thereafter can therefore
be taken into account, even if a complete waiver of the procedural public policy defence is
considered to be impossible.386 The BGH has, for example, held that the failure to make use of
existing remedies to challenge an arbitrator, as to whose independence considerable doubts
existed, excluded reliance on the public policy defence.387 Likewise, the fraudulent behaviour
of parties and witnesses should be raised in the arbitration when known at the time.388 Concerning the arbitration agreement, the non-compliance with form requirements of German
or foreign law does not, in every case, lead to an ordre public violation.389
VIII. Additional Defences

It is highly controversial to what extent material defences against the judgment claim, e.g. 160
the fulfilment of the award or a set-off, can be raised as a defence in proceedings to have
383
384
385
386
387
388
389
BayObLG 23.09.2004 = Syrian Trading Company v. BMW AG, Yearbook XXX (2005), 568 (573);
OLG Hamburg 30.07.1998, RPS 1/1999, 13 (16) = Yearbook XXV (2000), 714 (716); OLG Schleswig
30.03.2000, RIW 2000, 706 (709) = Yearbook XXXI (2006), 652 (662); OLG Dsseldorf 15.12.2009
I-4 Sch 10/09 = Yearbook XXXV (2010), 386; LG Berlin 04.12.1964, KTS 1966, 183 (184); MusielakVoit (2013), 1061 para.24; Weigand-Haas (2002), NYC, Art. V para.109; cf. Bill of the Arbitration
Law Reform Act, BT-Drs. 13/5274, pp.59 seq. subsuming violations under 1059 (2) No. 1 (d) and not
under No. 2 (b) ZPO; for a different view Stein/Jonas-Schlosser (2002), Anhang 1061 para.155; Satmer
(1994), p.196.
OLG Bremen 30.09.99, RPS 2/2000, 18 (19) = (2001) Int.A.L.R. N-26.
OLG Hamm 28.11.2008, Yearbook XXXIV (2009), 536; too broad OLG Schleswig 16.06.2008 16 Sch
2/07, according to which a violation of the right to be heard is excluded if remedies exist at the place of
arbitration and the application has tried to make use of them without success.
Musielak-Voit (2013), 1061 para.24 in connection with 1059 para. 28; Weigand-Haas (2002), NYC,
Art. V para.111; cf. Kreindler/Schfer/Wolff (2006), para.1130.
BGH 01.02.2001, RPS 1/2001, 14 = Yearbook XXIX (2004), 700 (713); Sandrock, IPRax 2001, 550
(552); Krll, (2002) 17 (8) Mealeys I.A.R. 34; cf. BGH 15.05.1986, BGHZ 98, 70 (75 et seq.) = NJW
1986, 3027 (3029) = Yearbook XII (1987), 489 (490); OLG Hamburg 12.03.1998, IPRspr 1999, No.
178 = Yearbook XXIX (2004), 663 (668); KG Berlin 13.03.2002 -23/29 Sch 20/01.
BGH 18.01.1990, BGHZ 110, 104 (not reproduced in this regard) = NJW 1990, 2199 (2200) = Yearbook XVII (1992), 503 (507 seq.); for a narrower view see BayObLG 20.11.2003, IHR 2004, 81 (83) =
Yearbook XXIX (2004), 771 (775).
BGH 09.03.1978, BGHZ 71, 131 (137) = NJW 1978, 1744 = Yearbook IV (1979), 264 (266) (enforcement proceedings under the German-Belgium Treaty); id. 26.06.1969, BGHZ 52, 184 (190) = NJW
1969, 2093 (under old German law (1044 ZPO) defendant had failed to challenge the award for the
lack of an arbitration agreement at the place of arbitration).
496
the award declared enforceable. For the subsequent execution proceedings (i.e. enforcement
proceedings in the proper sense), 767 ZPO provides that such defences give rise to an
action against the title created by the declaration of enforceability and prevent its execution,
at least when the defences are not precluded pursuant to 767 (2) ZPO.390 In light of this and
in line with the position under the old German arbitration law,391 the prevailing view is that
such material defences can already be raised in the proceedings to have the award declared
enforceable. A party which wants to invoke such defences does not have to wait for the execution proceedings.392 The underlying rationale for this view is that it would be contrary to the
principle of venire contra factum proprium or at least procedural efficiency if the state courts
first declared an award to be enforceable only to then later deny execution of that same title
for reasons that already existed at the time when the award was declared enforceable.
161 However, in light of the legislative intent behind the new law and the dogmatic frictions
created by the above view, it is preferable under the new law to refer material defences in
principle to the execution proceedings.393 The primary objective of the changes made in the
new law to the provisions dealing with the declaration of enforceability was to facilitate and
streamline the procedure to obtain such a declaration.394 This objective would be frustrated if,
390
391
392
393
394
767 provides:
(1)Defences that concern the judgment claim itself, shall be invoked by the debtor by means of
an action before the court of first instance.
(2)Such objections are only admissible if the factual grounds on which they are based arose after
the conduct of the last oral hearing in which these objections should have been invoked pursuant
to the provisions of this Law and could not have been invoked by means of an objection.
(3)When filing the claim, the debtor shall rely on all the objections then available.
For the old law see BGH 16.02.1961, BGHZ 34, 274 (277); id. 22.11.1962, BGHZ 38, 259 (262); id.
22.02.1990, NJW 1990, 3210 (3211).
See BGH 30.09.2010, SchiedsVZ 2010, 330 = Yearbook XXXVI (2011), 282 (set-off); id. 29.07.2010,
SchiedsVZ 2010, 275 = Yearbook XXXVI (2011), 277 (set-off with an uncontested claim); cf. OLG Dsseldorf 19.01.2005, SchiedsVZ 2005, 214 = Yearbook XXXI (2006), 663 (666 et seq.) (set-off against
a claim whose existence had been finally determined by a foreign court judgement); OLG Schleswig
11.02.1999 16 SchH 03/98 (uncontested partial fulfilment of the award); OLG Koblenz 28.07.2005,
SchiedsVZ 2005, 260 = Yearbook XXXI (2006), 673 (677) (in favour but denied set-off since defendant
had failed to declare a set-off in the arbitral proceeding); OLG Kln 23.04.2004, SchiedsVZ 2005, 163
= Yearbook XXX (2005), 557 (left open because the material preconditions for a set-off were not met)
cf. Musielak-Voit (2013), 1060 para.13; BGH 02.11.2000, BGHZ 145, 376 (381) = NJW 2001, 373
= note by Boecker, EWiR 2001, 345 = note by Voit, ZZP 2001, 355 et seq. = (2002) Int.A.L.R. N-12;
MnchKommZPO-Mnch (2013), 1060 para.12 seq.; Mnch, FS-Ishikawa (2001), 335 (355); all in
favour of giving a party the choice of whether to invoke the defence in the recognition and enforcement
proceedings or after the award has been declared enforceable in an action pursuant to 767 ZPO; cf.
OLG Hamm 20.06.2001 8 Sch 02/00 (with extensive discussion in the context of domestic awards).
BayObLG 12.04.2000, BayObLGZ 2000, 124 = JZ 2000, 1170 with critical note by Wagner = MDR
2000, 968 with approving note by Weigel = (2003) Int.A.L.R. N-12; BayObLG 04.05.2000, BayObLGZ
2000, 131 (133 seq.); KG Berlin 07.01.2010 (overruled by BGH 30.09. 2010 III ZB 57/10, SchiedsVZ
2010, 330 = Yearbook XXXVI (2011); Krll, FS. Schtze (2014), 305 et seq.; Borris/Schmidt, SchiedsVZ
2004, 273 (279); Thomas/Putzo-Reichold (2013), 1060 para.3; Peters, JZ 2001, 598; critical also OLG
Kln 24.04.2006 -9 Sch 15/05; but see id. 22.04.2004 = (2005) Int.A.L.R. N-4; at least for contested
claims OLG Stuttgart 04.10.2000, OLGR Stuttgart 2001, 50 (51) = MDR 2001, 595; cf. Nelle (2000),
pp.576 et seq. (possibility to raise as counterclaim but not as defence).
Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, pp.62 seq.; the decrease of the courts work
load also mentioned, on which the proponents of the opposite view rely, is in this respect subsidiary and
does not have the same weight but is more a welcome side-effect of the newly regulated procedure.
1061 Krll
497
in addition to the defences listed in ArticleV NYC, material defences could be raised which
require extensive taking of evidence. The applicant has an equitable interest in having an
award declared enforceable without any delay and that later, at the enforcement stage proper,
delay will only be allowed against security (769 ZPO). Moreover, in light of the clear wording of ArticleV (1) NYC and 1060 (2) ZPO, which purport to present an exhaustive list of
possible defences against a declaration of enforceability, the additional objective of the new
law, namely clarity, would be affected by the admission of additional defences not listed. This
is even more so, as in other countries such material defences to the judgment claim are also
often excluded from the proceedings for a declaration of enforceability.395
In addition, due to the changes made to the proceedings for a declaration of enforceability, 162
it is no longer possible to combine the proceedings under 767 ZPO with those under
1061, 1060 ZPO without greater potential frictions emerging. The most obvious difference between both procedures is the different allocation of functional jurisdiction. For
proceedings under 767 ZPO, functional jurisdiction lies with a court of first instance to
be determined in accordance with an analogous application of 1062 ZPO.396 By contrast,
functional jurisdiction for proceedings pursuant to 1060, 1061 ZPO lies with the OLG,
which is, in principle, a court of second instance fulfilling different functions.
Only in cases where the material defence is not contested or its existence has already been 163
determined in a binding court judgement, it would be justified for the sake of procedural
efficiency to allow such defences to be considered in proceedings for a declaration of enforceability.397 In any event, a set-off against a contested claim is only possible if the court
has jurisdiction over the claim to be set-off and where material preconditions for set-off are
met398 or where the claim to be set-off is not contested.399
In light of this and the diverging views on this matter, it appears advisable to investigate with 164
the relevant court which view is taken when determining whether or not to raise a material
defence. Notwithstanding the above, only those material defences which could not be raised
during the arbitral proceedings may be raised at this stage.400 These are either defences which
only arose after the award was rendered (e.g. fulfilment of the award, 767 (2) ZPO) or
395
396
397
398
399
400
Kawano, Aufrechnung und Schiedsgerichtsbarkeit, ZZPInt 1999, 393 et seq.; for further references Nelle
(2000), pp.584 seq.
Borris/Schmidt, SchiedsVZ 2004, 276 et seq.; Peters, JZ 2001, 598; Musielak-Voit (2013), 1060 para.13;
Voit, ZZP 2001, 355 (359); MnchKommZPO-Mnch (2012), 1060 para.13; the wording of 767
ZPO which if taken literally would point to the OLG as the court from which the title originated, is
misleading and the underlying rationale for this special allocation of jurisdiction does not apply to the
OLG; for the opposite view OLG Dresden 20.04.2005, SchiedsVZ 2005, 210 (213).
OLG Dsseldorf 19.01.2005, SchiedsVZ 2005, 214 = Yearbook XXXI (2006), 663 (666 et seq.); with
critical remark Borris/Schmidt, SchiedsVZ 2005, 254 (255 seq.); OLG Schleswig 11.02.1999 16 SchH
03/98; see also OLG Hamburg 27.08.2002 6 Sch 04/02 (cost claim in same award).
See OLG Saarbrcken 16.09.2005, OLGR Saarbrcken, 2006, 220 (court lacked jurisdiction as the
dispute about performance of award was covered by the arbitration clause); OLG Mnchen 22.02.2006,
SchiedsVZ 2006, 165 seq. (award on agreed terms explicitly referred disputes arising from it to arbitration); id. 27.06.2005, OLGR Mnchen 2005, 592 seq. (set-off claim fell under the arbitration clause);
OLG Dresden 20.04.05, SchiedsVZ 2005, 210 (213) (arbitral tribunal had ruled on and rejected the setoff claim); OLG Kln 30.07.2002 9 Sch 14/02 (material preconditions for set-off were not met); OLG
Dsseldorf 16.03.1999 4 Sch 01/98 (material preconditions for set-off were not met).
BGH 29.07.2010, SchiedsVZ 2010, 275 = Yearbook XXXVI (2011), 277.
OLG Celle 08.07.2002 8 Sch 03/02 (1) (alleged fulfilment of claim before award rendered cannot be
raised).
498
defences for which the arbitral tribunal lacked jurisdiction (e.g. set-off against a claim not
covered by the arbitration agreement).401
IX. Decision and Means of Recourse

165 Decisions in proceedings under 1061 ZPO are rendered in the form of a court order and
not in the form of a judgment. The decision must contain the relevant facts on which it is
based, either in a separate statement of facts or in any other form.402
A.
Negative Decisions
166 In the rare case that the application is rejected, the court issues pursuant to 1061 (2)
ZPO an order declaring that the award is not recognized in Germany. Unlike for domestic
awards, German courts do not assume jurisdiction to set aside foreign awards.403 Where the
rejection of the application is not based on existing defences but on procedural defects, e.g.
if the decision by the arbitral tribunal is not to be considered an award, the courts decision
merely declares that enforcement is not possible. That allows for future applications after
the defects have been cured.404 A mere rejection of the application without any declaration
as to the enforceability of the award is also appropriate for cases of a successful set-off or
where other defences against the judgment claim were raised, insofar as this is considered
admissible.405
B.
Positive Decisions
167 In the large majority of cases, the courts will declare the award to be enforceable in Germany
as no grounds for refusal exist. As the decision constitutes the required title for execution,
it must contain the operative part of the award in the German language.406 The declaration
of enforceability may remedy minor defects in relation to the correct nomination of the
parties407 or concerning the required specificity of the operative part. This requires that the
necessary information can be deduced from other parts of the award without any doubts as
to its intent. In particular where the award orders the payment interest according to a foreign
statutory rate, the court may add the applicable interest rate or calculate the amount.408
401
402
403
404
405
406
407
408
The later constitutes a necessary supplement to 767 (2) ZPO; denied as set off could have been raised
in arbitral proceedings OLG Koblenz 28.07.2005, SchiedsVZ 2005, 260 = Yearbook XXXI (2006), 673
(677) (raised but under procedural condition); e.g. OLG Kln 15.02.2000, Yearbook XXIX (2004), 715
(719) (no reliance on right to withhold as not raised during arbitration); cf. id. 03.12.2004 9 Sch 8/04
and 9/04; and BayObLG 04.05.2000, BayObLGR 2000, 79 (80) = NJW-RR 2000, 1359 (1360) (both
denying set-off for claims that could have been raised during the arbitral proceedings).
BGH 15.07.1999, BGHZ 142, 204 (205) = NJW 1999, 2974 seq. = ZZP 2000, 483 et seq. with note by
Ehricke, ZZP 2000, 453 = RPS 1/2000, 12; for details see also supra, Krll, 1060 para. 40.
OLG Bremen 30.10.2008 2 Sch 2/08; OLG Thringen 13.01.2011, Yearbook XXXVII (2012), 220;
MnchKommZPO-Mnch (2012), 1061 paras.2, 28.
OLG Hamburg 27.08.2002 6 Sch 04/02.
OLG Mnchen 18.11.2004, SchiedsVZ 2006, 111 (112); id. 18.10.2010 34 Sch 18/09; id, 22.10.2012,
SchiedsVZ 2013, 62.
OLG Koblenz 28.07.2005, SchiedsVZ 2005, 260 = Yearbook XXXI (2006), 673 (678) OLG Schleswig
16.06.2008, Yearbook XXXIV (2009), 516; OLG Mnchen 27.05.2010 34 Sch 01/10; OLG Dresden
13.01.1999, Yearbook XXIX (2004), 679 (686) = CLOUT case No. 443; OLG Hamm 02.12.2003.
1061 Krll
499
Equally, orders for reimbursement of costs may be specified if the costs can be calculated on
the basis of available schedules referred to in the award.409
Beyond these cases, it may not go further than the operative part of the award. Thus, where 168
the award, in its operative part, does not provide for interest or does not regulate the amount
of interest, the courts may not include these matters in their declarations of enforceability.410
The same applies to omitted decisions on costs or if only the liability for costs is determined
but not the quantum411 (or if one party wants to make performance of a certain ruling dependent on the fulfilment of other rulings in the same award).412
It is also possible to declare only parts of the awards to be enforceable, while such a declar- 169
ation is rejected for those parts for which a ground to resist enforcement exists.413
Against all decisions rendered, a complaint on points of law to the BGH is possible.414 Not- 170
withstanding that, in general, the facts established by the OLG are binding and no new facts
may be introduced in the proceedings before the BGH, a party may always rely on the setting
aside of the award which has taken place in the meantime in the country of origin.415
X.
Provisional Measures
In addition, with the application to have an award declared enforceable, a party may submit 171
a request for preliminary execution of the award until the award has been declared to be
enforceable.416 According to 1063 (3) ZPO, such preliminary execution may be granted
by the presiding judge ex parte without any hearing of the other side.417 In practice, such an
order will, however, only be granted if informing the other side of the proceedings to have
the award declared enforceable may prevent enforcement of the award. Furthermore, the
admissible means of execution in these proceedings are limited to those, such as attachments,
409
410
411
412
413
414
415
416
417
BGH 30.11.2011, SchiedsVZ 2012, 41.

BGH 30.11.2011, SchiedsVZ 2012, 41 (42); OLG Kln 23.04.2004, SchiedsVZ 2005, 163 (165) =
Yearbook XXX (2005), 557 (not reproduced in this regard); BayObLG 05.07.2004, BayObLGR 2004,
381 (381) = Yearbook XXX (2005), 563 (567); OLG Mnchen 25.10.2006 34 Sch 22/06; cf. OLG
Hamburg 16.01.1989, RIW 1991, 152 (154) (requiring a separate claim for the payment of interest, for
which under the new law the OLG will lack functional jurisdiction).
KG Berlin 10.08.2006, SchiedsVZ 2007, 108; cf. OLG Karlsruhe 03.07.2006, SchiedsVZ 2006, 281 (283)
= (2006) Int.A.L.R. N-68.
See OLG Frankfurt 24.10.2008 26 Sch 03/08, Yearbook XXXIV (2009), 533 (decision on cost excluded from the declaration of enforceability).
For details see supra, Krll, 1060 para. 43; infra, Schroeder/Wortmann, 1065 paras 3 et seq., especially
para. 8.
BGH 01.02.2001, RPS 1/2001, 14 = Yearbook XXIX (2004), 700 (710 seq.) (defence of an invalid arbitration agreement was rejected, since defendant had not raised the issue before the OLG); id. 22.02.2001,
NJW 2001, 1730 = Yearbook XXIX (2004), 724 (727); Krll, (2002) 17 (8) Mealeys I.A.R. 34 (36 seq.).
The provision also applies to the execution of provisional measures ordered by the arbitral tribunal; see
Schwab/Walter (2005), Chap. 28, para.13, fn. 8.
1063 (3) ZPO provides The presiding judge of the civil court senate (Zivilsenat) may issue, without
prior hearing of the party opposing the application, an order to the effect that, until a decision on the request has been reached, the applicant may pursue enforcement of the award or enforce the interim measure of protection of the arbitration court pursuant to 1041 ZPO. In the case of an award, enforcement
of the award may not go beyond measures of protection. The party opposing the application may prevent
enforcement by providing as security an amount corresponding to the amount that may be enforced by
the applicant.
500
securing the later execution of the award.418 Thus, a transfer of money, for example, to the
applicants account may not be granted provisionally, as it exceeds the actions necessary to
secure later payment.419 The defendant may also prevent preliminary execution by providing
adequate security, thus obviating any need for such a measure.
XI. Annulment of the Declaration of Enforceability

172 The annulment of the award in its country of origin pursuant to ArticleV (1)(e) NYC constitutes a ground to refuse the declaration of enforceability. If the annulment occurs after
the award has been declared enforceable in Germany, this does not automatically affect the
declaration of enforceability. However, pursuant to 1061 (3) ZPO, a party may apply to
have the declaration of enforceability set aside in light of the annulment. There is no time
limit for the application and, in general, the mere fact that the award has been set aside in
its country of origin justifies the annulment of the declaration of enforceability. That applies
irrespective of the reason underlying the setting aside proceedings in the country of origin
or of whether it would be recognized in Germany. It is only required that the decision setting
aside the award has become final in its country of origin.420 Furthermore, a party may be
precluded from bringing the action where it would have previously been possible to raise the
annulment in the proceedings leading to the declaration of enforceability.421
173 Grounds which would have justified the rejection of an application to have an award declared
enforceable but which were only discovered after it had been granted do not, as such, justify
the annulment of the declaration.422 A party may, however, try to initiate setting aside proceedings against the award in its country of origin on the basis of these grounds. It can then
use the obtained setting aside decision to have the German declaration of enforceability
annulled.
174 In exceptional cases, independent of a possible setting aside of the award in its country of
origin, an action for retrial pursuant to 580 et seq. ZPO or a damage claim based on substantive law (826 BGB) may exist for the removal of the declaration of enforceability.
XII. Alternative Judicial Proceedings

175 Concerning the enforcement of the foreign award as such, there are no alternatives to the
application to declare the award enforceable. As a specially regulated procedure for the enforcement of an award, the proceedings under 1061 ZPO, in principle, also preclude any
action on the award for its fulfilment.423 Furthermore, actions for a declaratory judgment are
also inadmissible, as even awards whose content cannot be executed may nonetheless be
declared enforceable. The awards res judicata effect furthermore excludes the initiation of
new court proceedings concerning the substantive legal relationship.424
418
419
420
421
422
423
424
For details see infra, Schroeder/Wortmann, 1063 paras22 seq.

Schwab/Walter (2005), Chap. 28 para.13, fn. 8.
Schwab/Walter (2005), Chap. 30 para. 38; Musielak-Voit (2013), 1061 para. 9 (no legitimate legal
interest).
1061 Krll
501
It has been submitted that the defending party may initiate proceedings for a declaratory 176
judgment to the effect that the award is not to be recognized in Germany.425 It is a prerequisite
for such a negative declaration that the award has an enforceable content.
Foreign declarations of enforceability cannot be recognized in Germany under the provi- 177
sions that apply to the recognition of foreign judgments, 722, 328 ZPO.426 The content of
such decisions is, in general, limited to declaring the award enforceable in that country and
therefore contains no determination as to the awards enforceability in Germany.
The situation used to be different for decisions which contain an operative part, incorporat- 178
ing in one way or another findings of an award or even supplement them with additional
orders, e.g. for post award interest. Such merger-decisions can particularly be found in common law countries where judgments upon the award are often considered as an appropriate
or even necessary means for enforcing awards.
Despite concerns in the literature,427 courts had originally considered such judgments to be 179
enforceable under 722 ZPO428 or in the case of decisions from EU countries under ECRegulation 44/2001429 without, however, restricting the possibility to enforce the original
award instead.430
However, in 2009 the German Supreme Court changed its position.431 Deviating from its 180
previous decision, the court denied the possibility of having such foreign merger-decisions
declared enforceable. In its view, such a double-exequatur raised concerns as to the adequate
protection of the award-debtor which are not outweighed by other considerations, in particular the interest of the award-creditor. In case of a double exequatur, the award-debtor could
no longer raise the defences which existed against the award or the procedure in which it was
rendered. Instead, the debtor could only complain about defects in the exequatur procedure
425
426
427
428
429
430
431
OLG Nrnberg 26.11.1965, KTS 1966, 111 (112); MnchKommZPO-Mnch (2013), 1061 para.9.
However, German courts can be bound by foreign court judgments that finally determine that a dispute
is submitted to arbitration thereby excluding the defence of an invalid arbitration agreement if such judgment is to be recognized pursuant to 722, 328 ZPO OLG Bremen 30.09.1999, RPS 2/2000, 18 (19) =
Yearbook XXXI (2006), 640 (644 seq.) = (2001) Int.A.L.R. N-26.
Schwab/Walter (2005), Chap. 30 para.15; Dolinar, FS-Schtze (2005), 187 (196); Kilgus (1995), 129 et
seq.; cf. Haas (1990), pp.140 seq.
BGH 27.03.1984, RIW 1984, 557 (557 seq.) with note by Dielmann, 558 = WM 1984, 748 = Yearbook
X (1985), 426 (427); id. 10.05.1984, NJW 1984, 2763 = RIW 1984, 644 (645) (for a U.S. judgment
upon the award) with note by Mezger, 674 et seq. = Yearbook X (1985), 427 (428 et seq.); OLG Hamburg
05.11.1991, RIW 1992, 939 (940); according to the jurisprudence of the Reichsgericht, the predecessor
of the BGH, the mere declaration of enforceability would not render the award a judgment and could
therefore not be enforced, RG 05.11.1881, RGZ 5, 397; id., 10.12.1892, RGZ 30, 368; in favour Schlosser,
Doppelexequatur zu Schiedssprchen und auslndischen Gerichtsentscheidungen?, IPRax 1985, 141 et
seq.; Stein/Jonas-Schlosser (2002), 1061 para.4; for doctrine of mergers see Borges (1997), pp.275 et
seq.
OLG Frankfurt 13.07.2005, IHR 2006, 212 et seq.; on the decision see Borges, Doppelexequatur von
Schiedssprchen in der EugVVO, IHR 2006, 206 et seq.
BGH 27.03.1984, RIW 1984, 557 seq. with note by Dielmann, 558 = WM 1984, 748 = Yearbook X
(1985), 426 (427); id. 10.05.1984, NJW 1984, 2763 = RIW 1984, 644 (645) (for an U.S. judgment upon
the award) with note by Mezger, 674 et seq. = Yearbook X (1985), 427 (428 et seq.); in favour Schtze
(2012), para.537; Borges (1997), pp.379 et seq., fn. 143.
BGH, 02.07.2009, NJW2009, 2826-2828 = SchiedsVZ2009, 285 with positive comments by Plameier,
Ende des Doppelexequatur bei auslndischen Schiedssprchen SchiedsVZ 2010, 82; Schtze, Der Abschied vom Doppelexequatur auslndischer Schiedssprche, RIW 2009, 817.
502
in the foreign court that rendered the decision. At the same time, the double-exequatur
would run counter to the legislative intention to have the arbitration related enforcement
actions centralized at the court of appeal. Instead, a court of first instance would decide upon
the enforceability of a decision which despite its different wording is in the end nothing
but a declaration by the state court that an award is enforceable.
181 As a consequence of that decision, orders for interest (particularly post award interest) which
were not dealt with in the award but only in the foreign decision can no longer be enforced
in Germany.
XIII. More Favourable Provisions in Other Treaties

182 Cases where enforcement is sought under more favourable provisions of other treaties are
rare in practice. From the various multilateral treaties, in general, only the European Convention may be of some practical importance. It restricts reliance on the ground for refusal in
ArticleV (1)(e) NYC to those grounds where the award has been set aside for one of the
grounds mentioned in ArticleIX (1) and not on the basis of a local standard. The European Convention has been considered to be also applicable in cases where a party from a
non-signatory state could rely on a most favoured treatment provision in bilateral treaties
concluded by its home state with a signatory state.432
183 By contrast, the various bilateral treaties may play a role in practice for the recognition and
enforcement of settlements concluded during the proceedings and not converted into an
award on agreed terms. While they may not be declared enforceable under the NYC, some
bilateral treaties allow for such a declaration.433 Moreover, such treaties often limit the possible defences to public policy, the lack of a final award or the lack of an arbitration agreement.
This has the effect that an incorrect arbitral procedure as such does not justify the refusal to
recognize the award.434
184 The courts apply ipso jure the most favourable enforcement regime for the award irrespective
of any pleading to this effect by the parties.435 The prevailing view is, however, that while there
432
433
434
435
OLG Dresden 31.01.2007 11 Sch 18/05.

BayObLG 05.07.2004, BayObLGR 2004, 381 = Yearbook XXX (2005), 563 et seq. on the basis of Art. 12
(2) German-Austrian Treaty of 06.06.1959, for the treaty see BGBl. 1960 II, pp.1245 et seq. = Geimer/
Schtze (2005), Internationaler Rechtsverkehr, Vol. III, 742, p.1; comparable provisions are also contained in the German-Swiss Treaty of 02.11.1929 Art. 9 (3), RGBl. 1939 II, pp.1065 et seq. = Geimer/
Schtze (2005), Internationaler Rechtsverkehr, Vol. IV, 743, p.1; German-Italian Treaty of 09.03.1936
Art. 8 (2), RGBl. 1937 II, p.145 = Geimer/Schtze (2005), Internationaler Rechtsverkehr, Vol. IV,
739, p.2; German-Belgian Treaty of 30.06.1968 Art. 13 (2), BGBl. 1959 II, p.765 = Geimer/Schtze
(2005), Internationaler Rechtsverkehr, Vol. IV, 736, p.2; the German-Greek Treaty of 03.11.1961 Art.
14 (2), BGBl. 1963 II, p.109 = Geimer/Schtze (2005), Internationaler Rechtsverkehr, Vol. IV, 737, p.1;
German-Tunisian Treaty of 19.07.1966 Art. 52 (2), BGBl. 1969 II, pp.889 et seq. = Geimer/Schtze
(2005), Internationaler Rechtsverkehr, Vol. IV, 744, p.5.
BGH 23.02.2006, SchiedsVZ 2006, 161 (164) = IHR 2006, 125 = (2006) Int.A.L.R. N-59; (GermanSoviet Treaty of 25.04.1958 Art. 8 (3) = BGBl. 1959 II, pp.221 et seq. = Geimer/Schtze (2005), Internationaler Rechtsverkehr, Vol. IV, 745, pp.3 seq.).
Yearbook XXIX (2004), 767 = (2004) Int.A.L.R. N-21; cf. BGH 21.09.2005, SchiedsVZ 2005, 306
(307) Yearbook XXXI (2006), 679 (682) = (2006) Int.A.L.R. N-24.
1061 Krll
503
is a choice between the various enforcement regimes, no cherry picking between the various
parts of the regimes is possible.436
XIV. Costs of the Proceeding and the Amount in Dispute

The courts decision on the allocation of the costs of the enforcement proceedings is based 185
on 91 et seq. ZPO, which are in principle based on the idea of costs following the event.
In cases of immediate acknowledgement, 93ZPO, according to which the applicant must
bear the costs of the proceedings if the other side has not induced the filing of the application, may be applicable. However, the threshold as to when a party has given ground for the
application is low.437 Only where enforcement actions were obviously not necessary since the
award-debtor was willing to perform the award without undue delay may an application of
93 ZPO be justified. Where the parties have jointly declared the proceedings to be terminated as the award has, in the meantime, been fulfilled, the costs will be allocated according
to 91a ZPO. Thus, the probable outcome of the proceedings at the time of termination is
relevant.438 Costs that have arisen in regard to payments made under the award before the
proceedings were started must in principle be borne by the applicant, while the defendant
must bear the costs that were caused by later payments.439
The costs of the proceedings to be allocated between the parties according to the above 186
principles comprise attorneys fees and court costs. Both are calculated on the basis of the
amount in dispute. The amount in dispute is determined on the basis of the value of the
claims submitted for enforcement, including 440 the costs of the arbitral proceedings. As applications are, in general, interpreted to relate solely to the part of the award in which the
applicant has prevailed, only the claims that have been successfully raised will be relevant for
the calculation.441 At least in cases where some parts of the award are enforceable, the other
parts that lack an enforceable content will have no bearing on determining the amount in
dispute.442 In general, decisions on auxiliary claims, such as claims for interest, are not included in the calculation of the amount in dispute unless such decisions are either rendered
separately or form a major part of the award.443 Different approaches are taken concerning
the inclusion of decisions on costs into the calculation of the amount in dispute, which in
principle should be included.444
436
437
438
439
440
441
442
443
444

OLG Frankfurt 31.05.2001, RPS 1/2001, 23; BayObLG 11.11.2004 4 Z Sch 19/04; OLG Frankfurt
08.10.2012 26 Sch 14/12 (several weeks of inaction in preparing the balance sheet ordered by the
tribunal sufficient).
OLG Mnchen 02.03.2012 34 Sch 18/11.
OLG Naumburg 28.12.2004 10 Sch 01/04.
BayObLG 22.11.2002, SchiedsVZ 2003, 142 (144), not reproduced in Yearbook XXIX (2004), 754;
OLG Karlsruhe 23.11.2004 9 Sch 01/04; not included in KG Berlin 13.03.2002 25 W 15/03.
OLG Brandenburg 20.12.2004 7 SchH 01/04.
OLG Dresden 08.05.2001, RPS 1/2001, 22 = CLOUT case No. 444.
BayObLG 09.04.2004; OLG Brandenburg 20.10.2003 8 Sch 01/03 (interest included).
In favour of an inclusion OLG Mnchen 10.08.2007 34 Sch 29/06; BayObLG 16.03.2000, RPS 2/2000,
15 (16) = NJW-RR 2001, 431 = Yearbook XXVII (2002), 445 (449) against inclusion OLG Karlsruhe
23.11.2004 9 Sch 01/04; OLG Koblenz 28.07.2005, SchiedsVZ 2005, 260 = Yearbook XXXI (2006),
673 (666) (not reproduced in this regard/enforcement proceeding); OLG Naumburg 21.05.2004 =
(2006) Int.A.L.R. N-61; OLG Hamburg 31.07.2003, OLGR Hamburg 2004, 97.
504
187 Concerning the attorney fees, one must distinguish between the fees that a party actually
agreed to pay to its attorney and the reimbursable fees under 91 et seq. ZPO. Unless otherwise agreed between a party and its attorney, the remuneration of the latter is determined
by the Law on Attorneys Fees (Rechtsanwaltsvergtungsgesetz RVG) on the basis of the
amount in dispute. Such fees calculated on the basis of the RVG are reimbursable. However,
the parties are free to negotiate with their attorneys a different mode of remuneration, in particular hourly fees, provided that these fees are not below the fees due under the RVG.445 In
so far as such negotiated fees exceed the fees due under the RVG, they are not reimbursable.
The relevant fee numbers for calculating the RVG fees are Nos. 3100, 3104 VV RVG, which
determine the fees in proceedings before a court of first instance. Irrespective of the fact that
the Higher Regional Court is normally an appellate court, the fee numbers Nos. 3200, 3202
VV RVG are not applicable.446
188 Costs of the court are determined pursuant to KV No. 1620 Law on Court Fees (Gerichtskostengesetz GKG) on basis of the amount in dispute.447
445
446
447
In such a case the form requirements of 4 RVG have to be met. It is inadmissible to negotiate fees that
fall short of the fees provided by the RVG.
Musielak-Voit (2013), 1059 para.44; Zller-Geimer (2014), 1059 para.93; cf. preliminary remark 3.1
(1) and (2) VV RVG.
Chapter IX
Court Proceedings
Short Bibliography: Borris/Schmidt, Vollstreckbarkeit von Schiedssprchen und materiellrechtliche
Einwendungen des Schiedsbeklagten, SchiedsVZ 2004, 273; Brehm, Rechtsschutzbedrfnis und
Feststellungsinteresse, in: Canaris/Heldrich et al. (eds), 50 Jahre Bundesgerichtshof, Vol. 3, Mnchen 2000, p.89; Distler, Private Schiedsgerichtsbarkeit und Verfassung, Frankfurt am Main 2000;
Ehricke, Die Beschleunigung der Finalitt von Schiedssprchen nach dem neuen deutschen Schiedsverfahrensrecht, ZZP 2000, 453; Harbst, Die Rolle der staatlichen Gerichte im Schiedsverfahren,
Heidelberg 2002; Krll, Schiedsrechtliche Rechtsprechung 2003, SchiedsVZ 2004, 113; Krll,
Die schiedsrechtliche Rechtsprechung 2004, SchiedsVZ 2005, 139; Krll, Die schiedsrechtliche
Rechtsprechung 2005, SchiedsVZ 2006, 203; Krll, Die schiedsrechtliche Rechtsprechung 2007,
SchiedsVZ 2008, 62; Krll, Die Entwicklung des Schiedsrechts 2009 2010, NJW 2011, 1265;
Krll, Die schiedsgerichtliche Rechtsprechung 2012 Teil 2, SchiedsVZ 2013, 259; Schmann,
Schiedsgerichte unter staatlicher Kontrolle, Frankfurt am Main 2001; Schroeder, Richten und
Schlichten Staatliche Gerichtsbarkeit und Schiedsgerichtsbarkeit Alternativen, Konkurrenz und
Zusammenspiel , KritV 95, 2 (2012), 145; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005.
Para.
Arbitration-Related Court Proceedings
under German Law: Court Assistance
and Court Control . . . . . . . . . . . . . . . . . . . . . . . 2
A. Enumeration of Admissible Court
Actions under German Law . . . . . . . . . . 4
B. Court Assistance . . . . . . . . . . . . . . . . . . . . . 7
1. Court Assistance in German
Arbitration Law . . . . . . . . . . . . . . . . . . . 7
2. Reasons for Court Assistance . . . . . . 8
C. Court Control . . . . . . . . . . . . . . . . . . . . . . . 9
1. Court Control in German
Arbitration Law . . . . . . . . . . . . . . . . . . . 9
2. Reasons for Court Control . . . . . . . 10
3. No Review of the Merits . . . . . . . . . 11
II. Applicable Procedural Law . . . . . . . . . . . . . . 12
III. Jurisdiction of the State Courts for
Arbitration-Related Actions . . . . . . . . . . . . . 13
IV. Admissibility of an Arbitration-Related
Court Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
A. Legal Capacity to Act in Legal
Proceedings (Prozessfhigkeit)
and Ability to Bring the Proceedings in the Partys Own Name
(Parteifhigkeit) . . . . . . . . . . . . . . . . . . . . . 17
1. Principle . . . . . . . . . . . . . . . . . . . . . . . . . 17
2. Capacity of a Foreign Business
Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
I.
V.
Para.
B. Representation of the Party. . . . . . . . . . 26
C. Specific Request for Relief . . . . . . . . . . . 29
D. Legitimate Legal Interest in
Bringing the Action . . . . . . . . . . . . . . . . . 31
1. The Legitimate Legal Interest as
a General Principle of German
Procedural Law . . . . . . . . . . . . . . . . . . 32
2. Legal Interest for Declaratory
Claim Relative to the
Admissibility of a Claim for
Arbitration. . . . . . . . . . . . . . . . . . . . . . . 39
3. Legal Interest in Actions
Relating to an Award . . . . . . . . . . . . . 41
E. Specific Time Limits for Certain
Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
F. Further Prerequisites for the
Admissibility of the Claim . . . . . . . . . . . 51
1. Award in Proceedings for
Recognition and Enforcement
of an Award and in Proceedings
for Setting Aside . . . . . . . . . . . . . . . . . 52
2. Arbitration Agreement in
Proceedings for Recognition
and Enforcement of an Award . . . . 53
3. Challenge of an Arbitrator . . . . . . . . 54
Overview of Court Proceedings . . . . . . . . . 55
A. Filing of the Action. . . . . . . . . . . . . . . . . . 56
506
Para.
B. Respondents Response to the
Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
C. Oral Hearing. . . . . . . . . . . . . . . . . . . . . . . . 60
D. Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
E. Appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
VI. Costs and Legal Fees . . . . . . . . . . . . . . . . . . . . 68
A. The Cost of Litigation: Court
Costs and Attorneys Fees . . . . . . . . . . . 68
1. Court Costs . . . . . . . . . . . . . . . . . . . . . 69
2. Attorneys Fees. . . . . . . . . . . . . . . . . . . 71
B. The Value of the Subject Matter of
the Dispute . . . . . . . . . . . . . . . . . . . . . . . . . 75
1. Principle . . . . . . . . . . . . . . . . . . . . . . . . . 75
Para.
2. Appointment of an Arbitrator
under 1035 (4) ZPO . . . . . . . . . . . 78
3. Claims under 1040 ZPO . . . . . . . 81
4. Claims for Recognition and
Enforcement/Setting Aside of
the Award. . . . . . . . . . . . . . . . . . . . . . . . 82
C. The Courts Decision on the
Recovery of Litigation Costs. . . . . . . . . 83
1. General Rule: The Costs Follow
the Event . . . . . . . . . . . . . . . . . . . . . . . . 83
2. Exception: Costs Cannot be
Recovered . . . . . . . . . . . . . . . . . . . . . . . 84
D. Recovering Costs and Fees . . . . . . . . . . 85
1 This introductory section covers general questions of proceedings in state courts related to
arbitral proceedings (arbitration-related court proceedings).1 In arbitral proceedings conducted under German law, there are several different circumstances under which the state
courts may exercise their jurisdiction with respect to the arbitration. These arbitration-related
court proceedings do not involve the decision on the merits of the dispute or a review of the
arbitration award on the merits, but constitute instances of court assistance for and court
control of the arbitral proceedings (I.). The state courts will apply the Code of Civil Procedure (Zivilprozessordnung ZPO) as the procedural law of the lex fori (II.). The jurisdiction
for these arbitration-related court proceedings lies primarily with the Higher Regional Court
(Oberlandesgericht OLG) at the seat of the arbitration, whereas in some rare cases the Local Court (Amtsgericht AG) will have jurisdiction (III.). The course of the proceedings will
be determined by the first nine books of the ZPO, of which some requirements merit further
examination; especially in the context of court proceedings relating to international arbitrations conducted in Germany. First, the admissibility of such an action will be discussed (IV.)
and second, a brief and general overview of the course of the proceedings will be given (V.).
Finally, the section will also cover the issue of costs and attorneys fees that will arise out of
arbitration-related court proceedings in Germany (VI.).
I.
Arbitration-Related Court Proceedings under German Law: Court Assistance

and Court Control
2 By entering into an arbitration agreement, the parties intend to settle their dispute without
recourse to the state courts. At the same time, there is a practical need to resort to the state
courts for matters in which the arbitral tribunal as opposed to the state courts does not
have adequate powers to ensure the efficient settlement of the dispute. In order for arbitration
to function properly as a system, there is a need for court assistance. From the state authorities point of view, there is also a need for court control of arbitration in order to guarantee
that the awards rendered are in line with the standards of due process and public policy.
3 However, the parties will only have access to the state courts if there is court intervention
provided for in the 10th Book of the ZPO (A.). Under German law, there are different
arbitration-related actions for court assistance (B.) and for court control (C.) contained in
several individual provisions of the 10th Book.
1
Introduction to 10621065 Schroeder/Wortmann
A.
507
Enumeration of Admissible Court Actions under German Law
The arbitration agreement establishes the jurisdiction of the arbitral tribunal to decide the 4
subject matter of the dispute between the parties. The state courts can, in principle, not be
seized with this subject matter as the respondent may raise the objection under 1032 (1)
ZPO. As the arbitration agreement is a reflection of the parties intention to settle the dispute
outside the state court system, court actions for court assistance and court control cannot be
brought except for the instances expressly provided for in the 10th Book of the ZPO. This is
stated by 1026 ZPO.
The enumerative list of arbitration-related court actions is mirrored in 1062ZPO. A state 5
court may not grant any other relief with respect to arbitral proceedings, except for those
specific cases mentioned in the statutory law. For example, it is not possible to seize a state
court with a request for a declaratory claim that will circumvent the remedies contained in
the 10th Book.2
State courts may, however, also be seized with an action to oppose the execution of an award 6
(Vollstreckungsgegenklage) due to defences that have arisen after the award was issued. In most
instances, such a defence will be the performance of the obligation contained in the award.3
The courts will, in these proceedings to oppose the enforcement of the award, not review the
merits of the award but only establish whether the defence exists and whether it arose after
the arbitral proceedings were closed.
B.
Court Assistance
1.
Court Assistance in German Arbitration Law
The 10th Book of the ZPO provides for court assistance in the following instances:
the state courts may, under 1032 (2) ZPO, decide on the admissibility of arbitral proceedings in case of doubt as to the validity of the arbitration agreement until the arbitral
tribunal is constituted;
the state court may, at any time before and during the arbitration, grant interim remedies
upon request of either party, 1033 ZPO;
the state courts are also competent to render a final decision on the challenge of a partyappointed arbitrator, 1037 (3) ZPO;
during the process of constituting the arbitral tribunal, the state courts decide on the
constitution of the arbitral tribunal and the nomination of arbitrators according to
1034 (2) and 1035 (3)-(5)ZPO;
in case an arbitrator shall be replaced, the state courts may issue an order that the arbitrators mandate is terminated, 1038 ZPO;
further court assistance is provided by the state courts when an interim remedy granted
by the arbitral tribunal (1041 ZPO) or an award (1060, 1061 ZPO) shall be enforced. During proceedings for recognition and enforcement, the courts both provide
court assistance and exercise court control (see infra C.); and
finally, court assistance is available during the taking of evidence, 1050 ZPO.
2
3
OLG Nrnberg 26.11.1965, KTS 1966, 111 (112); MnchKommZPO-Mnch (2013), 1026 para. 3.
Cf. OLG Kln 22.04.2004; Borris/Schmidt, SchiedsVZ 2004,273.
508
2.
Reasons for Court Assistance
8 Court assistance is required because arbitration is a private dispute resolution mechanism

and because arbitral tribunals are not permanent bodies. As the tribunals even in institutional arbitration are only constituted after a specific dispute has arisen, there may be a
need for court assistance during the constitution process in order to guarantee the efficiency
of arbitral proceedings. Furthermore, arbitral tribunals themselves do not have the power
to enforce their own decisions and procedural measures. Therefore, the parties will have to
seek court assistance with the enforcement. Finally, the arbitration agreement is binding only
for its signatories. The arbitral tribunal, therefore, does not have jurisdiction or any other
power over third parties. For this reason, the arbitral tribunal must rely on the state courts
to summon a third party for the purpose of e.g. gathering evidence.
C.
Court Control
1.
Court Control in German Arbitration Law
9 The 10th Book of the ZPO provides for court control under the following circumstances:
under 1040 (3) ZPO, the state courts may review an arbitral tribunals interim decision
on its own jurisdiction (Zwischenentscheid);
the state courts may also set aside or modify an interim remedy granted by an arbitral
tribunal, 1041 (2) and (3) ZPO;
in proceedings for setting aside of an award, the state courts shall review the award according to the standard of 1059 ZPO; and
in proceedings for recognition and enforcement under 1060, 1061 ZPO, the state
court will be competent to review the award according to the standard of 1059 ZPO.
2.
Reasons for Court Control
10 The need for court control also arises from the private nature of arbitral proceedings. The
judiciary is a part of a states fundamental authority. In civil and commercial matters, the state
has chosen to allow arbitral tribunals to exercise judicial functions. German constitutional
law requires that the state retains a minimum of control over the process, especially to guarantee both parties right to due process.4 This control is exercised by the state courts in the
instances of court control by reviewing certain decisions of arbitral tribunals with respect
to whether they meet minimum requirements of due process and equal treatment of both
parties.
3.
No Review of the Merits
11 In this context, it should be stressed that court control does not imply a review of the award
on the merits. A plain error in the application of the relevant substantive law cannot be sanctioned by the state courts in their exercise of court control5 as there is no appeal on a point of
law as, for example, in Section 69 of the English Arbitration Act 1996.6
4
5
6
Distler (2000), pp.204 et seq.

BGH 06.06.2002, NJW 2002, 3031 (3032); Krll, SchiedsVZ 2008, 62.
Harbst (2002), pp.207 et seq.
II.
509
Applicable Procedural Law
German courts will apply the entire ZPO as the lex fori. Although there are some provisions 12
of the 10th Book of the ZPO that expressly deal with arbitration-related court proceedings,7
these provisions only give the ordinary courts the power to deal with certain aspects of the
dispute despite the arbitration agreement and establish which court has jurisdiction for the
individual cases of court intervention.8 Apart from that, the 10th Book does not contain
detailed provisions on the actual conduct of the proceedings. Therefore, the procedure is
governed by the first nine Books of the ZPO. However, the courts shall only apply those
provisions that can be reconciled with the legislators intention at the time of the law reform
of 1998. For example, the provisions addressing the judgement by default (Versumnisurteil, 330 et seq. ZPO) are not applicable as the court decides in the form of a court order
(Beschluss).9 In a nutshell, the 10th Book is, thus, the framework for the operation of the state
courts and the other provisions are only applicable if their contents can be reconciled with
this framework.
III. Jurisdiction of the State Courts for Arbitration-Related Actions

The Higher Regional Court has functional jurisdiction under 1062 (1)-(3)ZPO for all 13
arbitration-related court proceedings, except for proceedings for the assistance in the taking
of evidence under 1050 ZPO. For the latter court assistance, the Local Court will have
jurisdiction, cf. 1062(4)ZPO.
The action in arbitration-related court proceedings must be brought in the Higher Regional 14
Court mentioned in the arbitration agreement or if the parties did not choose a specific
Higher Regional Court as the place of venue at the place of the arbitration, cf. 1062 (1)
ZPO. There are some exceptions to this principle for the local jurisdiction that will be addressed in detail in the annotations to 1062ZPO.10
Court assistance under 1050 ZPO will have to be sought at the Local Court that has juris- 15
diction for the place in which the measure of court assistance will take its effects, 1050 (4)
ZPO.
IV. Admissibility of an Arbitration-Related Court Action

The arbitration-related court action must be admissible. There are several requirements for 16
the admissibility of such an action that merit closer examination. Claimant and respondent
must have legal capacity under German law and must be able to be party to court proceedings (A.). Also, both parties must be duly represented by attorneys admitted to the court in
which the action is brought in case the court schedules an oral hearing (B.). Claims for relief
must contain a specific motion, a requirement which may especially cause problems in the
contest of partial claims for relief (C.). The claimant must have a legitimate legal interest in
bringing the claim, which means that the request must not be futile or useless on its face (D.).
Some actions must be filed within a certain time limit after the occurrence of the fact that is
addressed by the action (E.). Finally, further prerequisites for the admissibility may apply to
specific claims for relief (F.).
7
8
9
10
See 1032, 1034, 1035, 1037, 1038, 1040, 1041, 1050, 1059, 1060, 1061 ZPO.
See 1062 ZPO.
Cf. BGH 23.02.2006, SchiedsVZ 2006, 161 (162).
See infra, Schroeder/Wortmann, 1062 paras 1 et seq.
510
A.
Legal Capacity to Act in Legal Proceedings (Prozessfhigkeit) and Ability to Bring the
Proceedings in the Partys Own Name (Parteifhigkeit)
1.
Principle
17 In principle, every person or entity that is capable to bear rights and obligations is also capable to act in legal proceedings, 1 Civil Code (Brgerliches Gesetzbuch BGB), 50 ZPO.
This covers individual persons (except minors) and associations. In addition to the general
capacity to be party to legal proceedings, a party to legal proceedings also must be able to
conduct the proceedings in its own name (Parteifhigkeit).
18 For some years, there had been a debate whether the German civilcode company (Gesellschaft brgerlichen Rechts GbR) was able to be bearer of rights and obligations and could
consequently be party to legal proceedings. This issue has been finally settled by a decision
of the Federal Court of Justice (Bundesgerichtshof BGH) answering it in the affirmative.11
For other corporations, such as the limited liability company (Gesellschaft mit beschrnkter
Haftung GmbH), the stock corporation (Aktiengesellschaft AG), the general partnership
(Offene Handelsgesellschaft oHG) as well as the limited partnership (Kommanditgesellschaft
KG), the capacity to act in legal proceedings follows from statutory provisions.12 Therefore, virtually all entities under German law relevant for international business transactions
may be party to legal proceedings.13
19 If a corporation is subject to insolvency proceedings, the insolvency administrator (Insolvenzverwalter) will be party to the proceedings as a statutory representative (Partei kraft Amtes)
according to 80 (1) German Insolvency Act (Insolvenzordnung InsO) instead of the
insolvent company itself.14
20 A company that has already been liquidated (i.e. deleted from the company register) cannot be party to court proceedings. In a case decided by the OLG Braunschweig, the claimant
requested recognition and enforcement of an award against a liquidated company. The court
ruled that the action was admissible but unfounded due to the fact that the company no
longer existed.15 However, the action should have been rejected as inadmissible: proceedings
cannot be brought against a non-existing company since it lacks the ability to be party to
legal proceedings in the first place.16 During the liquidation process, however, the company
in liquidation will be able to be party to proceedings; provided that the proceedings shall
ascertain rights and obligations of that company.
2.
Capacity of a Foreign Business Entity
21 The involvement of a foreign business entity in German proceedings introduces a private

international law dimension to the issue of the capacity to act in legal proceedings.
11
12
13
14
15
16
BGH 29.01.2001, NJW 2001, 1056; cf. Schmidt, Die BGB-Auengesellschaft: rechts- und parteifhig,
NJW 2001, 993; Hess, Grundfragen und Entwicklungen der Parteifhigkeit, ZZP 2004, 267 (282, 300).
Cf. 13 GmbHG, 1 AktG, 125 HGB, 161 HGB.
However, an estate (Nachlass) or a community of heirs (Erbengemeinschaft) cannot be party to civil proceedings, cf. BGH 11.09.2002, NJW 2002, 3389 (3390).
MnchKommInsO-Ott/Vuia (2013), 80 para. 77.
OLG Braunschweig 18.11.2002.
Cf. Krll, SchiedsVZ 2004, 113 (120).
511
For business entities from countries that are members of the European Union, the BGH has 22
ruled, in accordance with the jurisprudence of the European Court of Justice (ECJ),17 that a
foreign business entity may be party to proceedings in Germany if it has the ability to act in
legal proceedings attributed by the law under which it was created.18 The BGH has confirmed
this principle explicitly for the Dutch B.V.19 and for the UK Limited.20
For business entities from countries that are not members of the European Union but mem- 23
bers of the European Free Trade Association, the same principle applies: such a company
may be party to proceedings in Germany if it has this capacity under the law under it was
created.21
For business entities from other countries that are neither Members of the European Union 24
nor of the European Free Trade Association, the capacity must be ascertained in each individual case. In principle, the German courts will apply the law applicable at the actual seat
of the company.22 If the company was created under the law of a foreign country but has its
actual seat in Germany, the German courts will deem it not to have the legal capacity to act
as a claimant. However, under 50 (2) ZPO, it may be respondent in proceedings under
German law as it has conducted business in Germany.23 50 (2) ZPO provides that entities
that do not have the capacity to sue actively may be subject to proceedings against them.
Consequently, a respondent cannot invoke against an arbitration-related claim that it does
not have the legal capacity to be party to proceedings in Germany. On the other hand, the
same party may see its action for arbitration-related relief rejected on the basis that it does not
have the capacity to act as a claimant in these proceedings.
For some countries, such as the USA,24 there are bilateral treaties in place which recognize 25
the capacity of foreign business entities to act as a party in court proceedings. United States
business entities that have legal capacity according to the law under which they were created
will be considered to have the same capacity in Germany.25 As a consequence, a United States
Incorporated (Inc.) has been considered to have capacity to bring proceedings in Germany.26
B.
Representation of the Party
In principle, each party has the right to appear in and address the court, 79ZPO. However, 26
78 (1) sentence 2 ZPO establishes an exception for proceedings in the Regional Courts
(Landgericht LG) and in the Higher Regional Courts. According to 78 (1) ZPO, a
party to proceedings inthese courts needs to be represented by an attorney (Rechtsanwalt)
admitted to the German bar. This exception is of a high practical importance for arbitrationrelated court proceedings as, under 1062 ZPO, the vast majority of these proceedings will
17
18
19
20
21
22
23
24
25
26
ECJ 05.11.2002, Case C-208/00, (berseering v. Nordic Construction), NJW 2002, 3614; ECJ 30.09.2003,
Case C-167/01, (Kamer v. Inspire Art), NJW 2003, 3331.
BGH 13.03.2003, NJW 2003, 1461.
BGH 13.03.2003, NJW 2003, 1461.
BGH 14.03.2005, NJW 2005, 1648.
BGH 19.09.2005, NJW 2005, 3351.
Cf. Kindler, Auf dem Weg zur Europischen Briefkastengesellschaft? Die berseering-Entscheidung
des EuGH und das internationale Privatrecht, NJW 2003, 1073 (1079); disputed by Eidenmller, Wettbewerb der Gesellschaftsrechte in Europa, ZIP 2002, 2233 (2244).
Zller-Vollkommer (2014), 50 para. 9.
MnchKommBGB-Kindler (2006), IntGesR, para.214.
BGH 29.01.2003, NJW 2003, 1607 (1608).
BGH 05.07.2004, NJW-RR 2004, 1618.
512
have to be brought to the Higher Regional Courts. Therefore, representation by a German

Rechtsanwalt is, in principle, mandatory. 1063(4) ZPO provides, however, that a party
does not have to be represented by an attorney as long as the court has not yet scheduled an
oral hearing to take place. As a consequence, the parties themselves may submit briefs to the
court without being represented by an attorney. In all other circumstances, the representation by an attorney qualified in Germany will remain required.
27 If a party isnot duly represented by an attorney at the oral hearing, the parties motions will
have to be disregarded by the court.27 This sanction will apply even if the opponent does not
object to the representation or lack thereof.28 The lack of representation can be remedied by
re-filing the motion, but only within the applicable time limit and without retroactive effect.29
Consequently, a party not duly represented atthe oral hearing will, in principle, have to be
considered to be in default.30 However, the BGH has ruled that, in proceedings for recognition and enforcement, according to 330 et seq. ZPO the courts must not issue a judgement
by default, as the judgment by default does not fit into the system of arbitration-related court
actions provided for in the 10th Book.31
28 Pursuant to 80, 88 ZPO, the attorney representing a party must prove his or her power
of attorney by a written document at the other partys request. The power of attorney must
be produced as an original signed document or a certified document and will be kept in the
court files.32
C.
Specific Request for Relief
29 A request for relief must satisfy minimum requirements, i.e. mention the parties to the
proceedings and the court in which the action is filed. Most importantly, the statement of
claim must contain a specific prayer for relief and lay down the cause of the action, more
specifically, the facts on which the claimant bases its claim.
30 The requirement of a specific request is mandatory as it determines the scope of lis pendens
and res judicata. The court is bound to the claimants request and may, under 308 ZPO,
award only remedies within the scope of the claimants request (no judgement ultra petita).
As the request will be the basis for the courts judgement that will have to be enforced by the
state authorities, it will also have to be specific in order to allow these authorities to determine
whether the request for enforcement is covered by the judgement.
D.
Legitimate Legal Interest in Bringing the Action
31 Under German procedural law, a claimant may only initiate proceedings against a respondent
subject to the condition that the claimant has a legitimate legal interest in bringing the action
in court. This section will provide some background information on this requirement under
general procedural law (1.) before discussing declaratory claims relative to the admissibility
of a claim for arbitration (2.) and actions regarding the challenge and the enforceability of an
award (3.).
27
28
29
30
31
32
BGH 07.06.1990, NZV 1990, 346 (347).

BGH 11.10.2005, NJW 2005, 3773.
BGH 07.06.1990, NZV 1990, 346 (347); BGH 01.03.1984, NJW 1984, 1559 (1560).
Zller-Vollkommer (2014), 78 para. 12.
BGH 23.02.2006, SchiedsVZ 2006, 161.
BGH 23.02.2006, SchiedsVZ 2006, 161 (162).
1.
513
The Legitimate Legal Interest as a General Principle of German Procedural Law
The requirement of a legitimate legal interest is a general principle of German procedural 32

law. This part will first show the legal context of the concept (a.) before describing the consequences of its qualification as a prerequisite for the admissibility of a claim (b.). Furthermore,
this part will demonstrate the relevant test under German law and provide some practical
examples in which a legitimate interest has been found lacking (c.).
a. Background: The principle that an individual may not bring an action without having a 33
legitimate legal interest is a general principle of German procedural law that is closely related
to the good faith requirement of German substantive law.33 It was developed by the courts
in order to protect the efficacy of the judicial process against abusive claims by evidently
futile requests.34 It is intended to promote procedural economics, especially by preventing
evidently fruitless actions.35
256 ZPO requires a specific interest for a declaratory claim (as opposed to e.g. a claim for 34
performance).36 The authorities consider this specific legal interest to be a special case of the
general requirement of a legitimate legal interest that has not been incorporated into a statute
until today,37 despite its general acceptance in the case law.38
There is a tension, however, between the tendency to eliminate obviously futile requests and 35
the individuals right to access to justice.39 The individual must not be denied its right to be
heard in court, which is protected by Article 103 of the German Constitution (Grundgesetz
GG). Therefore, there is a presumption for the existence of a legitimate legal interest. If
a court intends to dismiss a claim for lack of legitimate legal interest, it will have to provide
specific reasons for this decision.40
b. The Legitimate Legal Interest as a Prerequisite for the Admissibility of a Claim: The legitimate 36
legal interest is a prerequisite for the admissibility of an action in court.41 The judge must
verify its existence ex officio so that the respondent need not invoke the lack of a legal interest.42 An action lacking a legitimate legal interest will be dismissed as being inadmissible and
not as being unfounded.43 Therefore, there is no res judicata effect as to the substance of the
dispute and the claimant may bring its action again if it is of the opinion that it will be able to
remedy the lack of a legitimate legal interest before the second filing.
c. The Relevant Test and Practical Examples Derived from Cases Not Related to Arbitration: The 37
German courts apply the following test in determining the existence of a legitimate legal
interest. In principle, the claimant is presumed to have a legitimate legal interest. Such an
interest is lacking in case
33
34
35
36
37
38
39
40
41
42
43
there is an equally efficient, but cheaper remedy;

MnchKommZPO-Becker-Eberhard (2013), vor 253 para. 12.
BGH 05.12.1975, GRUR 1976, 256 (257); BGH 14.03.1978, NJW 1978, 2031 et seq.
BGH 27.06.2002, NJW 2002, 2720; BayObLG 07.10.2002, NJW-RR 2003, 354 (355).
Brehm, in: Canaris/Heldrich et al. (eds) (2000), p.89.
Baumbach/Lauterbach (2014), Grundzge 253 para. 41.
BGH 14.12.1988, NJW-RR 1989, 263 (264); BGH 21.01.1999, NJW 1999, 1337 (1338).
Zller-Greger (2014), vor 253 para. 18.
Brehm, in: Canaris/Heldrich et al. (eds) (2000), p.89 (109).
Zller-Greger (2014), vor 253 para. 11.
Baumbach/Lauterbach (2014), Grundzge 253 para. 35.
514
there is no remedy needed at all; or
claimants claim is, on its face, an abuse of the judicial process.
38 An equally efficient but cheaper remedy has been assumed, most importantly, in the context of claims for litigation costs.44 Such a claim can be brought as an ancillary claim in the
pending proceedings. Consequently, there will not be a legitimate legal interest to bring this
claim for litigation costs by way of a new and independent action.45 Claimant will not need
a remedy granted by a state court if respondent has already promised performance in a title
enforceable at law, such as an enforceable notarial deed.46 An abuse of the process of law has
been assumed by the authorities in cases in which the claimant has sought a remedy by the
courts in infinitely small parts,47 such as a claim for payment of EUR 1,000 in parts of EUR
10.
2.
Legal Interest for Declaratory Claim Relative to the Admissibility of a Claim for Arbitration
39 According to the case law, a claimant will not have a legal interest to bring an action under
1032 (2) ZPO to determine the admissibility of a claim for arbitration if the claim has
already been raised in state courts who have dismissed it due to the existence of an arbitration
clause, provided that the subject matter of the dispute is identical to the subject matter of
the action under 1032 ZPO.48 Some authors maintain that there is always a legal interest
for an action under 1032 ZPO.49 This position, however, has been explicitly rejected by
the Bavarian Highest Regional Court (Bayerisches Oberstes Landesgericht BayObLG).50 In
order to prevent parallel proceedings in which the same legal problem is decided by different
courts with a possible different outcome, the court considered it to be justified to dismiss
an action under 1032 (2) ZPO as inadmissible, as the respondent in a claim in the state
courts had already raised the objection of the arbitration agreement under 1032 (1) ZPO
in the former proceedings.51
40 It must be observed that a legal interest for an action under 1032 (2) ZPO to determine the
admissibility of a request for arbitration only exists until the arbitral tribunal is constituted.
After the constitution of the arbitral tribunal, an action under 1032 (2) ZPO will have to be
dismissed as inadmissible. In one case, the OLG Naumburg had considered a request under
1032 (2) ZPO after the constitution of the arbitral tribunal as being unfounded,52 whereas
it should have already considered the action as being inadmissible.53
44
45
46
47
48
49
50
51
52
53
BGH 24.04.1990, NJW 1990, 2060 (2061).

Zller-Becker-Eberhard (2014), vor 253 para. 11.
Zller-Becker-Eberhard (2014), vor 253 para. 11.
Cf. Bu, De minimis non curat lex, NJW 1998, 337 (338).
KG Berlin 13.08.2003; BayObLG 07.10.2002, NJW-RR 2003, 354; OLGMnchen 10.01.2007.
MnchKommZPO-Mnch (2013), 1032 para. 24; Musielak-Voit (2013), 1032 para. 12; Stein/JonasSchlosser (2002), 1032 para.21.
BayObLG 07.10.2002, NJW-RR 2003, 354; OLG Naumburg 05.03.2013, SchiedsVZ 2013, 237.
BayObLG 07.10.2002, NJW-RR 2003, 354; OLG Mnchen 22.06.2011; OLG Naumburg 05.03.2013,
3.
515
Legal Interest in Actions Relating to an Award
a. Application for Recognition and Enforcement: A recurrent question is whether there is a legal 41
interest in proceedings for the recognition of a declaratory award. As declaratory awards do
not have an enforceable content, some courts have denied a legal interest on the basis that
recognition of an award is futile because the award will never be enforced.54 Other courts
have assumed a legal interest, as there is no exception for declaratory awards in 1059 et
seq. ZPO.55 The BGH overruled its own jurisdiction and lately supposes a legal interest even
if the content of the award is not enforceable at law. A further argument is that the recognition of a declaratory award reinforces its res judicata effect, as an award that has already been
recognized may not be set aside by a German court.56
The OLG Kln was seized with an application for recognition and enforcement against a 42
respondent that was not party to the arbitral proceedings. In this case, the court denied the
admissibility of such an application57 since, under these circumstances, the application could
not be successful in any case.
However, an application for recognition and enforcement will not lack a legal interest if the 43
debtor has declared that it will fulfil the claim covered by the award. As such a declaration is
not binding and cannot be enforced, the creditor of the claim awarded by the arbitral tribunal
may resort to the state courts with an application for recognition and enforcement.58 The
debtor will still be able to prevent the forced execution of the award simply by performing
the obligation.
b. Application for Setting Aside: In some instances, the state courts are seized with an action 44
to set aside by the unsuccessful party and with an action for recognition and enforcement
of the award at the same time. As the standard of review is the same under both causes of
action recognition and enforcement will not be granted if there is a ground for setting aside
under 1059 ZPO the German courts have had to decide whether there is a legitimate
legal interest for both of the parallel actions.
There will not be a legitimate legal interest for an action to set aside an award if the other party 45
has already initiated proceedings for recognition and enforcement.59 This is in line with the
opinion of the majority of courts and authors.60 The BayObLG was, however, of the opinion
that the proceedings shall be joined if a request for setting aside is brought after proceedings
for recognition and enforcement have been instigated.61 The court obviously considered
the action for setting aside to be admissible, although it was preceded by an application for
recognition and enforcement of the same award.
54
55
56
57
58
59
60
61
KG Berlin 27.05.2005, SchiedsVZ 2005, 310 (311) (overruled by BGH 30.03.2006, SchiedsVZ 2006,
278, also Musielak-Voit (2013), 1060 para. 5.
OLG Kln 22.04.2004; OLG Celle 09.09.2003; BayObLG 17.07.2003; KG Berlin 08.04.2002; BGH
30.03.2006, SchiedsVZ 2006, 278; OLG Frankfurt 30.09.2010; OLG Mnchen 29.08.2007.
BayObLG 28.05.2003; OLG Mnchen 29.08.2007, there is a legal interest for claims for recognition and
enforcement for a judicial decision on cost.
OLG Kln 21.09.2004.
OLG Hamburg 30.05.2008; OLG Frankfurt 11.09.2008; OLG Hamburg 24.01.2003, SchiedsVZ 2003,
284 (285); Schwab/Walter (2005), Chap. 25 para.4; Musielak-Voit (2013), 1059 para. 33.
BayObLG 16.01.2004, SchiedsVZ 2004, 163 (164).
516
46 In contrast, the OLG Hamm assumed a legal interest for a request for setting aside the award
even if declaration of enforceability was brought up.62 The court justified its decision with
the fact that reasons for setting aside must be pleaded within a specific period of time. The
party that claims for setting aside the award would be unfairly disadvantaged if the other
party withdraws his application but applies again after this period of time. Consequently,
there would be a danger losing the opportunity of setting aside the award.63
47 Opposing this view, the OLG Frankfurt has stated that the reasons for setting aside the award
pursuant to 1059 (2) No.2 ZPO shall be considered ex officio (1060 (2) sentence 3 ZPO)
without any time limit.64 Further, regarding reasons for setting aside pursuant to 1059 (2)
No.1 ZPO, the OLG Frankfurt is of the opinion that the withdrawal of the application of
declaration of enforceability after an oral hearing has taken place requires the agreement of
the other party, since a withdrawal without agreement is only admissible until an oral hearing has taken place (269(1) ZPO). This opinion is based on the fact that for proceedings
setting aside the award, an oral hearing is mandatory (1063 (2) ZPO).
48 As the standard of review is the same in both proceedings according to 1060(2) ZPO, it
appears reasonable to consider only one of the proceedings as being admissible. The relief
sought by the claimant in the action for recognition and enforcement, a declaration that the
award is enforceable, is more than the same party can achieve by a mere dismissal of an action
for setting aside. It, therefore, must be the action for recognition and enforcement that will
prevail.
49 There is no legal interest in an action for recognition and enforcement in cases where the
application for recognition and enforcement is not directed against the debtor of the arbitration award. In a decision by the OLG Kln, the court held that the claimant did not have a
legal interest in an action against the respondent as the arbitration award did not contain
an obligation of the respondent, but of a third party to the arbitral proceedings. Therefore,
the claimant could not have a legal interest in bringing the application for recognition and
enforcement against the respondent.65
E.
Specific Time Limits for Certain Actions
50 Finally, some of the arbitration-related court actions require that the action is brought within
a certain time limit. If the time limit is not observed, the action will already be inadmissible
and not be examined on the merits by the court seized with the application.
According to 1032 (2) ZPO, a state court can be seized with an application to determine the admissibility of arbitration only until the arbitral tribunal is constituted.
Under 1037 (3) sentence 1 ZPO, an application to the state court for the removal of an
arbitrator candidate must be filed within a month after the arbitral tribunal has rejected
the parties application to the arbitral tribunal.
An interim decision by the arbitral tribunal on its jurisdiction according to 1040 (3)
sentence 1 ZPO (Zwischenentscheid) is subject to a review by the state courts only within
the time limit of one month set up by 1040 (3) sentence 2 ZPO.
62
63
64
65
OLG Hamm 18.07.2007, MDR 2007, 1428.

OLG Hamm 18.07.2007, MDR 2007, 1428.
OLG Kln 03.07.2003.
F.
517
A claim for setting aside of an award has to be brought within three months after the
respective party has received the award, 1059(3)ZPO.
Further Prerequisites for the Admissibility of the Claim
There are some specific additional requirements for the admissibility of certain types of 51
arbitration-related court actions.
1.
Award in Proceedings for Recognition and Enforcement of an Award and in Proceedings for
Setting Aside
An action for setting aside of an award shall, according to some authorities, only be admissible 52
if there actually is an award and not a different measure. If a claimant instigates proceedings for
setting aside directed against a decision other than an award, the state court will, according to
this opinion, have to reject the action as inadmissible.66 This position is consistent, provided
that the document does not state itself that it is supposed to be an award. It is undisputed that
a procedural order or a settlement in arbitral proceedings that is not incorporated in an award
on agreed terms67 cannot be the object of an action for setting aside. The situation is different,
however, if the document is denominated as an award although it is not, e.g. because the decision making body is not an arbitral tribunal.68 As will be discussed elsewhere,69 an action for
setting aside directed against these pseudo awards should be considered as being admissible.70
2.
Arbitration Agreement in Proceedings for Recognition and Enforcement of an Award
The question of whether the arbitration agreement together with the arbitration award 53
must be filed together with the action for the recognition and enforcement of a foreign
award according to Article IV New York Convention 1958 has been raised in proceedings
before the BGH. The court came to the conclusion that in order to satisfy the requirement of
1064(1)ZPO, it is sufficient to attach the award and considered the action as being admissible.71 As 1064 (1) ZPO is more favourable to the claimant than the New York Convention
1958, this decision is in line with Article VII (1) New York Convention 1958. Thus, the attachment of a copy of the arbitration agreement is not a requirement for the admissibility of
an action for the recognition and enforcement of a foreign award in Germany.
3.
Challenge of an Arbitrator
In proceedings to challenge an arbitrator under 1037 ZPO, the preliminary challenge 54

procedure before the arbitral tribunal is not a statutory requirement for the admissibility
of an action in the state courts under 1037 (3) ZPO. If the parties have agreed to waive
the preliminary challenge procedure or if the applicable arbitration rules do not provide for
a preliminary challenge, such as 6 (3) of the German Maritime Association Arbitration
Rules, the parties may challenge an arbitrator directly in the state courts.72 In all other cases,
however, the challenge has to be submitted to the tribunal first.
66
67
68
69
70
71
72
BGH 27.05.2004, NJW 2004, 2226 (2228).

Cf. OLG Frankfurt 14.03.2003, SchiedsVZ 2003, 288.
Cf. BGH 27.05.2004, NJW 2004, 2226 (2228).
See supra, Krll/Kraft, 1061 para. 10.
There is, however, contrary case law by the BGH, cf. BGH 27.05.2004, NJW 2004, 2226 (2228).
BGH 25.09.2003, SchiedsVZ 2003, 281.
OLG Hamburg 12.07.2005, SchiedsVZ 2006, 55.
518
V.
Overview of Court Proceedings
55 Although arbitration-related court proceedings are primarily conducted in the Higher Regional Courts, the procedural rules for contentious proceedings (Erkenntnisverfahren) in the
Regional Courts are applicable.73
A.
Filing of the Action
56 The action must be submitted to the court in as many copies as necessary for the service
of the action, 253 (5) ZPO. The claimant needs to submit a signed original, as well as a
certified copy and a simple copy of the action for each respondent.
57 In view of the provision contained in 1063 (4) ZPO and the recent decision of the BGH
according to which the courts may not issue a judgment by default,74 a party to arbitrationrelated court proceedings could, in principle, conduct these proceedings without an attorney.
However, as these cases do not involve routine issues, it appears to be advisable to instruct a
specialised attorney regardless.
58 After the action is submitted to the court, the court will assign a matter number to the file and
serve the action upon the respondent ex officio, 270, 271 ZPO. Once the action is served
upon the respondent, the action is pending (rechtshngig), 261 ZPO. If a time limit has to
be observed by filing the action,75 the date of filing and not the date of service will be the
relevant point in time according to 167 ZPO, provided that the service of the action is not
delayed due to negligence on the part of the claimant. Such negligence may be, inter alia, a
delay in the payment of the advance in costs,76 in not providing enough copies for the service
of the action77 or in providing an incomplete address of the respondent.78
B.
Respondents Response to the Action
59 With the service of the action, the court will set a time limit for the respondent to defend
itself against the action. The response has to contain all defences to the action that respondent can be expected to raise at that point in time, 279(1)ZPO. Defences that are raised
belatedly may be struck out under 296(1)ZPO, provided that their admission would lead
to a delay in the resolution of the dispute.
C.
Oral Hearing
60 An oral hearing will be mandatory only under the following circumstances, 1063 (2), 128
(1) ZPO:
the action concerns the setting aside of an award;
the respondent raises one of the grounds for setting aside as a defence in proceedings for
recognition and enforcement of an award;79 or
73
OLG Dresden 27.01.2005, SchiedsVZ 2005, 159 (162); BGH 27.03.2002, NJW-RR 2002, 933; Krll,
NJW 2011, 1265 (1267).
See supra, para.12.
Cf. supra, para.50.
BGH 29.06.1993, NJW 1993, 2811 (2812).
BGH 24.06.1974, VersR 1974, 1106.
BGH 25.02.1971, NJW 1971, 891 (892).
The court may, however, decide without a hearing if the ground invoked by the respondent is not substantiated, KG Berlin 13.03.2002; see in more detail infra, Schroeder/Wortmann, 1063 para. 10.
74
75
76
77
78
79
519
one of the parties explicitly requests a hearing.80
In all other cases, an oral hearing will be at the discretion of the court as the court will give its 61
judgment in the form of a court order (Beschluss), which does not require a prior oral hearing
by law. In practice, the courts are rather hesitant to exercise their discretion to order an oral
hearing to take place.81
D.
Decision
The court will render its decision after the proceedings are closed. The judgment will take the 62
form of a court order (Beschluss) and contain the facts and the legal reasoning if the decision
is subject to an appeal, cf. 1065 ZPO. The court may refer to the arbitration award in factually simple cases instead of describing the facts of the case in detail.82
E.
Appeal
In general, there is no appeal against decisions in arbitration-related disputes in national 63

courts in order not to allow lengthy disputes to slow down the arbitration. Only in specific
cases shall an appeal on a point of law be admissible to protect the fundamental principles of
German procedural law.
As will be discussed elsewhere in detail,83 1065 (1) ZPO provides that only the following 64
decisions are subject to an appeal on a point of law to the BGH under 574 (1) No. 1 ZPO,
133 Act on the Constitution of the Courts (Gerichtsverfassungsgesetz GVG):
the decision on the admissibility of arbitral proceedings, 1062 (1) No. 2, 1032 (1)
ZPO;
the decision reviewing the arbitral tribunals interim decision on its jurisdiction, 1062
(1) No. 2, 1040 ZPO;
the decision on setting aside of an award, 1062 (1) No. 4, 1059ZPO;
the decision on recognition and declaration of enforceability of an award, 1062 (1)

No. 4, 1060 et seq. ZPO; and
the decision on setting aside of a declaration of enforceability of an award, 1062 (1)

No. 4, 1061 ZPO.
Any other decision in arbitration-related court proceedings are not subject to any recourse, 65
1065 (1) ZPO.
On appeal, the BGH will only review the Higher Regional Courts decision with regard to 66
errors of law. The appeal on a point of law will only be admissible if:
the matter has fundamental relevance, 574 (2) No. 1 ZPO; or
a decision by the BGH is required for the development of the law or for the harmonisation of the jurisprudence, 574 (2) No. 2 ZPO.
80
81
82
83

See supra, Krll/Kraft, 1061 para. 35.
BGH 15.07.1999, NJW 1999, 2974 (2975).
See infra, Schroeder/Wortmann, 1065 paras 1 et seq.
520
67 Fresh evidence on appeal will be admissible only if raised during the appeal and could not
have been raised in the first instance.84
VI. Costs and Legal Fees

A.
The Cost of Litigation: Court Costs and Attorneys Fees
68 The total cost of litigation in Germany (hereinafter litigation costs) are composed of costs
for the operation of the courts (court costs, 1.) and attorney fees (2.). The relevant legal basis
for court costs is the Court Fees Act (Gerichtskostengesetz GKG) and for attorney fees the
Lawyers Fees Act (Rechtsanwaltsvergtungsgesetz RVG). The actual amount of the costs
and fees will be determined according to the value of the subject matter of the dispute.
1.
Court Costs
69 Court costs have to be paid for the services of the court. Costs for legal proceedings are
calculated according to the GKG. The claimant must pay an advance on these costs,85 but
may be able to recover all or a part of the advance if the action is successful at least in part.
The claimant bears, however, the risk of insolvency on the part of its opponent: according
to 22 (1), 31 GKG, the claimant will have to bear the court costs if the costs cannot be
recovered from the respondent.
70 The amount of the court costs is determined as follows: first, the court must establish the
value of the substance of the dispute (Streitwert). Second, it will determine the value of
one basic fee (eine volle Gebhr) according to 34GKG.86 Third, according to the nature of
the dispute, the GKG will then determine how many basic fees will be due for the specific
court proceedings.87 As an example, proceedings for the recognition and the declaration of
enforceability of an award will require two basic fees calculated under 34GKG, whereas
proceedings for the assistance in the taking of evidence under 1050 ZPO will only require
half a fee calculated under 34 GKG.
2.
Attorneys Fees
71 In principle, each party must pay its own attorney fees. Usually, the remuneration will be
determined according to the RVG. The amount of the statutory attorney fees is calculated
in a similar way as the court costs. Again, the value of the subject matter of the dispute has
to be established first. Then, a basic fee according to 13 RVG will be calculated. The factor
in the proceedings depends on the actual activity of the attorney: for the representation in
the proceedings other than the participation at an oral hearing, the attorney earns 1.3 times
the basic fee. For the representation of the party at an oral hearing, the attorney earns an
additional fee amounting to 1.2 times the basic fee. These fees are only the statutory fees and
the party may agree with the attorney on a fee calculated on an hourly basis.
84
85
86
87
BGH 22.02.2001, NJW 2001, 1730; BGH 01.03.2007, SchiedsVZ 2007, 160 (162); Zller-Geimer
(2014), 1065 para.4.
12 GKG.
There are pre-calculated tables with basic fees corresponding to different values of the dispute in the different editions available of the GKG.
A table of the natures of the dispute and the corresponding fees is available at Schwab/Walter (2005),
Chap.34 para.1.
521
Alternatively, attorney and client may agree on the remuneration by a written agreement, e.g. 72
in the contract for professional services (4 RVG). It has become more and more common,
especially in international business disputes, to agree on a remuneration on a time-spent
basis.
Attorney fees may be recovered as part of the litigation costs, but there is a legal limit for the 73
recovery imposed by the RVG. The successful party may only recover attorney fees up to the
amount of the statutory fees, regardless of a previous agreement between the party and the
attorney on a fee calculated on an hourly basis. Therefore, if the actual attorney fees exceed
this limit, the successful party can only recover the amount limited by statute. 88
With relation to costs, claims for recognition and enforcement must be treated separately 74
from previous arbitral proceedings. Consequently, lawyers fees for proceedings regarding
recognition and enforcement accrue separately from and in addition to fees for the arbitral
proceeding.89
B.
The Value of the Subject Matter of the Dispute
1.
Principle
The relevant basis for the calculation of litigation costs is the value of the subject matter of 75
the dispute (Streitwert). Under 3 ZPO, the court has discretion in determining the value of
the subject matter of the dispute. This is rather clear cut in claims involving the payment of
a sum of money. In this case, the value of the subject matter will be equal to the sum that the
claimant has claimed.
In arbitration-related court proceedings, however, the calculation is sometimes more 76
complex. If the claimant applies for the recognition and enforcement or the setting aside of
an award, the value of the subject matter can be determined by assessing the total amount
that has to be paid under the award. If the award contains a declaratory claim, the principle
developed by the state courts may be applied, according to which a declaratory claim is to be
valued with a deduction of 20% of the value of the subject matter of the dispute of a claim for
payment in the same matter.90
In cases in which the claimant seeks court assistance during the arbitral proceedings, the 77
value of the subject matter in the arbitration-related court proceedings will be lower than the
value of the claim in the arbitral proceedings, as it is only an ancillary matter facilitating the
arbitral proceedings on the merits of the dispute.91 The details of assessing the value of the
individual actions, however, remain disputed in the case law.
2.
Appointment of an Arbitrator under 1035 (4) ZPO
The value of the subject matter of dispute in arbitration-related court proceedings dealing 78
with the appointment of an arbitrator by the court under 1035 (4) ZPO has been assessed
by the German courts in a rather inconsistent manner.92
88
89
90
91
92
This has not changed since the reform of the RVG from 01.08.2013, but 36 RVG from now on also
refers to part 3, clause 4 VV RVG (not only to part 3 clause 1 and 2 VV RVG).
OLG Mnchen 18.07.2008, NJOZ 2008, 3363 (3364).
BGH 28.11.1990, NJW-RR 1991, 509; Zller-Greger (2014), 256 para. 30; Thomas/Putzo-Htege
(2013), 3 para. 65; Musielak-Foerste (2013), 256 para. 45.
See also supra, Nacimiento/Abt/Stein, 1035 paras28 et seq.
522
79 The OLG Dresden has applied a value of the dispute in the court proceedings of 10per cent of
the arbitration claim,93 the OLG Naumburg has set the value at 20 per cent of the arbitration
claim,94 whereas the OLG Hamburg applied a value of 33 per cent95 and the OLG Hamm
determined the value of the court proceedings as being equivalent to the full claim of the
subject matter in dispute in the arbitral proceedings.96 The OLG Mnchen has stated that the
value must be set between 25 per cent and 33 per cent.97
80 From a practical perspective, a figure around 20per cent of the claim seems to be appropriate.
The appointment of an arbitrator is, although important for the due process of the arbitration, only an ancillary issue. It appears to be inappropriate to apply the full amount of the
claim in dispute in the arbitral proceedings to the arbitration-related court proceedings as
well.98
3.
Claims Under 1040 ZPO
81 The subject matter of claims under 1040 ZPO regarding the validity of the arbitration
agreement and, consequently, the admissibility of the claim in arbitral proceedings, concerns
whether an action may be brought to arbitration at all. Therefore, the value of the claim in
the arbitration-related court proceedings should be equal to the arbitration claim. Some
authors99 and an older court decision100 suggest, however, that the value should be lower than
the claim that shall be brought to arbitration.
4.
Claims for Recognition and Enforcement/Setting Aside of the Award
82 Claims for the recognition and enforcement, respectively the setting aside of an award, affect
the enforceability of the claim in toto. Therefore, the value of the dispute in the arbitration
related court proceedings is equal to the value of the arbitration award.101
C.
The Courts Decision on the Recovery of Litigation Costs
1.
General Rule: The Costs Follow the Event
83 The general rule, under German law, is that the prevailing party will recover the court costs
and the attorneys fees under RVG from its unsuccessful opponent, 91 ZPO. If the claim is
successful only in part, the prevailing party will only recover a part of the litigation costs. It is
important to note that attorneys fees may only be recovered up to the legal limit as provided
by the RVG (see supra, paras68 et seq.).
2.
Exception: Costs Cannot be Recovered
84 An exception to this general rule applies to proceedings for the appointment of arbitrators,
1035 (4) ZPO. The costs in these proceedings must be borne by the party for which the
93
94
95
96
97
98
99
100
101

OLG Naumburg 19.05.2003, SchiedsVZ 2003, 235 (236).
OLG Hamburg 19.04.2010; likewise OLG Mnchen 17.10.2011.
KG Berlin 17.03.2003; OLG Hamm 14.09.2007.
Controversial, cf. Schwab/Walter (2005), Chap. 34 para.6.
KG Berlin 23.06.1966, NJW 1967, 55.
523
arbitrator has been appointed.102 Only if the necessity for the appointment did not arise
because of the respective party not complying with its duty to nominate an arbitrator, the
costs are to be attributed according to 91et seq. ZPO.103
D.
Recovering Costs and Fees
Costs and fees can be recovered on the basis of the courts decision on costs in the judg- 85
ment delivered in the arbitration-related court proceedings. The parties will request a court
order determining the amount of the recoverable costs and fees (Kostenfestsetzungsbeschluss)
that will be issued by an officer of the court (Rechtspfleger). This order is an enforceable
instrument.
102
103

Cf. Krll, SchiedsVZ 2005, 139 (142) referring to BayObLG 11.11.04.
1062 Jurisdiction
(1) The Higher Regional Court (Oberlandesgericht) designated in the arbitration agreement or, failing such designation, the Higher Regional Court in whose district the
place of arbitration is situated, is competent for decisions on applications relating
to
1.
the appointment of an arbitrator ( 1034 and 1035), the challenge of an arbitrator (1037) or the termination of an arbitrators mandate (1038),
2.
the determination of the admissibility or inadmissibility of arbitration

(1032) or the decision of an arbitral tribunal confirming its competence in a
preliminary ruling (1040),
3.
the enforcement, setting aside or amendment of an order for interim measures

of protection by the arbitral tribunal (1041),
4.
the setting aside ( 1059) or the declaration of enforceability of the award

(1060 et seq.) or the setting aside of the declaration of enforceability (1061).
(2) If the place of arbitration in the cases referred to in subsection 1 No. 2, alternative
1, Nos 3 and 4, is not in Germany, competence lies with the Higher Regional Court
(Oberlandesgericht) where the party opposing the application has his place of business or place of habitual residence, or where assets of that party or the property
in dispute or affected by the measure is located, failing which the Berlin Higher
Regional Court (Kammergericht) shall be competent.
(3) In the cases referred to in 1025 (3), the Higher Regional Court (Oberlandesgericht) in whose district the claimant or the respondent has his place of business or
place of habitual residence is competent.
(4) For assistance in the taking of evidence and other judicial acts (1050), the Local
Court (Amtsgericht), in whose district the judicial act is to be carried out, is competent.
(5) Where there are several Higher Regional Courts (Oberlandesgerichte) in one Land,
the Government of that Land may transfer by ordinance competence to one Higher
Regional Court, or, where existent, to the highest Regional Court (Oberstes Landesgericht),1 the Land Government may transfer such authority to the Department
of Justice of the Land concerned by ordinance. Several Lnder may agree on crossborder competence of a single Higher Regional Court.
I.
II.
Para.
Purpose: Establishing Jurisdiction for
Court Assistance and Court Control . . . . . 1
Jurisdiction of State Courts with
Respect to Arbitration Proceedings . . . . . . . 4
Para.
A. 1062 (1) ZPO Jurisdiction of
the Higher Regional Court at the
Seat of Arbitration . . . . . . . . . . . . . . . . . . . 4
1. Overview and General
Considerations . . . . . . . . . . . . . . . . . . . 4
The federal state of Bavaria was the only federal state (Land) in Germany that had established a Bayerisches Oberstes Landesgericht. However, the state government decided to abolish the court in 2006. Since
the court has ceased to exist, its jurisdiction has been transferred to the Higher Regional Court Mnchen.
1062 Schroeder/Wortmann
Para.
2. Special Provisions
for Employment and
Administrative Law Disputes . . . . . . 9
3. 1062 (1) No. 1 ZPO. . . . . . . . . . . . 10
4. 1062 (1) No. 2 ZPO. . . . . . . . . . . . 12
5. 1062 (1) No. 3 ZPO. . . . . . . . . . . . 13
6. 1062 (1) No. 4 ZPO. . . . . . . . . . . . 14
B. 1062 (2) ZPO Jurisdiction
of the Higher Regional Court in
Case the Seat of the Arbitration is
Outside of Germany . . . . . . . . . . . . . . . . 16
1. Broad Interpretation . . . . . . . . . . . . . 16
2. No Order of Priority . . . . . . . . . . . . . 20
I.
525
Para.
3. No Need for a Restriction of the
Jurisdiction Attributed to the
Kammergericht . . . . . . . . . . . . . . . . . . . 22
C. 1062 (3) ZPO Jurisdiction of
the Higher Regional Court in Case
the Seat of Arbitration Has Not Yet
Been Determined . . . . . . . . . . . . . . . . . . . 24
D. 1062 (4) ZPO Jurisdiction
of the Local Court for Court
Assistance in the Context of
Certain Judicial Acts Mentioned in
1050 ZPO . . . . . . . . . . . . . . . . . . . . . . . . 27
E. 1062 (5) ZPO Concentration
of Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . 31
Purpose: Establishing Jurisdiction for Court Assistance and Court Control2
The provision enumerates the instances in which the German state courts may provide court 1
assistance and exercise court control over arbitration proceedings. 1062 (1) No.1 No.4
ZPO are exhaustive provisions regarding the jurisdiction of state courts for arbitration-related
court proceedings; only in the circumstances expressly mentioned in these provisions may
state courts intervene. No remedies may be granted by state courts with respect to arbitration
unless expressly listed in 1062ZPO. This principle of enumerative jurisdiction is in line
with Art. 5 UNCITRAL Model Law, which states that in matters governed by the Model
Law, no court shall intervene except where so provided by the Model Law.
In principle, the Higher Regional Court has jurisdiction for court assistance (1062 (1) 2
ZPO). At first sight, this is unusual since the Higher Regional Court generally exercises
jurisdiction mainly as an appeal court and has jurisdiction as a court of first instance only in
very few selected cases. The rationale behind the Higher Regional Court being competent in
arbitration-related court proceedings, however, lies in the fact that the legislator regarded the
arbitral tribunal as equivalent as a state court of first instance.3
As an exception, the Local Court (Amtsgericht AG) provides court assistance in the form 3
of taking evidence and performing further judicial acts for which the arbitral tribunal lacks
authority (1050 ZPO).4
II.
Jurisdiction of State Courts with Respect to Arbitration Proceedings
A.
1062 (1) ZPO Jurisdiction of the Higher Regional Court at the Seat of the
Arbitration
1.
Overview and General Considerations
As a general rule, the Higher Regional Court designated in the arbitration agreement will 4
have local jurisdiction pursuant to 1062 (1)ZPO. Failing such an agreement, the Higher
Regional Court at the seat of the arbitration5 will have local jurisdiction, although the parties
2
3
4
5
BT-Drs. 13/5274, p. 63.
See supra, Sachs/Lrcher, 1050 para. 1.
Cf. 1043 ZPO.
526
are free to modify the local jurisdiction at any point in time after entering into the arbitration
agreement.6 According to the OLG Mnchen, the place of the arbitration is deemed to be
where the award is said to have been rendered by the arbitrators signing the award, even if
it was actually signed by the arbitrators in a different place. In the case decided by the OLG
Mnchen, the arbitration award contained a reference to Frankfurt am Main as the place of
signature although the place where the arbitral tribunal was to hold its deliberations was
agreed by the parties to be Munich. The OLG Mnchen decided that it did not have jurisdiction for court assistance with respect to the enforcement of that award since the place of
the arbitration was where the award was rendered. This was Frankfurt am Main, with the
consequence that the OLG Frankfurt am Main was also competent for any remedy in view
of that award.7
5 The scope of application of 1062 ZPO is limited to arbitration awards. The parties to other
mechanisms of alternative dispute resolution, such as mediation or expert determination,
cannot rely on court assistance or court control pursuant to this provision.8 In this context, it
is doubtful whether a document that purports to be an arbitration award but does not meet
the substantive requirements of such an award (pseudo award) may be subject to an action
for setting aside. German court practice answers this question in the negative.9 It has been
argued, however, that a party that is the addressee of such a pseudo award must be entitled to
destroy the appearance of an enforceable instrument by attacking the pseudo award with the
same means as a proper arbitration award.10
6 1062 ZPO allows the parties to agree on a different place of venue regarding the local
jurisdiction for the state courts in view of arbitration proceedings. It is important to note that
this power to derogate from the general principle in ZPO 1062 (1) is strictly limited to local
jurisdiction. The provision does not give the parties the power to establish the functional
jurisdiction of the Higher Regional Court instead of the Local Court or vice versa.11 Any such
agreement is ineffective.
7 That said, local jurisdiction may also be established by prorogation under the general rules
of German procedural law, e.g. by an express agreement of the parties under 38 ZPO or by
a tacit agreement pursuant to 39 ZPO.12 If the state court that was seized by an applicant
with an action relative to arbitration proceedings comes to the conclusion that it does not
have the necessary local jurisdiction to deal with the merits of the application, it may refer
6
7
8
9
10
11
12
Zller-Geimer (2014), 1062 para. 2.

OLG Mnchen 03.02.2010, SchiedsVZ 2010, 336: The award contained a reference to Frankfurt am
Main before the date and the signatures of the arbitrators, whereas the arbitration agreement provided
that the arbitral tribunal meets in Munich; see also OLG Kln 11.09.2009.
See supra, Krll/Kraft, 1059 ZPO para.18.
See Schroeder, Zur Aufhebung von Scheinschiedssprchen und anderen formellen Schiedssprchen
durch staatliche Gerichte Ein Beitrag zur Auslegung des Begriffes Schiedsspruch in 1059 ZPO,
OLG Mnchen 01.04.2010; Zller-Geimer (2014), 1062 para. 1; Musielak-Voit (2013), 1062 para. 2;
other opinion, MnchKommZPO-Mnch (2013), 1062 para.22.
OLG Koblenz 17.03.2011, NJOZ 2011, 1241 (1242); OLG Stuttgart 16.07.2002, SchiedsVZ 2003, 84;
527
the proceeding to the competent court (281ZPO).13 This referral requires a procedural
motion by the applicant.
Contrary to a decision of the OLG Dsseldorf,14 there is no exclusive jurisdiction of the 8
Antitrust Senate of the Higher Regional Court if the applicant asserts an infringement of
competition law by an arbitration award.15 Rather, the senate exercising jurisdiction over
arbitration-related disputes shall have jurisdiction over this type of disputes as well.
2.
Special Provisions for Employment and Administrative Law Disputes
1062 ZPO is not applicable for arbitration proceedings in relation to employment disputes 9
since these matters are governed by leges speciales.16 Further, pursuant to 173 Rules of the
Administrative Court (Verwaltungsgerichtsordnung VwGO), the Administrative Court
(Verwaltungsgericht VG) instead of the Higher Regional Court will exercise jurisdiction
over arbitration-related court proceedings relative to arbitrations governed by German
administrative law.
3.
1062 (1) No. 1 ZPO
1062 (1) No. 1 ZPO establishes the jurisdiction for court assistance in the context of 10
appointing an arbitrator (1062 (1) No. 1 var. 1 ZPO in conjunction with 1034, 1035
ZPO), challenging an arbitrator (1062 (1) No. 1 var. 2 ZPO in conjunction with 1037
ZPO) or termination of an arbitrators mandate (1062 (1) No. 1 var. 3 ZPO in conjunction
with 1038 ZPO).
If the dispute shall be arbitrated by a sole arbitrator and the parties cannot reach an agreement 11
on the person of the sole arbitrator, the court will have the authority to appoint an arbitrator
(1062 (1) No. 1 var. 1 ZPO). The same applies if a tribunal is composed of three arbitrators
and one party fails to nominate an arbitrator or if the two party-appointed arbitrators cannot
agree on the person of the chairman.
4.
1062 (1) No. 2 ZPO
According to 1062 (1) No. 2 ZPO in conjunction with 1032(1) ZPO, the state courts 12
will have jurisdiction to determine the admissibility or inadmissibility of arbitration proceedings irrespective of whether this issue arises before or after the composition of the arbitral
tribunal.17 In this context, the court will examine whether the arbitration agreement is valid
and whether it covers the subject-matter of the dispute. In addition, the state court is also
competent to review any interim ruling on the part of the arbitral tribunal, pursuant to 1040
ZPO, confirming its competence under an arbitration agreement.
13
14
15
16
17
OLG Mnchen 03.10.2010, SchiedsVZ 2010, 336; OLG Mnchen 17.10.2008, SchiedsVZ 2008, 307
(309); Stein/Jonas-Schlosser (2002), 1062 para.5; MnchKommZPO-Prtting (2013), 281 para.6;
Other opinion: OLG Schleswig 16.09.2012, BeckRS 2013, 01310.
OLG Dsseldorf 15.07.2002, BB 2002, IDR-Supplement 7, p.44.
Cf. 110 Labour Courts Act (Arbeitsgerichtsgesetz AGG).
528
5.
1062 (1) No. 3 ZPO
13 Pursuant to 1062 (1) No. 3 ZPO, the enforcement, setting aside or modification of interim
remedies granted by the arbitral tribunal (1041 ZPO) is subject to court assistance by state
courts.
6.
1062 (1) No. 4 ZPO
14 1062 (1) No. 4 ZPO governs the jurisdiction of the state court for setting aside an award
(1059ZPO), for the declaration of enforceability of awards (1060ZPO) and for setting
aside a declaration of enforceability (1061 ZPO). These competences qualify as the core
area of state control over arbitral proceedings and the awards that result from such proceedings.
15 According to German case law, 1062(1) No.4 ZPO also establishes the competence of
the Higher Regional Court to set an amount for a penalty payment. 18 This remedy will be
available, in accordance with 888 ZPO, only in cases in which the award that is subject
to a declaration of enforceability contains an obligation to perform an act that can only be
performed by the respondent. In proceedings to declare an arbitration award enforceable, the
respondent may raise objections to the claim based on substantive law,19 such as performance
or set-off. However, the court may only consider those objections which are not governed by
an arbitration agreement between the parties.20
B.
1062 (2) ZPO Jurisdiction of the Higher Regional Court in Case the Seat of the
Arbitration is Outside of Germany
1.
Broad Interpretation
16 1062 (2) ZPO establishes the jurisdiction of state courts if the place of arbitration is outside
the territory of Germany or has not yet been determined. If the place of arbitration is not
within the territory of Germany, the following alternative places of local jurisdiction for the
Higher Regional Court are established:
at the seat or residence of the party opposing the application;
in the district in which assets of that party are located;
in the district in which the property that is at the heart of the arbitration or that is affected by an interim measure is located; or
ultimately, the Kammergericht in Berlin will have jurisdiction.
17 If more than one of the first three alternatives applies, the applicant shall be entitled to select the place of venue at its convenience (forum shopping).21 If an applicant intends to rely,
however, on the jurisdiction established on the location of assets within the district of a
certain Higher Regional Court, that applicant will have to establish a prima facie case and will
bear the burden of proof for the fact that assets are actually located within the district of the
Higher Regional Court seized.22
18
19
20
21
22

BGH 22.11.1962, WM 1963, 196; BGH 29.07.2010, SchiedsVZ 2010, 275.
BGH 29.07.2010, SchiedsVZ 2010, 275; BGH 17.01.2008, SchiedsVZ 2008, 94 (95).
Musielak-Voit (2013), 1062 para.4; Thomas/Putzo-Reichhold (2013), 1063 para.4.
529
The subsidiary jurisdiction of the Kammergericht in Berlin will be established in cases in 18

which it is uncertain whether the arbitration will take place in Germany or elsewhere, as well
as in cases in which the seat of the arbitration shall be an unspecified place in Germany. In
such a case, the OLG Kln rejected an application under 1062 (2), 1062 (1) no. 2, 1032
ZPO for lack of jurisdiction, indicating that the applicant should have filed the application
with the Kammergericht.23 Although the subsidiary jurisdiction will, in principle, be established if the place of arbitration is outside of Germany, the Kammergericht has required an
applicant to show a reasonably close connection to Germany (hinreichender Inlandsbezug). It
has rejected an application for a declaration of enforceability of a foreign award due to a lack
of jurisdiction in a case in which there was no connection to Germany at all and there was
no indication at all that the award might actually be enforced in Germany at any point in the
future.24
1062 (1) ZPO applies to all proceedings enumerated in 1062(1)No.2 var.1 ZPO, 19
1062(1)No.3 ZPO, and 1062(1)No.4ZPO, but only to these proceedings.25
2.
No Order of Priority
One view among the authorities argues that 1062 (2) ZPO should be deemed to establish 20
a ranking in priority.26 According to this opinion, the courts will have exclusive local jurisdiction in the following order: first, the court at the place of business or place of habitual
residence of the party opposing the application. Second, the court in the district of which
assets of the party opposing application or the subject matter of the arbitration are located
will have exclusive jurisdiction. Third, the Kammergericht will have subsidiary jurisdiction if
there is a reasonably connection to Germany.
However, there is no indication in the literal wording of 1062 (2) ZPO that justifies such an 21
order in priority. Furthermore, the intention of the legislator was expressly to provide different points of reference for local jurisdiction.27 This purpose does not seem to be aligned with
a strict order of priority.
3.
No Need for a Restriction of the Jurisdiction Attributed to the Kammergericht
Different scholars favour a more restrictive interpretation of the Kammergerichts subsidiary 22

jurisdiction under 1062(2) ZPO.28 The main argument against the broad interpretation in
this context is essentially that the Kammergericht should not be deemed to have an extraterritorial jurisdiction for all arbitrations world-wide on the simple basis that their seat is located
outside of Germany. Rather, the Kammergericht should only have jurisdiction under 1062
(2) ZPO if two cumulative requirements are fulfilled: first, if there is a sufficient connection
to Germany and, second, if the remedy sought is not available at the seat of the arbitration
abroad. 29
23
24
25
26
27
28
29
OLG Kln 10.12.2001, SchiedsVZ 2003, 238; Musielak-Voit (2013), 1062 para. 4; Thomas/PutzoReichhold (2013), 1063 para.4.
OLG Kln 15.02.2000; Thomas/Putzo-Reichhold (2013), 1063 para.4.
MnchKommZPO-Mnch (2013), 1062 paras 18 et seq.
BT-Drs. 13/5274 p. 64: Es erscheint sachgerecht, fr die rtliche Zustndigkeit in diesen Fllen mehrere Anknpfungspunkte [] vorzusehen.
Schwab/Walter (2005), Chap. 31 para. 7; Stein/Jonas-Schlosser (2002), 1062 para.3.
Schwab/Walter (2005), Chap. 31 para. 7; Stein/Jonas-Schlosser (2002), 1062 para.3.
530
23 There is no need for a restrictive interpretation of 1062(2) ZPO. Although the scope of
application under the literal wording is wide, German procedural law in the actual court practice will avoid excessive jurisdiction without further restrictions. It is accepted in German
legal practice that an application to the Kammergericht will have to be dismissed for lack of
jurisdiction or at least for a lack of legal interest if and as far as the decision by the arbitral tribunal will not have any effects within the territory of the Federal Republic of Germany.30 The
application would be dismissed as being inadmissible since the legal interest is a prerequisite
for the admissibility of an action in court.31
C.
1062 (3) ZPO Jurisdiction of the Higher Regional Court in Case the Seat of
Arbitration Has Not Yet Been Determined
24 1062 (3) ZPO is applicable if the place of arbitration has not yet been determined (1025
(3) ZPO).
25 This provision will be applied mostly in cases in which court assistance is sought before
the arbitral tribunal has been constituted and in which the arbitration agreement does not
provide for a seat of the arbitration. Under these circumstances, the arbitral tribunal will have
to determine the seat of the arbitration after its constitution.
26 1062 (3) ZPO provides for these cases that local jurisdiction will be determined by the seat
or place of residence of either the claimant or the defendant in the arbitration proceedings.
If both parties have their seat or place of residence within the territory of the Federal Republic of Germany but within the districts of different Higher Regional Courts, it is disputed
whether the applicant has a right to choose between the two different places of venue.32 As
an alternative, it is being discussed that the place of venue established by the claimants seat
or place of residence should take priority since it has been mentioned first.33 However, the
wording of 1062 (3) is broad and suggests that the applicant should be free to select the
place of venue between the two options at its convenience.
D.
1062 (4) ZPO Jurisdiction of the Local Court for Court Assistance in the Context
of Certain Judicial Acts Mentioned in 1050 ZPO
27 1062 (4) ZPO governs the local jurisdiction exercised by the Local Courts. As an exception
to the principle that the Higher Regional Court is competent to decide on applications for
court assistance and court control under 1062 (1)(3) ZPO, the Local Court has jurisdiction for court assistance in the taking of evidence and certain other judicial acts pursuant to
1050 ZPO.
28 Local jurisdiction of the Local Court will be determined by the place in which the taking
of evidence will occur or in which the judicial act will have to be carried out. As a general
rule, the examination of a witness will take place at the witness residence. Consequently, the
Local Court exercising jurisdiction over the place of residence will also have local jurisdiction
in accordance with 1062 (4) ZPO.34
30
31
32
33
34
See also KG Berlin 10.08.2006, SchiedsVZ 2007, 108 (112); Musielak-Voit (2013), 1062 para.4.
See supra, Schroeder/Wortmann, Introduction to 10621065 para.36.
Stein/Jonas-Schlosser (2002), 1062 para. 2; Thomas/Putzo-Reichhold (2013), 1063 para.5.
531
Since court assistance under 1050 ZPO is provided upon request by the arbitral tribunal 29
placed with the Local Court, the arbitral tribunal will have a certain discretion with respect
to deciding on which Local Court it will call in order to seek court assistance in this context.
It may be justified to seek court assistance from a Local Court different from the Local Court
at the place of residence if there are several witnesses that should be examined together or if
the witness shall be confronted with original documents that cannot be moved conveniently
to the Local Court at the witness place of residence.35
1062 (4) ZPO establishes the Local Courts jurisdiction irrespective of whether the seat of 30
the arbitration is located within the territory of Germany or outside that territory.36
E.
1062 (5) ZPO Concentration of Jurisdiction
1062 (5) ZPO in conjunction with 8 Court Jurisdiction Regulation (Gerichtliche Zustn- 31
digkeitsverordnung Justiz) allows federal states (Bundeslnder) with more than one Higher Regional Court to issue a law to transfer the jurisdiction to one of the Higher Regional Courts.
The main reasons for this concentration of jurisdiction with respect to court assistance and
court control are to foster specialisation and to promote consistency of case law.37
Such laws to concentrate jurisdiction have been passed by Bavaria and Rhineland-Palatinate, 32
transferring jurisdiction to the Higher Regional Courts in Munich and Koblenz respectively.
As a consequence, in both federal states, an agreement by the parties purporting to establish
the jurisdiction of another Higher Regional Court within that same state will be ineffective.38
An agreement purporting to establish the competence of a Higher Regional Court other than
the OLG Mnchen will be construed as establishing the jurisdiction of the OLG Mnchen
anyhow.39
1062(5) sentence 2 ZPO allows several federal states to agree on a concentration of ju- 33
risdiction across the borders of the federal states. As a result, one Higher Regional Court
would gain exclusive local jurisdiction for court assistance and court control for more than
one federal state. However, none of the federal states seem to have considered this option, let
alone taken concrete steps to implement it.
35
36
37
38
39

Voit / Musielak (2013), 1062 para. 7.
Saenger (2013), 1062 para.4.
OLG Mnchen 29.02.2012, SchiedsVZ 2012, 96 (99); OLG Mnchen 21.12.2011, SchiedsVZ 2012, 111
(112).
1063 General Provisions

(1) The court shall decide by means of an order. The party opposing the application
shall be given an opportunity to comment before a decision is taken.*
(2) The court shall order an oral hearing to be held, if the setting aside of the award
has been requested or if, in an application for recognition or declaration of enforceability of the award, grounds for setting aside in terms of 1059 (2) are to be
considered.
(3) The presiding judge of the civil court senate (Zivilsenat) may issue, without prior
hearing of the party opposing the application, an order to the effect that, until a
decision on the request has been reached, the applicant may pursue enforcement
of the award or enforce the interim measure of protection of the arbitration court
pursuant to 1041. In the case of an award, enforcement of the award may not go
beyond measures of protection. The party opposing the application may prevent
enforcement by providing as security an amount corresponding to the amount that
may be enforced by the applicant.
(4) As long as no oral hearing is ordered, applications and declarations may be put on
record at the court registry.
Short Bibliography: Ehricke, Die Beschleunigung der Finalitt von Schiedssprchen nach dem neuen
deutschen Schiedsverfahrensrecht, ZZP 2000, 453; Krll, Die schiedsgerichtliche Rechtsprechung,
SchiedsVZ 2013, 259; Schtze, Schiedsgerichtsbarkeit und Schiedsverfahren, Mnchen 2012;
Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005; Sessler/Scheiber, Ausgewhlte Rechtsfragen
der Sicherungsvollstreckung gem 1063 Abs. 3 ZPO, SchiedsVZ 2006, 119.
I.
II.
III.
IV.
V.
I.
Para.
Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Court Decision . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Mandatory Oral Hearing . . . . . . . . . . . . . . . . . 9
Request for Oral Hearing . . . . . . . . . . . . . . . 16
Court Costs and Legal Fees . . . . . . . . . . . . . 18
Para.
VI. Interim Order (1063 (3) ZPO). . . . . . . . 22
A. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
B. Formal Requirements . . . . . . . . . . . . . . . 25
C. Court Decision . . . . . . . . . . . . . . . . . . . . . 27
D. Avoiding Enforcement . . . . . . . . . . . . . . 30
Overview and General Principles1
1 1063 ZPO provides general and specific procedural rules for arbitration-related court proceedings. The provision applies to proceedings in the Higher Regional Court under 1062
(1)(3) ZPO as well as to proceedings in the Local Court in accordance with 1062(4)
ZPO.
2 1063 ZPO complements the general provisions of German procedural law (e.g. 260,
261, 262, 263, 267, 269ZPO).2 The most important principle of an unwritten nature in
the context of arbitration-related state court proceedings is that an application will only be
admissible if and as far as the applicant has a legitimate legal interest for pursuing the application.3 As already explained in detail, declaratory claims, claims for recognition and en1
2
3
See supra, Schroeder/Wortmann, Introduction to 10621065 paras 31 et seq.
533
forcement as well as claims for setting aside the award have specific requirements regarding
a legitimate legal interest.4
Any application for court assistance or court control has to fulfil the formal requirements of 3
a statement of claim in state court proceedings. As a consequence, the prerequisites listed in
253 ZPO also need to be present.5 Applications need to be submitted in writing or put on
record at the court registry (1063 (4) ZPO).
Due to 78(3)ZPO, any party may submit applications to the court in person, i.e. without 4
being represented by a member of the German bar. Only if an oral hearing is scheduled,
either party must be represented by an attorney admitted to the German bar.
According to 184 Judicature Act (Gerichtsverfassungsgesetz GVG), the only language in 5
German courts is German. Hence, applications for court assistance and court control need
to be made in German even if the language of the arbitration is English or any other language
by the parties agreement (1045 ZPO).6
II.
Court Decision
The court will decide on all applications for court assistance or court control listed in 1062 6
ZPO by means of a court order (Beschluss). The provisions relating to a judgement by default
(330 et seq. ZPO) are not applicable.7 As a consequence, and contrary to German state
court proceedings outside of arbitration-related disputes, a defaulting party cannot lose a
case just because it is in default. Rather, when deciding on applications for court assistance
and court control, the court must decide on the merits even if one or both parties are in
default, i.e. are not effectively represented at the oral hearing.
The right to be heard, granted by Art. 103 Constitutional Law (Grundgesetz GG), is 7
reflected by 1063(1) sentence 2 ZPO. Under this provision, the other side must be heard
before the court decides on the application, unless the court has come to the conclusion
that the application must be without merit from any possible factual and legal angle. In the
latter circumstances, there is no need to hear the opposing party before issuing the decision.8
Usually, the right to be heard will be allowed for by the court effecting service of process of
the application and setting a time limit for a reply.
Pursuant to general procedural law, any court order issued after an oral hearing must be 8
formally pronounced. If, however, the court order is issued without a prior oral hearing, the
court will have the opportunity to informally communicate the decision to the parties. This
follows from 329 ZPO, which is applicable in arbitration-related court proceedings.9
4
5
6
8
9

MnchKommZPO-Mnch (2013), 1063 para. 1; Illmer, Ziel verfehlt Warum Englisch als Verfahrenssprache in 1062 ZPO zuzulassen ist, ZRP 2011, 170 recommends the admission of court proceedings
in English.
BGH 23.02.2006, NJW 2007, 772 (773); OLG Hamm 13.07.2012, SchiedsVZ 2013, 182 (183); MnchKommZPO-Mnch (2013), 1063 para. 6; Other opinion Schwab/Walter (2005), Chap. 28 para. 10;
Stein/Jonas-Schlosser (2002), 1063 para. 8 a.
MnchKommZPO-Mnch (2013), 1063 para. 3; Baumbach/Lauterbach (2014), 1063 para. 2.
534
III. Mandatory Oral Hearing

9 Generally, an oral hearing is optional, 128 (4) ZPO. It may be ordered by the court at its
discretion. The entire panel will have to decide; the decision cannot be taken by the presiding judge alone. The purpose of an oral hearing being optional is intended to accelerate the
arbitration-related court proceedings.10
10 Only in cases enumerated by 1063(2) ZPO will an oral hearing be mandatory. This concerns applications for setting aside on the one hand and applications for recognition and for
a declaration of enforceability on the other hand, in which grounds for setting aside under
1059 (2) ZPO become an issue.
11 It is not entirely clear how the words become an issue (in the German original in Betracht
kommen) should be interpreted.
12 With respect to the grounds for setting aside that will have to be considered ex officio pursuant
to 1059 (2) No. 2 ZPO, it is accepted that the party opposing the application for recognition or for a declaration of enforceability does not need to raise these grounds as a defence
for them to become an issue. Rather, the court will have to consider these grounds under
any circumstances, which means that it will also have to schedule an oral hearing pursuant to
1063 (2) ZPO.
13 The situation is different in the context of grounds for setting aside which may be considered
only if the party opposing the application invokes them (1059 (2) No.1 ZPO). Some
courts and authors take the view that the grounds for setting aside only become an issue if the
party invoking such a ground has shown sufficient cause.11 The respective partys pleadings
must contain all facts needed for a court decision in its favour and lay out the relevant legal
standards and rules from which it derives the legal consequences in its favour.12
14 The opposing view is less restrictive and suggests that reasons for setting aside already come
into question if there is a certain likelihood that grounds for setting aside can successfully
be asserted in a subsequent oral hearing.13 Effectively, this opinion requires from the party
defending against an application for recognition or for a declaration of enforceability that it
relies on a ground for setting aside in accordance with 1059 (2) No. 1 ZPO and pleads facts
on the basis of which the court comes to the conclusion that the ground for the annulment
cannot be present under any circumstances and on the face of the application itself.
15 It is common ground that the ground for setting aside must be positively invoked in order
to become an issue in accordance with 1063 (2) ZPO.14 It is also common ground that, if
the existence of any ground pursuant to 1059 (2) No. 1 ZPO can be positively ruled out by
the court, an oral hearing is also not required. However, the bar for the party opposing the
application should not be raised any higher. After all, the question to be decided by the court
10
11
12
13
14
Ehricke, ZZP 2000, 453 (454).

BGH 15.07.1999, NJW 1999, 2974 (2975); BayObLG 24.02.1999, NJW-RR 2000, 807 (808); Schwab/
Walter (2005), Chap. 27 para.18; Zller-Geimer (2014), 1063 para.2; Saenger (2013), 1063 para.2.
Ehricke, ZZP 2000, 453 (459).
OLG Mnchen 02.03.2011, SchiedsVZ 2011, 167 (168); Krll, SchiedsVZ 2004, 113 (120); MusielakVoit (2013), 1063 para. 2.
OLG Mnchen 02.03.2011, SchiedsVZ 2011, 167 (168); BayObLG 24.02.1999, NJW-RR 2000, 807
(808); Ehricke, ZZP 2000, 453 (454); Musielak-Voit (2013), 1063 para. 3; dissenting MnchKommZPO-Mnch (2013), 1063 para.3.
535
at this stage is not whether the award must be set aside, but rather whether the court will
schedule an oral hearing before deciding on the merits.15
IV. Request for Oral Hearing

With regard to Art. 6 European Convention for the Protection of Human Rights (ECHR), 16
the court will further schedule an oral hearing upon request by either party.16
As a consequence of party autonomy and pursuant to 128(2) ZPO, both parties may by 17
concerted motion renounce an oral hearing that is mandatory.17
V.
Court Costs and Legal Fees
In arbitration-related court proceedings, there is no advance payment on court fees or secu- 18

rity for costs for foreign applicants because 12Court Fees Act (Gerichtskostengesetz GKG)
and 110 ZPO only apply to lawsuits (Klagen).18
For the cases listed in 1062ZPO, the court order must include a decision on costs and a 19
definition of the value of the dispute that is at the courts discretion (3 (1) ZPO).19 The
general rule is that the costs follow the event, 91 et seq. ZPO. As an exception, 93ZPO
is applicable if the respondent accepts the application without having given cause for the
claimant filing the application. In these instances, the applicant as the prevailing party may
have to bear the costs despite having been successful on the merits.20
How many basic fees will become due for the specific arbitration-related court proceeding 20
(1062 ZPO) is determined by 34 GKG.21
As mentioned in the introduction,22 the legal basis for attorney fees is the Lawyer Fees Act 21
(RVG), which also provides specific regulations on attorney fees for proceedings according
to 1062 (1) No. 2 4 ZPO.23
VI. Interim Order (1063 (3)ZPO)

A.
Purpose
1063(3)sentence1 ZPO gives the presiding judge broad latitude to order preliminary 22
enforceability of awards or to issue an order that enforces the interim measures of protection
of the arbitral tribunal (1041ZPO). The proceedings can be conducted ex parte, i.e. the opposing party does not have to be heard before the interim order will be issued. Such an order
will in most cases be issued at the outset of the procedure in order to ensure enforceability
while proceedings are still pending. This is the main distinction between an interim order
pursuant to 1063 (3) ZPO and a declaration of enforceability in the interim pursuant to
15
16
17
18
19
20
21
22
23

BT-Drs. 13/5274 p. 65.
Musielak-Voit (2013), 1063 para. 2; Stein/Jonas-Schlosser (2002), 1063 para. 10; Other opinion
MnchKommZPO-Mnch (2013), 1063 para. 2; see supra, Schroeder/Wortmann, Introduction to
10621065 paras69 et seq.
Musielak-Voit (2013), 1063 para. 8; MnchKommZPO-Mnch (2013), 1063 para.25.
In conjunction with No.1610 to No.1629 seq. of appendix 1 to the GKG
VV 3327: procedural fee 0,75; VV 333: hearing fee 0,5.
536
1064 (2) ZPO.24 The latter forms part of the operative provisions of the court order itself,
which covers the period until the court order will become final and binding. In contrast, the
former is a separate interim court order which covers the period until the court order on
the merits will be issued.
23 An interim order pursuant to 1063(3)sentence1 ZPO may be required to protect the
applicants legitimate interests in those instances in which a court order on the merits will
come too late for an effective enforcement of the award. Essentially, the provision gives the
creditor under the award some leverage in order to prevent actions by the debtor that put the
enforcement at risk.25
24 Typically, the applicant requests the court to issue an order protecting certain assets from being transferred outside the jurisdiction of the German courts. Common requests are requests
for a freezing order regarding bank accounts, for the attachment of certain tangible assets or
of shares in a company.26
B.
Formal Requirements
25 First, the court may only issue an interim order pursuant to 1063 (3) ZPO upon the request
of the applicant.27
26 The applicant must establish a prima facie case for an interim enforcement. It will have to
show that it has a legitimate interest in enforcing the award before the court order on the merits will be issued. The OLG Frankfurt decided that an applicant does have a legitimate interest
if the debtor under the award only has certain assets located in Germany that could easily be
transferred outside the jurisdiction of the German courts while the enforcement proceedings
are still pending.28 Moreover, a legitimate legal interest will be present if the applicant can
establish that the financial situation of the debtor under the award is about to deteriorate.29
C.
Court Decision
27 The decision concerning an interim order pursuant to 1063(3) ZPO is at the discretion of
the presiding judge. This competence of the presiding judge (and not of the entire panel of
judges) is justified by the urgency in which such applications have to be decided.
28 Since the interim enforcement implies far-reaching consequences for the unsuccessful party,
the presiding judge will have to take into consideration the interests of both parties. Furthermore, the judge will have to carefully consider the consequences for both sides of issuing or
not issuing the requested interim order.30 One of the determining factors in decision-making
will be the projected outcome of the proceedings on the merits, i.e. the chances of success for
the applicant receiving the requested declaration of enforceability in the main proceedings.31
24
25
26
27
28
29
30
31
See infra, Schroeder/Wortmann, 1064 para. 12.

Sessler/Scheiber, SchiedsVZ 2006, 119 (120); Schwab/Walter (2005), Chap. 28 para. 11.
MnchKommZPO-Mnch (2013), 1063 para. 31; Zller-Geimer (2014), 1063 para.4; Baumbach/
Lauterbach (2014), 1063 para. 4; Sessler/Scheiber, SchiedsVZ 2006, 119 (120).
Sessler/Scheiber, SchiedsVZ 2006, 119 (126).
OLG Hamburg 20.07.2012, 6 Sch 11/12; Baumbach/Lauterbach (2014), 1063 para. 4; Krll, SchiedsVZ
2013, 259 (268).
Schtze (2012), p. 151.
537
There will not be a separate decision on costs for the interim order pursuant to 1063 (3) 29
sentence 3ZPO since the order is not a final decision in the proceedings. Costs will therefore
be dealt with only in the court order on the declaration of enforceability.32
D.
Avoiding Enforcement
1063 (3) sentence3 ZPO authorises the opposing party to avoid enforcement of the award 30
by providing security. This provision applies only to claims for the payment of a sum of money.33 Usually the debtor provides security in form of a bank guarantee.34
32
33
34
OLG Hamm 27.03.2012, SchiedsVZ 2012, 221 seq.

Schwab/Walter (2005), Chap. 28 para. 11.
1064 Particularities Regarding the Enforcement of Awards

(1) At the time of the application for a declaration of enforceability of an arbitral
award the award or a certified copy of the award shall be supplied. The certification may also be made by counsel authorised to represent the party in the judicial
proceedings.
(2) The order declaring the award enforceable shall be declared provisionally enforceable.
(3) Unless otherwise provided in treaties, subsections 1 and 2 shall apply to foreign
awards.
Short Bibliography: Schtze, Schiedsgerichtsbarkeit und Schiedsverfahren, Mnchen 2012; Schwab/
Walter, Schiedsgerichtsbarkeit, Mnchen 2005.
Para.
I. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
III. Court Decision . . . . . . . . . . . . . . . . . . . . . . . . . . 9
A. Decision by Court Order . . . . . . . . . . . . . 9
B. Operative Part of Court Order. . . . . . . 10
I.
Para.
1. Decision on the Declaration of
Enforceability Itself . . . . . . . . . . . . . . 10
2. Declaration of Enforceability in
the Interim . . . . . . . . . . . . . . . . . . . . . . 12
3. Security of Enforcement in the
Interim? . . . . . . . . . . . . . . . . . . . . . . . . . 14
IV. Foreign Arbitral Awards. . . . . . . . . . . . . . . . . 18
Purpose1
1 1064 (1) and (2) ZPO complement the procedural rules contained in 1063 ZPO. These
provisions contain further formal requirements which apply in the context of proceedings
regarding the declaration of enforceability of arbitration awards according to 1062 (1)
No.4ZPO, in conjunction with 1060, 1061 ZPO.
2 The purpose of these additional formal requirements as well as of the declaration of enforceability itself is to ensure legal certainty. A declaration of enforceability is a condition
precedent for the enforcement of an award pursuant to 1060 (1) ZPO. In the enforcement
proceedings proper, the enforceable instrument will not be the arbitration award, but the
court decision declaring the award enforceable. This follows directly from the wording of
794(1) No.4a ZPO2 in conjunction with 1060 ZPO. As a consequence, the arbitration
award will not be in the hands of the authorities when the operative part of the award is enforced. 3 For this reason, the formal requirements are intended to ensure that the declaration
of enforceability is consistent with the operative part of the arbitration award.
1
2
794(1) No.4a ZPO reads: Die Zwangsvollstreckung findet ferner statt [] aus Entscheidungen, die
Schiedssprche fr vollstreckbar erklren, sofern die Entscheidungen rechtskrftig oder fr vorlufig vollstreckbar
erklrt sind;
As opposed to the status of the law before the reform im 1998, which required that the award was filed
with the court in enforcement proceedings (Niederlegung in accordance with 1039 (3)ZPO old version); cf. Stein/Jonas-Schlosser (2002), 1064 para. 1; MnchKommZPO-Mnch (2013), 1064 para. 2.
II.
539
Procedure
The Higher Regional Court is competent to issue the declaration of enforceability according 3
to 1062 (1) No.4 var.2 ZPO and 1062 (2) var.3 ZPO.
A declaration of enforceability requires an application by one of the parties. This application 4
needs to contain all information required to review and ensure consistency with the award,
e.g. names of the parties, the composition of the arbitral tribunal, and the particulars of the
arbitration award including its operative part.4
The original award (1054 (4) ZPO) or a certified copy must be submitted with the ap- 5
plication (1064 (1)sentence1 ZPO). For the sake of procedural economy and in order
to speed up the arbitral procedure as much as possible,5 1064(1)sentence 2 ZPO allows
for the certification of a copy by the applicants counsel in the court proceedings for obtaining the declaration of enforceability. According to long-standing case law by the BGH, the
certification of the copy of the arbitration award must extend to the arbitrators signatures.6
However, the formal requirements in that respect are not very strict. It will be sufficient if
counsel attaches a declaration to the copy of the arbitration award that states that the entire
copy is identical with the arbitration award from which the copy was directly produced.
The wording of 1063 (3) ZPO does not require the arbitration agreement to be produced 6
in the proceedings for the declaration of enforceability.7 In this respect, German arbitration
law differs from Art IV New York Convention 1958, which requires that the arbitration
agreement be submitted together with an application for the declaration of enforceability.
However, 1064 (3) ZPO qualifies as an independent local rule that overriding Art. IV New
York Convention 1958 because of the principle of most favourite treatment enshrined in
Art. VII (1) NYC. That said, it may still become necessary for the applicant to produce the
arbitration agreement if and as far as its existence or validity becomes a decisive issue in the
court proceedings. The court may even order the submission (pursuant to 142 ZPO) if it
deems the production of the document itself to be of the essence.
In addition to 1064 ZPO, the general provisions of the ZPO with regard to costs, joinder 7
of proceedings (such as the proceedings for setting aside by the respondent and the proceedings for the declaration of enforceability by the claimant), withdrawal of requests, etc., are
applicable.8
An oral hearing is, in principle, not mandatory in proceedings for the declaration of enforce- 8
ability of an arbitration award. The debtor of the award will, however, be able to force the
court to conduct an oral hearing by invoking one or more grounds for setting aside as a
defence against the application for the declaration of enforceability, cf. 1063(2)var.2 ZPO.
From a practical perspective, exercising this tactical option will under most circumstances
4
5
6

Schtze (2012), p. 315.
Cf. BT-Drs., 13/5274, p. 65 (referring to BGH NJW 1974, 1383 and BGH NJW 1976, 2264); Schtze
(2012), p. 315; Baumbach/Lauterbach (2014), 1064 para. 2; Saenger (2013), 1064 para. 2.
BGH 25.09.2003, NJW-RR 2004, 1504 (1505); OLG Mnchen 30.07.2012, SchiedsVZ 2012, 339
(341); OLGFrankfurt 07.03.2011; Zller-Geimer (2014), 1064 para.1; Stein/Jonas-Schlosser (2002),
1064para.4; Saenger (2013), 1064 para. 2; Baumbach/Lauterbach (2014), 1064 para. 2; Other
opinion MnchKommZPO-Mnch (2013), 1064 para.4: Art. 35 (2) sentence 1 UNCITRAL-Model
Law states that regarding foreign awards the arbitration agreement must be submitted.
540
not improve the debtors position since the case will already be properly briefed before an
oral hearing anyway and it is unlikely that the court will receive new information relevant
for its decision during oral pleadings at the hearing. The ensuing delay will most likely also
not lead to any advantage on the debtors part since the statutory interest at the rates recently
applicable works to the creditors advantage as a deterrent against delaying tactics.
III. Court Decision

A.
Decision by Court Order
9 The court will decide upon an application for the declaration of enforceability by way of
court order pursuant to 1063(1) ZPO.
B.
Operative Part of the Court Order
1.
Decision on the Declaration of Enforceability Itself
10 If declaring the award enforceable, the court shall simply pronounce the award to be enforceable. Since the declaration of enforceability (and not the award itself) is the enforceable
instrument, the order must be unambiguous and clear.9 A previous order regarding the
interim enforceability pursuant to 1063 (3) ZPO is rendered moot, becomes part of the
final decision and therefore does not need to be revoked explicitly.10
11 If the application is unsuccessful, there are two alternative reasons which may be distinguished: the application can either be rejected as inadmissible (e.g. for formal reasons) or
rejected as unfounded. If all prerequisites stated by 1059 (2) ZPO are fulfilled, the court
is even authorised to set aside the award.11 A negative decision automatically replaces and
revokes any decision on provisional enforceability.
2.
Declaration of Enforceability in the Interim
12 1064 (2) ZPO explicitly rules that the court order declaring the award enforceable must
contain, in its operative part, a declaration of enforceability in the interim (vorlufige Vollstreckbarerklrung). This declaration of enforceability in the interim will allow the creditor
under the award (in most cases the former claimant) to enforce the operative part of the
award against the debtor before the court order declaring the award enforceable will become
final and binding. A declaration of enforceability in the interim need not be requested by the
party applying for a declaration of enforceability; rather, the court will include such declaration in the operative part ex officio. As already mentioned,12 the main difference between
an order pursuant to 1063 (3) ZPO and the declaration of enforceability in the interim
is that the former is a separate order covering the period until an order on the merits of the
declaration of enforceability is issued, whereas the latter is part of the order on the merits
itself, covering the period until that decision becomes final and binding.
13 Only if and as far as the court order is declared to be enforceable in the interim (vorlufig
vollstreckbar) will the declaration of enforceability constitute an enforceable instrument
within the remit of 794 (1) No.4a ZPO. If the court inadvertently omits such a declar9
10
11
12
Schwab/Walter (2005), Chap. 28 para. 6; MnchKommZPO-Mnch (2013), 1064 para.11.

See supra, Krll/Kraft, 1059 paras 50 et seq.
See supra, Schroeder/Wortmann, 1063 para. 22.
541
ation pursuant to 1064(2)ZPO, the creditor under the award may request correction and
completion of the operative part pursuant to general procedural principles applicable under
German law (321, 716 ZPO).13
3.
Security for Enforcement in the Interim?
1064 ZPO does not contain express provisions regarding security for costs (Sicherheitsleis- 14
tung). There is an academic dispute as to whether the general rules of German procedural
law are applicable in that regard. Under these general rules, a party seeking enforcement of
an instrument in the interim (vorlufige Vollstreckung) shall be permitted to do so only after
providing security. This security usually an unconditional bank guarantee will cover the
amount for which the enforceable instrument shall be enforced in the interim, plus costs and
interest. The purpose of such security is to protect the debtors interest to be able to reverse
the effects of the enforcement in the interim. After all, the debtor may be able to overturn the
decision on the merits until it becomes final and binding. For the period in the interim, German law intends to protect the debtor of the award against the risk of insolvency on the part
of the creditor of the award. Otherwise, German law would allow the economic effects of a
decision that is repealed in final instance to stand as a result of the enforcement in the interim.
According to some authorities, the court should order security as a prerequisite for enforce- 15
ment in the interim. The proponents of this view consider 708 et seq. ZPO as general
provisions of procedural law, to be applicable in addition to 1064 ZPO.14
Contrarily, the prevailing authorities favour an order without security. This view relies on an 16
argumentum e contrario 1065 (2) sentence2 ZPO. Pursuant to this provision, the 707,
717 ZPO are to be applied, in the context of appeals on a point of law, by way of analogy.
If the 708 ZPO et seq. were to be applied as general rules anyway, at least the reference
to 717 ZPO would not be necessary. The fact that the legislator saw the need to include
1065(2) sentence 2 ZPO confirms that the legislator did not consider 708 ZPO et seq.
to be applicable in the first place.15
When considering these two opposing views, the decisive issue should be that the declar- 17
ation of enforceability is essentially an embodiment of the arbitration award itself at least
for enforcement purposes and that the arbitration award in turn is an equivalent to a court
judgement on the merits pursuant to 1055 ZPO. For these reasons, it is justified to apply
the 708 ZPO et seq. at least by way of analogy to the declaration of enforceability. As a
consequence, the court should order security for costs in the operative part ex officio.
IV. Foreign Arbitral Awards

1064 (3) ZPO declares 1064 (1) and (2) ZPO applicable for foreign arbitral awards, 18
unless otherwise provided in treaties.
Currently, there are no rules in international treaties that supersede 1064 (1) and (2) ZPO. 19
Under the principle of most favourite treatment pursuant to Art. VII NYC, 1064 (1) and
(2) ZPO will take priority, as more liberal national provisions, over Art. IV NYC. There are
13
14
15

OLG Hamburg 30.08.2002; See also MnchKommZPO-Mnch (2013), 1064 para.9.
BGH 22.09.1969, NJW 1969, 2089, OLG Mnchen 14.11.2011, SchiedsVZ 2012, 43 (47); Bay
ObLG22.11.2002, SchiedsVZ 2003, 142 (144); Stein/Jonas-Schlosser (2002), 1064 para.3; Baumbach/
Lauterbach (2014), 1064 para. 3; Saenger (2013), 1064 para.2.
542
no other provisions in treaties to which Germany is a party that might claim priority over
1064 (1) and (2) ZPO. 1064(3) ZPO, therefore, is currently without an effective scope
of application.16
16
1065 Legal Remedies

(1) A complaint on a point of law is available against the decisions mentioned under
1062 (1) No. 2 and No. 4. No recourse against other decisions in the proceedings
specified in 1062 (1) may be made.
(2) The complaint on a point of law can also be based on the ground that the decision is
based on a violation of a treaty. 707 and 717 apply mutatis mutandis.
Short Bibliography: Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005.
Para.
Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Appealable Decisions and Remedy . . . . . . . 3
A. Decisions Subject to an Appeal on
a Point of Law. . . . . . . . . . . . . . . . . . . . . . . . 3
B. Remedy: Appeal on Point of Law . . . . . 9
C. Ancillary Appeal on a Point of Law
by Appellee . . . . . . . . . . . . . . . . . . . . . . . . . 10
III. Prerequisites for an Appeal . . . . . . . . . . . . . . 11
A. Admissibility: Formal Requirements. 11
I.
II.
I.
Para.
Application . . . . . . . . . . . . . . . . . . . . . . 11
Time Limit for the Appeal . . . . . . . . 13
Representation . . . . . . . . . . . . . . . . . . 15
Prerequisites of 574 (2) ZPO:
Relevance of the Case at Hand. . . . 16
B. Grounds Justifying an Appeal on a
Point of Law . . . . . . . . . . . . . . . . . . . . . . . . 18
IV. Standard of Review and Court Decision . 20
V. Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
1.
2.
3.
4.
Purpose1
1065 ZPO defines the instances in which a court order issued by the Higher Regional 1
Court in arbitration-related proceedings may be subject to an appeal. Consequently, 1065
ZPO restricts the unsuccessful partys right to judicial review of a court order to its detriment. This restriction is in the interest of procedural efficiency and it aims to accelerate the
procedure until a final and binding decision is issued. In essence, it is the purpose of 1065
ZPO to retain speed as one of the perceived advantages of arbitration proceedings over state
court proceedings.2
It is important to note that the restrictions pursuant to 1065 ZPO do not apply to decisions 2
in the context of court assistance rendered by the Local Court in accordance with 1050
ZPO. These decisions are subject to an appeal under 159 GVG or under the general provisions of the ZPO.3
II.
Appealable Decisions and Remedy
A.
Decisions Subject to an Appeal on a Point of Law
1065 (1) sentence 2 ZPO states the general principle according to which court orders is- 3
sued by the Higher Regional Court in arbitration-related proceedings listed in 1062 (1)
ZPO are not subject to an appeal.
1065 (1) sentence 1 ZPO contains the corresponding exception and enumerates those 4
cases under which decisions listed in 1062 (1) ZPO may be appealed.
1
2
3
Baumbach (2014), 1065 para. 1; Querverweis auf Kommentierung zu 1050 ZPO.
544
5 In consequence, only the following decisions by the Higher Regional Court may be
appealed4:
the determination of the admissibility of arbitration and the review of the decision of an
arbitral tribunal confirming its competence (1062 (1) No. 2ZPO); and
an order setting aside an arbitration award, an order declaring an arbitration award enforceable and an order setting aside a declaration of enforceability of an award (1062
(1) No. 4ZPO).
6 The question of which decisions of the Higher Regional Court are subject to an appeal is,
however, not as straightforward as it may seem at first glance. This is illustrated by two decisions rendered by the Federal Court of Justice (Bundesgerichtshof BGH).
7 According to the first decision, an interim decision by the Higher Regional Court on the
admissibility of an application for setting aside pursuant 1059 ZPO (in conjunction with
280 ZPO) is also subject to an appeal on a point of law.5 This is not self-evident since this
type of interim decision is not contained in the enumerative list in 1065 (1) ZPO. Further,
the decision on the admissibility could also be appealed together with the decision on the
merits. The BGH, however, argued that procedural efficiency called for this type of interim
decision to be subject to an appeal on a point of law in order to avoid having to conduct the
proceedings on the merits despite the inadmissibility of the application for setting aside.6
8 In the second decision, the BGH took a different stance. In this case, the Higher Regional
Court had appointed, upon request of the claimant in arbitration, an arbitrator. The respondent in arbitration challenged this decision by an appeal on a point of law. The BGH
considered this appeal on a point of law to be inadmissible and argued that a decision on the
appointment of an arbitrator was not open to an appeal on a point of law simply because it
was not enumerated in the list contained in 1065 (1) ZPO. 7 This line of reasoning might be
considered as contradicting the rationale of the first decision. It is widely accepted in German
court practice that, when appointing an arbitrator instead of the parties, the Higher Regional
Court shall implicitly examine the existence and validity of the arbitration agreement as a
preliminary question.8 This question would then fall within the scope of 1062 (1) No. 2
ZPO, which in its turn constitutes sufficient grounds for an appeal on a point of law under
1065 (1) ZPO. Furthermore, the invalidity of the arbitration agreement would also pave
the way for a successful application for setting aside pursuant to 1059 ZPO. It could, therefore, be argued that procedural efficiency should allow for a challenge of the decision to appoint an arbitrator since an arbitration award issued on the basis of a non-existent or invalid
arbitration agreement could not be allowed to stand. However, the BGHs decision and the
underlying distinction may be justified on the basis that the standard of review is reduced in
the context of the appointment of an arbitrator. In this situation, the Higher Regional Court
may only assess whether the arbitration agreement is evidently non-existent or invalid. A
full review is not part of the test, but is reserved for different remedies which were not initiated in the case at hand.
4
5
6
7
8
BGH 19.07.2012, SchiedsVZ 2012, 281 (282).

BGH 20.09.2001, NJW 2001, 3787.
BGH 20.09.2001, NJW 2001, 3787.
BGH 19.07.2012, SchiedsVZ 2012, 281 (282).
BGH 19.07.2012, SchiedsVZ 2012, 281 (282); BGH 30.04.2009, NJW-RR 2010, 425 seq.
B.
545
Remedy: Appeal on a Point of Law
The correct remedy is the appeal on a point of law (Rechtsbeschwerde) to the BGH, according 9
to 574 (1) No. 1 ZPO, 133 GVG. The writ of appeal must be filed with the BGH (iudex
ad quem).
C.
Ancillary Appeal on a Point of Law by the Appellee
The appellee may join in contesting the decision of the Higher Regional Court in the same 10
proceedings by way of an ancillary appeal (Anchlussbeschwerde) pursuant to 574(4) ZPO.
This ancillary appeal requires a request for relief that goes beyond the mere dismissal of the
appellants appeal on a point of law and must be filed within one month after the the writ
of appeal on a point of law was served upon the appellee.9 The ancillary appeal will become
inadmissible if the appellants appeal on a point of law is withdrawn or rejected as inadmissible (574 (4) sentence 2 ZPO).
III. Prerequisites for an Appeal

A.
Admissibility: Formal Requirements
1.
Application
The application for an appeal must identify
the court order against which the appeal on a point of law is raised;
the parties in first instance;
the court that has issued the order;
the date of issue; and
the docket number in first instance.10
11
The application will further have to contain a specific request for relief (575 (3) No.1 12
ZPO). The request for relief will in most cases be the setting aside of the Higher Regional
Courts order. The scope defined by the request for relief will be binding on the BGH
(577(2)sentence1 ZPO) in the sense that the courts decision may not exceed the scope
of the application (no decision ultra petita).11 Pursuant to 575(2)sentence1 ZPO and in
conjunction with 575 (3) ZPO, the appeal must state the grounds on which the request for
relief is based.
2.
Time Limit for the Appeal
Any court order of the Higher Regional Court must be appealed within a time limit of one 13
month, beginning with the service of process (575 (1) sentence 1 ZPO). This time limit
to lodge the appeal is a strict statutory time limit (Notfrist) that cannot be extended by the
court. If it expires, the court order issued by the Higher Regional Court will become final
and binding.
Although the appeal and the statement of grounds for the appeal need not be contained in 14
the same document, the statement of grounds will in principle also have to be filed within the
9
10
11
Musielak (2013), 574 para. 10 in conjunction with 554 paras 6 et seq.

546
time limit applicable for the appeal itself (575 (3) ZPO). At the request of the appellant,
this time limit may however be extended by the court since the time limit to submit grounds
for the appeal it is not a strict statutory time limit.12
3.
Representation
15 Not every attorney admitted to the German bar, but only an attorney admitted to the bar
at the BGH, is authorised to lodge the appeal (78 (1) ZPO).13 A writ of appeal filed by an
individual who is not admitted to the bar at the BGH will not have any legal effect and will
not be suitable to prevent the time limit of one month from expiring.
4.
Prerequisites of 574 (2) ZPO: Relevance of the Case at Hand
16 The appeal on a point of law will only be accepted for decision by the BGH, provided that the
prerequisites of 574 (2) ZPO are fulfilled. This means the case at hand must either be of
fundamental importance (574(2) No. 1 ZPO) or require a decision by the BGH in order
to ensure consistency of case law (574(2)No.2ZPO).
17 There is no threshold for the amount in dispute for an appeal on a point of law.
B.
Grounds Justifying an Appeal on a Point of Law
18 An appeal will only be successful if the appellant can successfully rely on an infringement of a
federal law or any other law that applies not only in the district of one Higher Regional Court
(576(1) ZPO). Pursuant to 1065 (2) sentence1 ZPO, the appeal on a point of law may
also be based upon an infringement of an international treaty to which Germany is a party.
19 A violation of law requires that an applicable legal provision has not been applied at all or has
been applied incorrectly (576(3) ZPO in conjunction with 546 ZPO).
IV. Standard of Review and Court Decision

20 The BGH will in principle be bound by the findings of facts of the Higher Regional Court
that has issued the court order under appeal.14 New facts cannot be taken into account (577
(2) sentence4 ZPO in conjunction with 559 (1) sentence1 ZPO). As an exception, those
facts which come into existence only after the decision of the Higher Regional Court was
issued and which affect the procedural situation shall also be considered by the BGH.15 Further, decisions by other courts which determine a prejudicial legal issue relevant for the case
at hand will also be considered by the BGH.16
21 The BGH will either reject or allow the appeal on a point of law.
22 If the appeal on a point of law is rejected, the decision of the BGH will state whether the
rejection is due to the inadmissibility of the appeal (e.g. because of deficiencies of form or due
to the time limit having expired) or whether it is due to be appeal being unfounded.
12
13
14
15
16
Thomas/Putzo-Reichhold (2013), 1065para.4.

BGH 21.03.2002, NJW 2002, 2181; Zller-Heler (2014), 574 para. 3; Thomas/Putzo-Reichhold (2013),
1065para. 3; other view MnchKommZPO-Mnch (2013), 1065 para. 6 that applies 1063(4)ZPO.
BGH 15.07.1999, NJW 1999, 2974.
BGH 01.03.2007, SchiedsVZ 2007, 160 (162); BGH 22.02.2001, NJW 2001, 1730 seq.; Zller-Geimer
(2014), 1065 para.4.
BGH 22.02.2001, NJW 2001, 1730 seq.; Zller-Geimer (2014), 1065 para. 4.
547
If the appeal on a point of law is allowed, the BGH will repeal the Higher Regional Courts or- 23
der. The BGH may then either decide the subject matter of the case itself (577(5)ZPO) or
remand the case to the Higher Regional Court for further action to be taken (577(4)ZPO).
The BGH will decide the subject matter of the case itself if it repeals the Higher Regional
Courts order and if no further measures of fact-finding are required to decide the case.
1065 (2) sentence2 ZPO stipulates that 707, 717ZPO apply. On the basis of these pro- 24
visions, the BGH may order an interlocutory suspension of the enforcement of the Higher
Regional Courts order.17
V.
Costs
For the court decision by the BGH according to 1065 ZPO, three basic fees will become 25
due.18 If the applicant withdraws the application, the fee will be reduced from three to one
basic fees.19
The attorney earns 1.3 times the basic fee for lodging or defending against the appeal on a 26
point of law. Another fee in the amount of 1.2 times the basic fee will become due for representation of the appellant or the appellee at an oral hearing.20
17
18
19
20
Musielak-Voit (2013), 1065 para. 2; Saenger (2013), 1065 para.2.

See supra, Schroeder/Wortmann, Introduction to 10621065 para. 68; KV No. 1628.
KV No. 1629.
See supra, Schroeder/Wortmann, Introduction to 10621065 para. 71; VV No. 3100, VV No. 3104.
Chapter X
Arbitral Tribunals Not Established by Agreement
1066 Mutatis Mutandis Application of the Provisions of the 10th Book
The provisions of this Book apply mutatis mutandis to arbitral tribunals established lawfully by disposition on death or other dispositions not based on an agreement.
Short Bibliography: Albrecht, Offene Fragen zu Schiedsfhigkeit II, NZG 2010, 486; Bandel,
Schiedsklauseln in Testamenten und Erbvertrgen, NotBZ 2005, 381; Baumbach/Hopt, Handelsgesetzbuch, Mnchen 2012; Baumbach/Hueck, GmbH-Gesetz, Mnchen 2013; Baur, Einige Bemerkungen zum gerichtlichen Verfahren in Kartellsachen, ZZP 1972, 3; Bayer, Schiedsfhigkeit von
GmbH-Streitigkeiten, ZIP 2003, 881; Beckmann, Statutarische Schiedsklauseln im deutschen Recht
und internationalen Kontext, Frankfurt am Main 2007; Bender, Schiedsklagen gegen Gesellschafterbeschlsse im Recht der Kapitalgesellschaft nach der Neuregelung des Schiedsverfahrensrechts,
DB 1998, 1900; Bengel/Reimann-Mayer, Handbuch der Testamentsvollstreckung, Mnchen 2013;
Berger, GmbH-rechtliche Beschlussmngelstreitigen vor Schiedsgerichten, ZHR 2000, 295; Bork,
Zur Schiedsfhigkeit von Beschlussmngelstreitigkeiten, ZHR 1996, 374; Born, International Commercial Arbitration, London 2009; Borris, Die Schiedsfhigkeit gesellschaftlicher Streitigkeiten in
der Aktiengesellschaft, NZG 2010, 481; Ebbing, Schiedsvereinbarungen in Gesellschaftsvertrgen,
NZG 1998, 281; Ebbing, Private Zivilgerichte: Mglichkeiten und Grenzen privater (schiedsgerichtlicher) Zivilrechtsprechung, Mnchen 2003; Geimer, Nichtvertragliche Schiedsgerichte, in:
Bachmann et al. (eds), FS-Schlosser, 2005, p. 197; Geimer, Das Schiedsvereinbarungsstatut in der
Anerkennungsperspektive, IPRax 2006, 233; Gottwald/Schwab/Lettmaier, Family and Succession
Law in Germany, Mnchen 2012; Haas, Schiedsgerichte in Erbsachen und das New Yorker bereinkommen ber die Anerkennung und Vollstreckung auslndischer Schiedssprche, SchiedsVZ
2011, 289; Haas, Beruhen Schiedsabreden in Gesellschaftsvertrgen nicht auf Vereinbarungen i.S.
des 1066 ZPO oder vielleicht doch?, SchiedsVZ 2007, 1; Haas, Letztwillige Schiedsverfgungen
i.S. des 1066 ZPO, ZEV 2007, 49; Haas, Zur Einfhrung von Schiedsklauseln durch Satzungsnderungen in Vereinen, ZGR 2001, 325; Haas, Grundlagen des Sportrechts, in: Haas/Haug/
Reschke (eds), Handbuch des Sportrechts, Neuwied 2006; Haas/Hauptmann, Schiedsklauseln
in Ungleichgewichtslagen am Beispiel des Sports, SchiedsVZ 2004, 175; Haas/Hossfeld,
Schiedsvereinbarungen zwischen Gesellschaft und GmbH-Geschftsfhrern, in: Burgard et al.
(eds), FS-Schneider, 2011, p. 407; Habersack, Die Personengesellschaft und ihre Mitglieder in der
Schiedsgerichtspraxis, SchiedsVZ 2003, 241; Happe, Schiedsklauseln durch Testament, in: Bckstiegel (eds), Schiedsgerichtsbarkeit in gesellschaftsrechtlichen und erbrechtlichen Streitigkeiten,
Kln 1996, p. 85; Hauschild, Schiedsvereinbarungen in Gesellschaftsvertrgen, DNotZ 2012, 577;
Heskamp, Schiedsvereinbarungen in Gesellschaftsvertrgen, RNotZ 2012, 415; Hess, Sportschiedsgerichte im Lichte der New Yorker Konvention, ZZPInt 1998, 457; Kipp/Coing, Erbrecht, Tbingen
1990; Klbl, Schiedsklauseln in Vereinssatzungen, Berlin 2004; Kohler, Letztwillige Schiedsklauseln,
DNotZ 1962, 125; Kreindler/Schfer/Wolff, Schiedsgerichtsbarkeit: Kompedium fr die Praxis,
Frankfurt 2006; Krll, Schiedsklauseln in Satzungen zur Abgrenzung von Vereinsgericht und
Schiedsgericht, ZIP 2005, 13; Krug, Die Erbteilung durch ein Schiedsgericht, in: Bonefeld/Kroi/
Tanck (Hrsg.), Der Erbprozess, Angelbachtal 2012, p.311; Lange, Erbrecht, Mnchen 2011; Lange/
Kuchinke, Erbrecht, Mnchen 2001; Lutter/Hommelhoff, GmbH-Gesetz, Kln 2012; Mayer/Tanck
550
et al. (eds), Handbuch Pflichtteilsrecht, Angelbachtal 2010; Michalski (eds), Kommentar betreffend
die Gesellschaften mit beschrnkter Haftung (GmbH-Gesetz), Mnchen 2010; Muscheler, Entlassung des Testamentsvollstreckers und letztwillige Schiedsklausel, ZEV 2009, 317; Muscheler,
Erbrecht, Tbingen 2010; Mlbert, Gerichtsstandsklauseln als materielle Satzungsbestandteile,
ZZP 2005, 313; Nieder/Kssinger, Handbuch der Testamentsgestaltung, Mnchen 2011; Nolting,
Schiedsfhigkeit von Beschlussmngelstreitgkeiten Zugleich Besprechung des Urteils des BGH
v. 06.04.2009 Az.: II ZR 255/08, NotBZ 2009, 241; von Oertzen/Pawlytta, 63, in: Scherer
(eds), Mnchener Anwaltshandbuch Erbrecht, Mnchen 2010; Ostendorf, Wirksame Wahl auslndischen Rechts auch bei fehlendem Auslandsbezug im Fall einer Schiedsgerichtsvereinbarung
und auslndischem Schiedsort?, SchiedsVZ 2010, 234; Otte, Die Zulssigkeit testamentarischer
Schiedsklauseln, in: Rheinische Notarkammer (Hrsg.), FS des Rheinischen Notariats, 1998, p. 241;
Otte, Die Schiedsklausel im Erbvertrag des Hauses Hohenzollern, FamRZ 2006, 309; Pawlytta, Erbrechtliches Schiedsgericht und Pflichtteilsrecht, ZEV 2003, 89; Reichert, Handbuch Vereins- und
Verbandsrecht, Neuwied 2009; Reichert/Harbarth, Statuarische Schiedsklauseln Einfhrung,
Aufhebung und umwandlungsrechtiche Behandlung, NZG 2003, 379; Reichert/Weller (Hrsg.), Der
GmbH-Geschftsanteil, Mnchen 2006; Raeschke-Kessler, Gesellschaftsrechtliche Schiedsverfahren
und das Recht der EU, SchiedsVZ 2003, 145; Rowedder/Schmidt-Leithoff (Hrsg.), Gesetz betreffend
die Gesellschaften mit beschrnkter Haftung, Mnchen 2013; Schiffer, Erbrechtliche Gestaltung:
Letztwillige Schiedsklauseln Mglichkeiten und Hinweise, BB 1995, Beilage No. 5, p. 2; Schmidt,
Statuarische Schiedsklauseln zwischen prozessualer und verbandsrechtlicher Legitimation, JZ
1989, 1077; Schmidt, Schiedsklauseln und Schiedsverfahren im Gesellschaftsrecht als prozessuale
Legitimationsprobleme Ein Beitrag zur Verzahnung von Gesellschafts- und Prozessrecht, BB
2001, 1857; Schulze, Letztwillig eingesetzte Schiedsgerichte, MDR 2000, 314; Schulze, Grenzen der
objektiven Schiedsfhigkeit im Rahmen des 1030 ZPO, Frankfurt am Main 2003; Schwab/Walter,
Schiedsgerichtsbarkeit, Mnchen 2005; Selzener, Zur Entlassung des Testamentsvollstreckers
durch ein testamentarisch eingesetztes Schiedsgericht, ZEV 2010, 285; Storz, Kann ein Erblasser
die Entlassung des Testamentsvollstreckers testamentarisch einem Schiedsgericht bertragen?,
SchiedsVZ 2010, 200; Stumpf, Schiedsgerichtsbarkeit in Stiftungen, SchiedsVZ 2009, 266; Ulmer/
Habersack/Winter, Gesetz betreffend die Gesellschaften mit beschrnkter Haftung (Grokommentar), Tbingen 2008; Wagner, Rechtswahlfreiheit im Schiedsverfahren: Ein Probierstein fr
die juristische Methodenlehre, in: Gottwald/Roth (Hrsg.), FS-Schumann, 2001, p. 535; Weigand
(Hrsg.), Practitioners Handbook on International Arbitration, Mnchen/Copenhagen 2002; Wegmann, Die Schiedsgerichtsbarkeit in Nachlasssachen, ZEV 2003, 20; Werner, Das Schiedsverfahren
als Instrument zur Lsung erbrechtlicher Streitigkeiten, ZEV 2011, 506.
I.
II.
Para.
Sphere of Application and Purpose of
the Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Arbitral Tribunals Established Mortis
Causa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
A. Starting Point . . . . . . . . . . . . . . . . . . . . . . . . 4
B. The Closing Element (Abschlusstatbestand) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1. Effective Testamentary Directive . . 8
2. Death of the Testator . . . . . . . . . . . . . . 9
3. Prerequisites on the Part of the
Addressee of the Disposition . . . . . 10
4. Special Cases . . . . . . . . . . . . . . . . . . . . 14
C. The Legal Nature of a Testamentary
Disposition . . . . . . . . . . . . . . . . . . . . . . . . . 16
Para.
1. An Overview of Current Opinion 16
2. Comments . . . . . . . . . . . . . . . . . . . . . . 18
D. Relationship between a Testamentary
Direction and Other Testamentary
Dispositions . . . . . . . . . . . . . . . . . . . . . . . . 19
E. Objective Arbitrability . . . . . . . . . . . . . . 20
F. The Powers of an Arbitral Tribunal. . . 23
G. Executor as Arbitrator . . . . . . . . . . . . . . . 25
H. The Fair and Reasonable Test . . . . . . . 26
III. Testamentary Direction and Foreign
Lex Successionis . . . . . . . . . . . . . . . . . . . . . . . . . 27
IV. Arbitral Tribunals Established Under
Company Law . . . . . . . . . . . . . . . . . . . . . . . . . . 29
1066 Haas
Para.
A. Distinction from an Associations
Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . 30
B. Relevant Criteria for the
Application of 1066 ZPO in the
Company Law Context. . . . . . . . . . . . . . 31
1. Arbitration Clause at the Time
of Formation of the Company . . . . 34
2. The Introduction of Arbitration
Clauses by Amending the
Partnership Agreement, the
Articles of Association or Statutes 37
3. Joining as a New Member . . . . . . . . 51
4. Transfer of Membership . . . . . . . . . . 57
5. Submitting (by Agreement) to the
Statutes or Articles of Association . 59
C. Legal Requirements for
Establishing an Arbitral Tribunal
by Company Law . . . . . . . . . . . . . . . . . . . 61
I.
551
Para.
1. Minimum Content of the
2. Requirement as to Form. . . . . . . . . . 63
3. An Arbitration Agreements
Subjective Reach . . . . . . . . . . . . . . . . . 64
4. An Arbitration Agreements
Reach in Terms of the Subject
Matter Covered . . . . . . . . . . . . . . . . . . 66
5. Objective Arbitrability . . . . . . . . . . . 67
6. Fair and Reasonable Test . . . . . . . . 68
D. Statutory Arbitration Clauses and
Foreign Law Applicable to the
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
V. Other Cases in Which Arbitral
Jurisdiction is Established Unilaterally . . 70
VI. 1066 ZPO and the New York
Convention 1958 . . . . . . . . . . . . . . . . . . . . . . . 71
Sphere of Application and Purpose of the Rule1
1066 Code of Civil Procedure (Zivilprozessordnung ZPO) takes over the wording of the 1
old 1048 ZPO pre-1998 unamended.2 It has no equivalent in the Model Law (ML). The
provision applies if the arbitral tribunals place of arbitration is in Germany.3 In case the place
of arbitration is located abroad and recognition and enforcement of the award is sought in
Germany, cf. marg. no. 71 et seq. 1066 ZPO is aimed at arbitral tribunals that are established
not by contract, but by disposition mortis causa or otherwise. Through the provision, the law
is trying to take into account the various features of personal autonomy and thereby the various ways of establishing a legal bond between parties. In any event, the arbitral tribunal must
be established by an act of private law. Arbitral tribunals established by operation of law or by
subordinate legislation (e.g. 36a German Copyright Act (Urheberrechtsgesetz UrhG)), i.e.
not privately, are not a product of personal autonomy and are therefore not covered by 1066
ZPO.4 1066 ZPO does not itself regulate the conditions under which arbitral tribunals can
otherwise be established; instead, it only stipulates the procedural consequences in the event
that an arbitral tribunal is lawfully established by an appropriate disposition. For such cases,
the provision has a clarifying function5 in that it states 1025 et seq. ZPO apply mutatis
mutandis. The necessary adaptations implied by the mutatis mutandis application concern
primarily the closing element and the requirements as to form.
The law provides that arbitral tribunals can be established by disposition on death or other- 2
wise independently of any agreement. In practice, this second possibility is of great significance, namely in connection with arbitration clauses in articles of association or statutes.6
1
2
3
4
5
6
On the historical origins of the rule, cf. Schmidt, JZ 1989, 1077 (1078).
See supra, Wagner, 1025 paras 23 seq.
BGH 22.05.1967, BGHZ 48, 35 (44); OLG Mnchen 29.12.1976, BB 1977, 865; Musielak-Voit (2013),
1066 para.1; Schwab/Walter (2005), Chap. 32 para.1; Stein/Jonas-Schlosser (2002), 1066 para.2;
MnchKommZPO-Mnch (2013), 1066 para.1; Thomas/Putzo-Reichold (2013), 1066 para.2.
552
II.
Arbitral Tribunals Established Mortis Causa
3 As one possibility of establishing arbitral jurisdiction independent of any agreement, 1066

ZPO names arbitral tribunals established by disposition on death. Whether arbitral jurisdiction is just as preferable compared with state jurisdiction in disputes concerning succession
law as it is, for example, in disputes concerning contract or commercial law, is a matter of
controversy in legal literature.7 In practice, however, arbitration is definitely on the increase
in disputes concerning wills and successions.8 Thus, precedents for drafting are being recommended more and more often.9 The arguments put forward in support of (international) arbitration in commercial matters, such as the particular expertise of the arbitrators, the speed
and confidentiality of the proceedings and the cost savings are arguments which equally
support using arbitral tribunals in disputes concerning succession law.10 Particularly where
assets or potential heirs or beneficiaries are located in different countries, an agreement on a
single arbitral tribunal to deal with the complete succession appears advantageous.
A.
Starting Point
4 1066 ZPO stipulates that if an arbitral tribunal is established lawfully by disposition on

death, 1025 et seq. ZPO apply mutatis mutandis. At first sight, the provision is difficult to
understand because the provisions referred to in 1066 ZPO (1025 et seq. ZPO) themselves contain conditions for establishing arbitral jurisdiction (see e.g. 10291031 ZPO).
However, the question then is, what provisions does 1066 ZPO refer to when it speaks of
arbitral tribunals established lawfully? The question arises particularly because succession
law does not contain any provisions on testamentary arbitral tribunals which one could fall
back on in the context of 1066 ZPO.
5 In the final analysis, 1066 ZPO must be understood to mean that the provision is based
on the assumption that testamentary arbitral tribunals are basically admissible.11 However,
it leaves open the conditions subject to which they can be established. These conditions
basically ensue from both 1025 et seq. ZPO, as well as from succession law. Therefore the
only question is, when does one resort to the one level of regulation and when to the other?
According to the correct view, the conditions upon which testamentary arbitral tribunals are
lawful are basically set out in 1025 et seq. ZPO. One exception to this is where said provisions provide no (or no definitive) rules. Then one has to fall back on the general principles of
the respective special subject area (here succession law) in order to fill the gaps.12
7
8
10
11
12
Bandel, NotBZ 2005, 381; criticised by Happe, in: Bckstiegel (eds) (1996), pp.85 et seq.
Werner, ZEV 2011, 506 (506); critical thereof Schwab/Walter (2005), Chap. 32 para.25: so gut wie auer Gebrauch.
Von Oertzen/Pawlytta (2010), 67 paras52 et seq.; Bandel, NotBZ 2005, 381 (390 et seq.); Nieder/Kssinger (2011), 15 para.334; Bengel/Reimann-Mayer, Chap. 5 para.485.
Lange, Erbrecht (2011), 31 para. 54; Pawlytta, ZEV 2003, 89; von Oertzen/Pawlytta (2010), 67 paras5
et seq.; Krug, in: Bonefeld/Kroi/Tanck (Hrsg.) (2012), 3 para.469.
Thus probably the prevailing opinion, see RG 27.09.1920, RGZ 100, 76 (77); id. 08.02.1943, RGZ
170, 380 (383); OLG Hamm 08.10.1990, NJW-RR 1991, 455 et seq.; Schmidt, JZ 1989, 1077 (1080);
von Oertzen/Pawlytta (2010), 67 para. 19; Thomas/Putzo-Reichold (2013), 1066 para. 1; Nieder/
Kssinger (2011), 15 para.330; MnchKommBGB-Leipold (2010), 1937 para.29; Haas, ZEV 2007,
49 (50); contra Stein/Jonas-Schlosser (2002), 1066 para.1, according to which the admissibility derives
from other rules. Since no such other rules exist, Schlosser wants to infer the admissibility from the overall context of the inheritance rules.
Cf. Kreindler/Schfer/Wolff (2006), para.87; Musielak-Voit (2013), 1066 para.2.
1066 Haas
553
One must resort to succession law not only when there is a gap, but also whenever 1029 6
et seq. ZPO are not appropriate for arbitral tribunals established by disposition on death.
Although testamentary freedom is just as much a feature of general personal autonomy as
the freedom of contract, there are distinct differences between the two forms of personal
autonomy. One particular difference is the way in which the parties become bound. Whereas
in contract law the parties become bound only if they have (previously) expressed their will
to be bound, the binding effect of a last will and testament enters into force upon the death
of the testator and therefore (initially) enters into force unilaterally. However, in order to
protect the persons affected (e.g. the heir or beneficiaries) against being dictated to by third
parties, succession law provides a possibility for the latter to shake off the binding effect
by rejecting the bequest (and therefore also the testamentary disposition). In summary, one
may conclude that the parties autonomy in succession law and in contract law are realised
differently. However, this does not mean that the parties autonomy in succession law has
a different quality to the parties autonomy in contract law. If that is the case, then 1029
et seq. ZPO which have obviously been tailored to contractual autonomy can only be
applied to 1066 ZPO to the extent that said provisions are compatible with the model of
autonomy under succession law.
B.
The Closing Element (Abschlusstatbestand)
1066 ZPO stipulates that the jurisdiction of an arbitral tribunal can be established under 7
succession law, particularly by testamentary disposition, but it does not stipulate the prerequisites for the same, i.e. the element required to close this (hereinafter referred to as closing
element (Abschlusstatbestand)).13 In this regard, 1066 ZPO is no different from 1029
ZPO.14 1029 ZPO also stipulates that the jurisdiction of an arbitral tribunal can be established by agreement, but does not regulate the closing element. In the context of 1029ZPO,
the prevailing opinion is to close this gap by falling back on the general principles governing
the coming into existence of contracts (145 et seq. Civil Code (Brgerliches Gesetzbuch
BGB), cf. also 1029 marg. no. 15).15 The thought behind this is that these provisions
contain a general legal principle, which unless otherwise provided by special provisions
contained in 1025 et seq. ZPO also applies to arbitration agreements and therefore contracts on procedural law. Of course, in the context of 1066 ZPO it is not possible to have
recourse to 145 et seq.BGB because a testamentary disposition does not generally (see
comments on testamentary contracts infra, para. 14) encompass any offer to the heirs to
enter into an arbitration agreement that the latter can choose to accept or refuse. Rather, the
concept of parties becoming bound by virtue of a testamentary disposition can be described
and explained solely with the help of testamentary categories. Accordingly, in order to have
a binding effect, the clause must be based upon an effective testamentary directive (see 1.),
the testator must have deceased (see 2.) and the parties bound by the testamentary directive
must fulfil certain prerequisites (see 3.). Finally, a particular look will be given to particular
cases (see 4.)
13
14
15
Musielak-Voit (2013), 1066 para.2; Schmidt, JZ 1989, 1077 (1080).

RG 27.09.1920, RGZ 100, 76 (77).
554
1.
Effective Testamentary Directive
8 The deceased must have directed arbitral jurisdiction in a will (as regards testamentary
contracts, see infra, para. 14).16 In order for this to have binding effect, the testator must have
testamentary capacity and must have given the directive with the intention to make a will.17
What is questionable is whether the requirements as to form for an arbitral tribunal to be
established by testamentary directive are to be taken from succession law. The prevailing
opinion is, quite rightly, that this is the case. The objectives pursued by the requirements as
to form required under succession law (evidentiary purposes and protection against making
rash decisions, proof of seriousness, etc.) are closely connected with the closing element and
cannot sensibly be separated from it. The provision in 1031 ZPO governing the requisite
form of arbitration agreements which has obviously been tailored to contracts and not to
unilateral directions does not therefore apply to arbitral tribunals established by disposition on death. Instead, the requirements as to form are to be taken solely from the respective
provisions of succession law.18 A defect of form renders a direction for an arbitral tribunal
invalid with the consequence that the objection under 1032 (1) ZPO does not apply.
2.
Death of the Testator
9 A further prerequisite in order for the person to whom the testamentary disposition is addressed to become bound is the death of the testator. The testamentary disposition does
not have any legal effect prior to the death of the testator. Disputes between the testator and
(potential) beneficiaries inter vivos (e.g. the validity of a renunciation of inheritance) can
therefore only be assigned to an arbitral tribunal on the basis of an agreement within the
meaning of 1029ZPO, but not with the help of 1066 ZPO.19
3.
Prerequisites on the Part of the Addressee of the Disposition
10 Because the parties autonomy forms the basis of arbitral jurisdiction (completely irrespective of how the arbitral jurisdiction is established), in order for the addressee of the testamentary disposition to be bound there must be a corresponding expression of his will to accept
by the testamentary arbitration clause.20 Said will is expressed by the person concerned not
rejecting the binding effect that originates from the testamentary disposition. This failure to
act on the part of the person concerned constitutes just as valid an expression of will as the
acceptance of an offer to enter into a contract containing an arbitration clause (as is the case
under 1029 ZPO). If, however, it is a requirement that the addressee express his will in
order to construe the effect of being bound to arbitral jurisdiction, then only those persons
to whom the law gives the possibility of shaking off the binding effect can be bound by a
16
17
18
19
20

MnchKommBGB-Leipold (2010), 1937 para.29.
Said provisions can be found in 2231 et seq., 2247 et seq., and 2267 BGB; cf. as to the form requirements, Kreindler/Schfer/Wolff (2006), para.87; Stein/Jonas-Schlosser (2002), 1066 para.4; MnchKommBGB-Leipold (2013), 1937 para.29; Staudinger-Otte (2008), Vorbem. zu 1937-1941BGB
para.6; Bandel, NotBZ 2005, 381 (383); Musielak-Voit (2013), 1066 para.2; MnchKommZPO-Mnch
(2013), 1066 para.5.
Bandel, NotBZ 2005, 381 (388).
Generally Sonnauer, Die Kontrolle der Schiedsgerichtsbarkeit durch die staatlichen Gerichte, Kln 1992,
p.49; in contrast Geimer, FS-Schlosser (2005), pp.198 et seq.; Pawlytta, ZEV 2003, 89 (90 et seq.); Stein/
Jonas-Schlosser (2002), 1066 para.3 whereby the jurisdiction of an arbitral tribunal is based solely on a
unilateral act.
1066 Haas
555
testamentary arbitration clause. First and foremost, the law grants this possibility to the heir
and beneficiaries; for both can reject the binding effect that originates from the testamentary
disposition by disclaiming the bequest. However, if they do not do this, they thereby express
that they wish to be bound by the directive establishing arbitral jurisdiction. An executor
expresses his agreement to arbitral jurisdiction by accepting the office intended for him (and
the accompanying obligation to carry out the testators directions).
Insofar as the law does not provide any possibility of voluntariness for persons involved in a 11
deceaseds estate, i.e. to reject becoming bound by arbitration, the relationship between said
person and the testator is not one characterised by the principle of party autonomy. Party autonomy, however, is a prerequisite of arbitration, with the consequence that there is no scope
for arbitral jurisdiction in the context of such legal relationships. This applies e.g. in relation
to creditors of the deceaseds estate.21 However, this also applies in principle in relation to
persons entitled to a compulsory portion of the estate (230322 et seq. BGB).23 According
to these provisions, close family members (descendants, parents and the spouse) that have
been excluded from succession to the estate by a disposition mortis causa in principle are
entitled to a minimum portion of the deceaseds estate.24 Arbitral jurisdiction established by
testamentary disposition does not have any binding effect on such persons. This is so if the
person entitled to a compulsory portion of the estate is otherwise completely excluded from
sharing in the estate. In that case, there is a lack of (party autonomous) proof of authority in
order for the compulsory beneficiary to be bound by the arbitral jurisdiction. Of course the
testator and the compulsory beneficiary can inter vivos enter into an agreement whereby
an arbitral tribunal is to have jurisdiction to decide all disputes arising out of the right to
a compulsory portion of the estate. However, any such agreement would then have to be
assessed solely on the basis of 1029 et seq. ZPO and not on the basis of 1066 ZPO.
However, the testator can cause the compulsory beneficiary to be bound by the testamentary 12
disposition by appointing him as his or her heir. According to 2306 (1) BGB,25 an heir
who is also a compulsory beneficiary cannot shake off being bound by the testamentary
21
22
23
24
25
Krug, in: Bonefeld/Kroi/Tanck (Hrsg.) (2012), 3 para.467; Schulze, MDR 2000, 314 (316).
2303
(1) If a descendant of the testator is excluded by disposition mortis causa from succession, he may
demand his compulsory share from the heir. The compulsory share is one-half of the value of the
share of the inheritance on intestacy.
(2) The parents and spouse of the testator have the same right if they have been excluded from succession by disposition mortis causa. The provision of 1371 remains unaffected.
In conclusion also Kreindler/Schfer/Wolff (2006), para.89; Otte, FS des Rheinischen Notariats (1998),
p.241 (251); Lange, Erbrecht (2011), 31 para. 58; Lange/Kuchinke (2001), 32 II 4; Musielak-Voit
(2013), 1066 para.3; MnchKommBGB-Leipold (2013), 1937 para.34; Wegmann, ZEV 2003, 20;
Krug, in: Bonefeld/Kroi/Tanck (Hrsg.) (2012), 3 para.467; Zller-Geimer (2014), 1066 para.18;
Schulze (2003), p.90; contra Geimer, FS-Schlosser (2005), pp.198 (201 et seq.); Pawlytta, ZEV 2003, 89
(92); Werner, ZEV 2011, 506 (508)
Cf. Gottwald/Schwab/Lettmaier (2012), paras371 et seq.
2306
(1) Where a person entitled to inherit a compulsory share who becomes an heir has been limited by
the designation of a subsequent heir, the appointment of an executor, or a direction concerning
the partitioning of the estate, or where he has been charged with a legacy or a testamentary burden,
he may claim his compulsory share if he disclaims his share of the inheritance; the period for filing a disclaimer does not commence until after the person entitled to a compulsory share has
obtained knowledge of the limitation or charge.
556
disposition if one agrees with the view taken here (see para. 17) that the testamentary disposition is not to be considered to be the disposition of a burden (1940, 2192 et seq.
BGB: Auflage).26 However, it must be taken into account that the obligation to be bound by
arbitral jurisdiction affects the compulsory beneficiary only in relation to his or her position
as an heir; it does not remove any claim to a compulsory portion from the jurisdiction of the
state courts (2305 BGB27). Occasionally, consideration is given to whether an heir who is
entitled to a compulsory portion of the estate is to be protected by the analogous application
of 2306 (1) BGB.28 Here, it is at most an heir (who is a compulsory beneficiary) and to whom
less than the compulsory portion (one half of the statutory share) has been bequeathed, who
appears to be worthy of protection. However, this only applies if the legislators premise of the
equivalence of state jurisprudence and arbitration (by reason of corresponding directions by the
testator) is not correct. For these cases though, there is no need for protection under 2306 (1)
sentence 1 BGB. Instead, the heir entitled to a compulsory portion is adequately protected by
the general provisions (in particular 138 BGB), so there is no gap in the protection requiring
2306 BGB to be applied analogously. The disposition directing arbitral jurisdiction could be
void pursuant to 138 BGB if the testator has in derogation from the statutory model structured the proceedings so much to the disadvantage of the heir entitled to a compulsory portion
that, from the outset, one can no longer count on the mandatory provisions designed to protect
the compulsory beneficiary being applied.
13 If the testator also wishes to bind a compulsory beneficiary beyond his position as heir, i.e.
also in relation to his claim to a compulsory portion, although this is not possible under
1066 ZPO, it probably is under 1029 et seq. ZPO. The testator can, for instance, by way
of a burden (Auflage) (2192 et seq.BGB), impose an obligation on the heir to enter into
an arbitration agreement with the other persons involved in the estate;29 the content of such a
burden (Auflage) can be to do or to refrain from doing anything, and so consequently it can
also be to enter into a contract.30 Of course, one must not overlook the fact that such a burden
constitutes an encumbrance for the heir entitled to a compulsory portion, which opens up
the scope of application of 2306 (1) BGB. The testator can also lay down other conductrelated incentives for the heir (entitled to a compulsory portion) to enter into an arbitration
agreement with the other persons involved in the estate. It is, for instance, conceivable that
the heir be appointed heir subject to a condition precedent, or to direct legacies to his detriment subject to the condition precedent that he does not enter into an arbitration agreement.
However, 2306 (1) BGB will then also apply to protect the compulsory beneficiary.
26
27
28
29
30
According to 1940, 2192 et seq. BGB a testator can impose on the heir (or legatee) an obligation (e.g.
to act in a certain way) without conferring on another the right to claim performance thereof.
2305
If a person entitled to a compulsory share is left a share of the inheritance which is less than one-half of
the share of the inheritance on intestacy, the person entitled to a compulsory share may claim from the
co-heirs as his compulsory share the amount by which his share is less than one-half. Limitations and
charges of the nature referred to in 2306 are not taken into consideration when calculating the value.
In this tenor Handbuch Pflichtteilsrecht-Mayer (2010), 2 para.63; in support of a direct application of the
provision, Musielak-Voit (2013), 1066 para.3.
Nieder/Kssinger (2011), 15 para.331; see also Bandel, NotBZ 2005, 381 (389).
Soergel-Dieckmann (2003), 2192 para.2.
1066 Haas
4.
557
Special Cases
a. Testamentary Contract: If the arbitral jurisdiction is established by testamentary contract, 14

the question arises as to how wide the scope of application of 1066 ZPO is increased, if at
all. Although the legal nature of a testamentary contract is a testamentary legal transaction,31
145 et seq. BGB apply to its closing element,32 so there is no unilateral direction by the
testator. But then 1029 et seq. ZPO would better suit such a legal transaction.33 There is
an exception in that the arbitration clause is also supposed to bind third parties, i.e. persons
who are not party to the contract. In that case, 1066 ZPO applies to such third parties; for
here the arbitration clause is (initially) forced on such third parties34 as in the case of a will.
The closing element must then be examined on the basis of the corresponding provisions of
succession law.
b. Joint Will: A disposition establishing an arbitral tribunal can also be made in a joint will. 15
Here too, 1031 ZPO does not apply. Furthermore, the disposition cannot be directed reciprocally within the meaning of 2270 (1) BGB (converse argument of 2270 (3) BGB);
according to the correct opinion, the disposition is not a burden (see infra, para. 17), but
rather an institution that falls under procedural law.
C.
The Legal Nature of a Testamentary Disposition
1.
An Overview of Current Opinion
How a testamentary disposition of arbitral jurisdiction is to be classified legally is a matter 16

of dispute.35 The question, however, is decisive as to which persons and to what extent said
persons may be bound by a testamentary disposition.
Some authors qualify the testamentary disposition as falling under procedural law.36 How- 17
ever, the overwhelming opinion qualifies a disposition of arbitral jurisdiction as falling under
substantive law. In detail, however, the opinions are very divergent. Sometimes the disposition is considered to be a burden pursuant to 1940 BGB.37 38 The reasons given for this are
that succession law provides a numerus clausus (restricted admission test) of possible testamentary dispositions and therefore the testamentary disposition of arbitral jurisdiction must
be classified as falling under one of the categories under 1937-1940 BGB. Amongst the
supporters of this opinion, it is disputed whether the burden is to the detriment of the person
concerned within the meaning of 2306 or 2289 (1) sentence 2 BGB. The reason given for
31
32
33
34
35
36
37
38
Staudinger-Kanzleiter (2006), vor 2274 para.5.

Soergel-Wolf (2002), vor 2274 para.16.
OLG Hamm 08.10.1990, NJW-RR 1991, 455 (456); Musielak-Voit (2013), 1066 para. 5; Schulze
(2003), p.82; MnchKommBGB-Leipold (2013), 1937 para.30; Stein/Jonas-Schlosser (2002), 1066
para.3; Staudinger-Otte (2008), 1937-1941 para.6; contra Zller-Geimer (2014), 1066 para.15.
OLG Hamm 08.10.1990, NJW-RR 1991, 455 (456); MnchKommZPO-Mnch (2013), 1066 para.4;
Authorities on the status of the dispute Krug, in: Bonefeld/Kroi/Tanck (Hrsg.) (2012), 3 para.470.
Zller-Geimer (2014), 1066 para.19; Geimer, FS-Schlosser (2005), pp.198 (202 seq.); Pawlytta, ZEV
2003, 89 (92 seq.).
1940
The deceased may by will oblige his heir or a legatee to perform an act without giving another person
a right to the performance (testamentary burden).
Bamberger/Roth-Mayer (2003), 2306 para. 5; Mayer, ZEV 2000, 267; Nieder/Kssinger (2011), 15
para.331; Kohler, DNotZ 1962, 125 (127); Stein/Jonas-Schlosser (2002), 1066 para.3.
558
the latter is mostly that, when reforming 1025 et seq. ZPO, the legislator39 proceeded upon
the assumption that arbitral jurisdiction so long as it offers a guarantee of independent and
impartial dispensation of justice constitutes an equivalent alternative to state jurisdiction.40
Occasionally, the view is also put forward that a testamentary disposition within the meaning
of 1066ZPO is of a nature sui generis (and therefore not a burden within the meaning of
1940 BGB).41 This is supported by the arguments that 1937 et seq. BGB do not contain
an exhaustive list of possible types of testamentary disposition,42 the provisions in 2192
BGB applicable to burdens43 are not appropriate and, for example, an executor could not be
bound by an arbitration clause with the help of a burden.44
2.
Comments
18 According to the correct view, the power to be able to direct arbitral jurisdiction by testamentary disposition must be classified under procedural law.45 It is difficult to see why this
power under 1066 ZPO should be classified other than falling within 1029 ZPO. This
is all the more so in that as is shown by the example of a testamentary contract there is
no clear division between the two features of personal autonomy. If the power to be able to
establish arbitral tribunals derives directly from 1066 ZPO, then it also cannot be limited
by the provisions of inheritance law. 2289 (1) sentence 2 BGB,46 47e.g. which prevents the
testator to revoke (unilaterally) dispositions stipulated in a testamentary contract, does not
therefore apply directly to a (subsequent) testamentary disposition of arbitral jurisdiction
by the testator; for such a disposition (which is to be classified as falling under procedural
law) does not (substantively) impair a disposition that has become binding by virtue of a
testamentary contract or joint will.48 There is also no need for an analogous application of
the provision because the interests of the persons involved are already adequately taken into
account by the fair and reasonable test (see infra, para. 26).
D.
Relationship between a Testamentary Direction and Other Testamentary Dispositions
19 A testator can make various directions in his will. The question is, what effect does the invalidity of individual dispositions have on the testamentary direction of arbitral jurisdiction?
According to the correct view, this relationship is determined not by substantive law (here
39
40
41
42
43
44
45
46
47
48

Handbuch Pflichtteilsrecht-Mayer (2010), 3 para.17; different view Musielak-Voit (2013), 1066 para.3.
Staudinger-Otte (2008), vor 1937-1941 para.7; MnchKommBGB-Leipold (2013), 1937 para.31;
Schulze (2003), p.83; cf. also Lange, Erbrecht (2011), 31 para. 55.
RG 08.02.1943, RGZ 170, 380 (383); Schwab/Walter (2005), Chap. 32 para.25; MnchKommBGBLeipold (2013), 1937 para.31; Staudinger-Haas (2006), 2306 para.30a; Otte, FS des Rheinischen
Notariats (1998), pp.241 (243 seq.); Krug, in: Bonefeld/Kroi/Tanck (Hrsg.) (2012), 3para.446; see
also Bandel, NotBZ 2005, 381 (383).
Bamberger/Roth-Mller-Christmann (2012), 2192 para.4; Bandel, NotBZ 2005, 381 (383).
2289
(1) A prior testamentary disposition by the testator is cancelled by a contract of inheritance to the
extent that it would adversely affect the right of a person provided for under the contract. A later
disposition mortis causa is, notwithstanding the provision of 2297, ineffective to the same extent.
Cf. Gottwald/Schwab/Lettmaier (2012), para.370.
Contra OLG Hamm 08.10.1990, NJW-RR 1991, 455 (456); Bandel, NotBZ 2005, 381 (388); MnchKommBGB-Leipold (2013), 1937 para.30.
1066 Haas
559
2085 BGB49), but by 1040 (1) sentence 2 BGB.50 According to this section providing that the testator did not obviously intend the opposite the testamentary direction of
arbitral jurisdiction is legally effective on its own. This is particularly the case if the will has
been validly challenged. When challenged if there is any doubt the direction of arbitral
jurisdiction remains legally effective with the consequence that the arbitral tribunal can
make a binding decision on the (in)validity of the testamentary dispositions as well as on
any disputes in connection with the legal succession.51 If, by way of exception, the invalidity
also affects the testamentary direction of arbitral jurisdiction or if the latter is invalid for some
other reason (form, see supra, para. 8; the fair and reasonable test see infra, para. 26), the
arbitral tribunal only has the power to find in accordance with 1040 ZPO that it does
not have jurisdiction.52
E.
Whether in the context of 1066 ZPO the objective arbitrability of a matter in dispute de- 20
pends (solely) on 1030 ZPO is controversial.53 Occasionally it is argued that the provision
is ill-suited to testamentary arbitral tribunals. Instead, it is argued that the objective arbitrability must be taken from substantive law with the consequence that only that which is covered
by a testators testamentary freedom can objectively be the subject of arbitration.54 However,
this opinion cannot be agreed with; as has been explained supra (para. 7), in inheritance law
the principle of personal autonomy is realised in a manner that is perfectly comparable with
its realisation in contract law, so there is no reason for any different treatment with regard
to 1030 ZPO. Under 1030 (1) ZPO, any claim involving an economic interest (vermgensrechtlicher Anspruch), and therefore also inheritance disputes, can (in principle) be the
subject of arbitration. Matters which can particularly be the subject of arbitration are disputes
concerning the validity of a testamentary disposition,55 the (explanatory or supplementary)
interpretation of testamentary dispositions,56 the entitlement to inherit,57 voidability58 or
49
50
51
52
53
54
55
56
57
58
2085
The ineffectiveness of one of a number of dispositions contained in a will results in the ineffectiveness
of the other dispositions only if it is to be assumed that the testator would not have made them without
the ineffective disposition.
Stein/Jonas-Schlosser (2002), 1066 para.3; see also Geimer, FS-Schlosser (2005), p.198 (204).
Lange/Kuchinke (2001), 32 II 4 c); Bandel, NotBZ 2005, 381 (384); Zller-Geimer (2014), 1066
para.17.
Stein/Jonas-Schlosser (2002), 1066 para.3; Bandel, NotBZ 2005, 381 (384).
Schulze, MDR 2000, 314 (315).
MnchKommBGB-Leipold (2013), 1937 para.32; Otte, FamZ 2006, 309 (312); id., FS des Rheinischen
Notariats (1998), p.241 (246); Staudinger-Otte (2008), vor 1937-1941 para.8; furthermore, Krug, in:
Bonefeld/Kroi/Tanck (Hrsg.) (2012), 3 para.466 (without giving reasons focuses on the comparability under the old law).
Staudinger-Otte (2008), vor 1937-1941 para.8; Otte, FS des Rheinischen Notariats (1998), p.241
(247); Schwab/Walter (2005), Chap. 32 para.26.
Zller-Geimer (2014), 1066 para. 21; Stein/Jonas-Schlosser (2002), 1066 para. 3; Schulze (2003),
pp.91seq.; Otte, FS des Rheinischen Notariats (1998), pp.241 (247 seq.)
Staudinger-Otte (2008), vor 1937-1941 para.8; MnchKommBGB-Leipold (2013), 1937 para.33.
MnchKommBGB-Leipold (2013), 1937 para.33; Lange/Kuchinke (2001), 32 II 4 b).
560
other disputes which arise out of a succession.59 In principle, claims for compulsory portions
can also be the subject of arbitration.60
21 1030 (1) ZPO is, however, limited by 1030 (3) ZPO, pursuant to which limitations
on objective arbitrability outside the 10th Book of the ZPO remain unaffected by 1030
ZPO.61 The arbitration law is thereby saying that the arbitrability regulated in 1025 et seq.
ZPO constitutes a party-autonomous alternative to state jurisdiction only for cases which
are litigated under the procedural rules of the ZPO. In inheritance disputes, German law
distinguishes between matters which fall under the competence of civil jurisdiction over
contentious matters and those which are allocated to so-called voluntary jurisdiction. In the
latter case, it is not a trial court (Prozessgericht) that is called upon to decide the case, but
rather a probate court (Nachlassgericht) applying its own procedural rules (Act on Procedure
in Family Matters and Matters subject to Voluntary Jurisdiction Gesetz ber das Verfahren in
Familiensachen und in Angelegenheiten der freiwilligen Gerichtsbarkeit FamFG). Unlike, for
example, the Act governing the Employment Courts (Arbeitsgerichtsgesetz ArbGG), the
FamFG does not provide for any possibility of establishing the arbitral jurisdiction. It is also
not admissible to simply fill gaps in the procedural rules of voluntary jurisdiction by applying
the ZPO mutatis mutandis.62 However, none of this prevents the application of 1025 et seq.
ZPO mutatis mutandis in matters of voluntary jurisdiction; for whether a matter is allocated
to the civil jurisdiction over contentious matters or to voluntary jurisdiction is often determined by considerations of expediency, with the consequence that procedures must also
be found in voluntary jurisdiction which are comparable to those of civil jurisdiction over
contentious matters. However, if they are comparable, then there is, in principle, no reason
not to apply 1025 et seq. ZPO to said procedures mutatis mutandis.63 It is indisputable that
there is no comparability in cases concerning the jurisdiction of the probate courts to grant
a certificate of inheritance (Erbschein) or a grant of probate or certificate of executorship.64 It
is disputed whether the decision on an application to dismiss an executor from office can be
referred to an arbitral tribunal (2227 BGB).65 However, the predominant opinion rightly
rejects this.66 The Higher Regional Court (Oberlandesgericht OLG) of Karlsruhe endorsed
59
60
61
62
63
64
65
66
Schwab/Walter (2005), Chap. 32 para.26; Schulze (2003), p.92.

Here, however, there will not usually be any party-autonomy between the parties involved legitimising
the arbitrability, see paras1, 6 and 10 supra.
See infra, Trittmann/Hanefeld, 1030 para. 12.
BGH 17.06.1952, BGHZ 8, 248 (257).
BGH 17.06.1952, BGHZ 8, 248 (258); BayObLG 19.10.2000, FamRZ 2001, 873 (874); Otte, FS des
Rheinischen Notariats (1998), pp.241 (251 et seq.); Stein/Jonas-Schlosser (2002), 1066 para.3 and vor
1025 para.19; Schwab/Walter (2005), Chap. 32 para.26; contra RG 23.06.1921, RGZ 133, 128 (133);
LG Mnchengladbach 15.01.1986, NJW 1987, 224 (225) (with note by Bork); Lange, Erbrecht (2011),
31 para. 57.
BayObLG 19.10.2000, FamRZ 2001, 873 (874); LG Hechingen 07.12.2000, FamRZ 2001, 721 (723);
OLG Stuttgart 21.11.2001, FamRZ 2002, 1365 (1366); MnchKommBGB-Mayer (2013), 2359
para.46; Otte, FamRZ 2006, 309; Otte, FS des Rheinischen Notariats (1998), pp.241 (252 seq.); Bandel,
NotBZ 2005, 381 (382).
In this tenor see for example Schwab/Walter (2005), Chap. 32 para.26; Schulze, MDR 2000, 314 (318);
id., (2003), p.94; Stein/Jonas-Schlosser (2002), 1066 para.3; Krug, in: Bonefeld/Kroi/Tanck (Hrsg.)
(2012), . 3 para.468; Muscheler, ZEV 2009, 317 (317).
RG 23.06.1921, RGZ 133, 128 (133 et seq.); Lange/Kuchinke (2001), 32 II 4 c); MnchKommBGBLeipold (2013), 1937 para.35; Kipp/Coing (1990), p.437; Staudinger-Otte (2008), vor 1937-1941
para.11; Otte, FS des Rheinischen Notariats (1998), pp.241 (252 et seq.); Bandel, NotBZ 2005, 381
(386); MnchKommZPO-Mnch (2013), 1066 para.7; Musielak-Voit (2013), 1066 para.4.
1066 Haas
561
this view and stated that in the context of the conferral of powers under 1066 ZPO, the
freedom of the testator is limited by the rights of the heirs under 2220, 2227 BGB.67
It is questionable what effect a (pending) arbitration case has on an ongoing voluntary ju- 22
risdiction case. In the relationship between the trial court and the probate court, the latter
is for the most part granted the possibility of suspending the case ex officio when the
Statement of Claim is pending before the trial court.68 However, an obligation to do so is
only advocated under very limited conditions.69 Whether these principles can be applied to
the relationship between arbitration and probate proceedings has not yet been decided.70
However, the Bavarian Highest Regional Court (Bayerisches Oberstes Landesgericht BayObLG) has made it clear that for arbitral proceedings that are not yet pending, the probate
court must conduct its proceedings without delay and that an arbitration clause does not
alter this.71 If an award has been pronounced in the arbitral proceedings, it has the effect of a
ruling by a state court (1055 ZPO) and is therefore authoritative to the same extent for the
probate court.72
F.
The Powers of an Arbitral Tribunal
An arbitral tribunals mandate and powers depend on the will of the testator. In case of doubt, 23
the arbitral tribunal has the powers that, in the event of a dispute, the state courts (of the
law governing the case) would have had.73 If the court would have had the power to modify
the rights of the parties in accordance with the applicable law, the arbitral tribunal may avail
itself of the same powers. Even powers that a state judge does not have under the governing
law, can in principle be assigned to the arbitral tribunal by means of a corresponding
(procedural) direction. This is also so where 1066 ZPO applies.74 Thus, for instance, the
testamentary disposition can empower arbitrators to decide the case ex aequo et bono or as
amiable compositeur (1051 (3) ZPO).75 Whether the parties can grant the arbitrators powers beyond this depends on the applicable substantive law. If German inheritance law applies,
then 2065 BGB, for example, prevents the testator from leaving the decision about whether
his disposition will be effective or who the heir should be to a third party.76 It is then not
possible to confer such powers on the arbitral tribunal. If the testator breaches this, any such
direction is not effective.77 As to the question of what the implications are of any ineffectiveness
67
68
69
70
71
72
73
74
75
76
77
OLG Karlsruhe 28.07.2009, ZEV 2009, 466 (467). For comments on this judgement, see Selzener, ZEV
2010, 285; Storz, SchiedsVZ 2010, 200; Heinze, RNotZ 2009, 661 (663 et seq.).
BayObLG 30.04.1998, FamRZ 1999, 334 (335); BayObLG 23.06.1964, BayObLGZ 1964, 231 (234
seq.); MnchKommBGB-Mayer (2010), 2359 paras30, 36; Lange/Kuchinke (2001), 39 III (p. 1019).
MnchKommBGB-Mayer (2010), 2359 para.36; see also Geimer, FS-Schlosser (2005), pp.198 (209
seq.).
For an obligation to suspend the probate court see for example Musielak/Voit (2013), 1066 para.2.
BayObLG 19.10.2000, FamRZ 2001, 873 (874); see also LG Hechingen 07.12.2000, FamRZ 2001,
721(723).
Staudinger-Otte (2008), vor 1937-1941 para.9.
RG 22.12.1936, RGZ 153, 193 (195 et seq.); Bandel, NotBZ 2005, 381 (384); Kohler, DNotZ 1962, 125
(132 seq.); Schulze (2003), p.89.
Gottwald/Schwab/Lettmaier (2012), para.351.
RG 27.09.1920, RGZ 100, 76 (78); Staudinger-Otte (2008), vor 1937-1941 para.10; MnchKommBGB-Leipold (2013), 1937 para.36; Bandel, NotBZ 2005, 381 (384); Kohler, DNotZ 1962, 125 (129);
Schulze, MDR 2000, 314 (315); Schwab/Walter (2005), Chap. 32 para.26; Schulze (2003), p.88; id.,
562
of a testamentary direction on other dispositions contained in the will, in particular a direction of

arbitrability, see supra under paras 19 et seq. The arbitral tribunals power to investigate and as
far as necessary to interpret the testators true will remains unaffected by 2065 BGB.
24 Occasionally, German inheritance law also allows third parties to decide in the testators
place. This is so, for example, in the case of legacies (2151, 2153 et seq. BGB), the appointment of the executor (2198 BGB) or in the case of division pursuant to 2048 sentence
2 BGB. Such powers can be conferred on the arbitrator without difficulty.78 Under substantive law, it is also lawful to confer the power to bindingly determine disputed facts (e.g. in
connection with evaluating the estate). The arbitrator (Schiedsrichter) can therefore also act
as an adjudicator (Schiedsgutachter).79 The prevailing opinion is that the parties can contest
the (adjudicators) award (Schiedsgutachten) pursuant to 319 (1) BGB because of obvious
incorrectness. However, it is then not the arbitrator, who previously acted as an adjudicator,
who is called upon to decide; for no one may judge his own case.80 Rather, a different arbitrator must be appointed for this question.81
G.
Executor as Arbitrator
25 In practice, it often happens that the executor (2197 et seq. BGB)82 is appointed as the
arbitrator. A distinction must be made when considering whether, and to what extent, this is
admissible. If the executor is appointed to decide a legal dispute to which he himself is not a
party, then the prevailing opinion is that notwithstanding the right under 1036 ZPO to
challenge the arbitrator83 such an appointment is admissible; the executor is therefore not
an unsuitable arbitrator from the very outset.84 The legal situation is different if the subject
matter of the proceedings relates to his or her position as executor; for no one can arbitrate
his own case.85 The circumstance that the binding nature of the arbitration is based on the
testators free hand does not justify a less strict measure in connection with either 1036
or with 1034 (2) ZPO.86 If the executor is simultaneously the arbitrator, conducting the
78
79
80
81
82
83
84
85
86
MDR 2000, 314(315).

MnchKommBGB-Leipold (2013), 1937 para.36; differentiating Staudinger-Otte (2008), vor 19371941 para.10.
Otte, FamRZ 2006, 309 (310); id., FS des Rheinischen Notariats (1998), p.241 (256); Schulze, MDR
2000, 314 (316); Bandel, NotBZ 2005, 381 (385).
Musielak-Voit (2013), 1066 para.3; Bandel, NotBZ 2005, 381 (385).
Bandel, NotBZ 2005, 381 (385). By contrast, in favour of a review solely by the state courts, JauernigStadler, Brgerliches Gesetzbuch, Mnchen 2011, 317 BGB para.8; Otte, FS des Rheinischen Notariats
(1998), p.241 (256).
Cf. Gottwald/Schwab/Lettmaier (2012), paras423 et seq.
RG 27.09.1920, RGZ 100, 76 (78 seq.); OLG Hamm 08.10.1990, NJW-RR 1991, 455 seq.; Schwab/Walter (2005), Chap. 32 para.26; MnchKommZPO-Mnch (2013), 1066 para.7; Zller-Geimer (2014),
1066 para.16; Staudinger-Otte (2008), vor 1937-1941 para.12; Schiffer, BB 1995, Beilage No. 5, p.2
(3); Nieder/Kssinger (2011), 15 para. 332; Stein/Jonas-Schlosser (2002), 1036 para.5 and 1066
para.3; contra von Oertzen/Pawlytta (2010), 67 para.35; Kipp/Coing (1990), p.425.
RG 27.09.1920, RGZ 100, 76 (78); Staudinger-Otte (2008), 1937-1941 para.12; MnchKommBGBLeipold (2013), 1937 para.38; Musielak-Voit (2013), 1066 para.3; Zller-Geimer (2014), 1066
para.22; Stein/Jonas-Schlosser (2002), 1066 para.4; Krug, in: Bonefeld/Kroi/Tanck (Hrsg.) (2012),
3 para.473.
Musielak-Voit (2013), 1066 para.3; contra Stein/Jonas-Schlosser (2002), 1066 para.4.
1066 Haas
563
arbitral proceedings is not part of the executors office,87 and so consequently this function is
also not discharged by the executors remuneration (2221 BGB).88
H.
The Fair and Reasonable Test
The prevailing opinion is that the general provisions on whether the terms of a contract 26
meet the fair and reasonable test (134,89 13890 and 307 et seq.BGB)91 also apply to
arbitration agreements within the meaning of 1029ZPO; for the prevailing opinion is that
these provisions include a general legal principle which is also to be applied to contracts on
procedural law.92 Nothing else can apply in the context of 1066. Here too, a testamentary
direction of arbitration (even if this is to be qualified as falling under procedural law) is to be
subjected to the fair and reasonable test under 134 and 138 BGB, unless more special
provisions apply in the individual case (e.g. 1034 ZPO).93 A testamentary direction of
arbitration may, in certain circumstances, be void under 138 BGB if the arbitral proceedings are designed to disadvantage a party or if, due to individual circumstances or an overall
view (empowerment of the arbitrator pursuant to 1051 (3) ZPO, conferral of the powers
of an adjudicator (Schiedsgutachter), etc.),94 it is to be feared that the arbitral proceedings will
disadvantage a party involved in the deceaseds estate contrary to the principles of good faith or
will not apply compulsory statutory provisions intended to protect him.95
III. Testamentary Direction and Foreign Lex Successionis

It is questionable what law governs the testators power to direct an arbitral tribunal by testa- 27
mentary disposition if a foreign law of succession is invoked to govern the merits. Occasionally there is support for the opinion that the answer to this question depends on the foreign
lex successionis.96 However, this opinion must be rejected. Instead, the power as to whether
arbitral jurisdiction can be established by testamentary disposition must be categorised as a
question of procedural law (see supra paras 18 et seq.) and therefore in principle depends on
87
88
89
90
91
92
93
94
95
96
OLG Hamm 08.10.1990, NJW-RR 1991, 455 (456).

Kohler, DNotZ 1962, 125 (135); Bandel, NotBZ 2005, 381 (387).
134
A legal transaction that violates a statutory prohibition is void, unless the statute leads to a different
conclusion.
138
(1) A legal transaction which is contrary to public policy is void.
(2) In particular, a legal transaction is void by which a person, by exploiting the predicament, inexperience, lack of sound judgement or considerable weakness of will of another, causes himself or a
third party, in exchange for an act of performance, to be promised or granted pecuniary advantages
which are clearly disproportionate to the performance.
On this see MnchKommZPO-Mnch (2013), 1029 paras 15 et seq.; Haas/Hauptmann, SchiedsVZ
2004, 175 (178 et seq.).
On the relationship between 1034 ZPO and the general provisions see Stein/Jonas-Schlosser (2002),
1066 para.26; Haas/Hauptmann, SchiedsVZ 2004, 175 (181).
MnchKommBGB-Leipold (2013), 1937 para.39
On such a prognosis in the context of an arbitration agreement see BGH 10.10.1991, NJW 1992, 575
(576); cf. also BGH 18.12.1958, BGHZ 29, 120 (125); BGH 06.06.1991, NJW 1991, 2215; cf. also Haas/
Hauptmann, SchiedsVZ 2004, 175 (180).
Musielak-Voit (2013), 1066 para.1; Bandel, NotBZ 2005, 381 (382); von Oertzen/Pawlytta (2010),
67 para.31a.
564
the domestic law of the forum (lex fori).97 If, therefore, the arbitral tribunal is domiciled in
Germany, the power to establish arbitral jurisdiction by testamentary disposition is governed
by German law. Of course, this does not rule out the possibility that for certain questions
regarding the closing element, the domestic law of the forum (lex fori) is not the law applicable; instead, the governing law is determined by applying the substantive rules of the
conflict of laws mutatis mutandis. This applies, for example, to the capacity to make a will98
or the requirements to be met by the form to be complied with in the case of testamentary
dispositions (Article 26 Introductory Law to the German Civil Code (Einfhrungsgesetz zum
Brgerlichen Gesetzbuch EGBGB) and the Hague Convention on the Conflicts of Laws
relating to the Form of Testamentary Dispositions of 5 October 1961).99
28 The extent to which 1051 (1) ZPO applies also to testamentary arbitration clauses is
questionable. The provision provides that the arbitral tribunal must decide the dispute in
accordance with such rules of law as are designated by the parties. Sometimes it is argued
that this far-reaching autonomy of the parties to determine the applicable law is tailored to
contractual disputes and is therefore ill-suited to non-contractual cases, such as inheritance
law.100 Ultimately, this concerns the general problem regarding the extent to which 1051
(1)ZPO takes precedence over the conflict of laws of the substantive law (in the present case
particularly over Article 25 EGBGB).101 One cannot answer this question any differently in
relation to 1066 ZPO than in the context of 1029 et seq. ZPO.102
IV. Arbitral Tribunals Established under Company Law

29 The law proceeds on the assumption that arbitral tribunals can be directed not only by testamentary disposition, but also by other dispositions. What is questionable is whether arbitral
tribunals established under company law (i.e. arbitral clauses contained in articles of association, statutes or partnership agreements) fall under this second category. This question is of
some importance because in practice one often comes across arbitral tribunals established
under company law. Particularly, the statutes of associations regularly include clauses which
refer disputes between the association and a member of the association or between members
of the association to certain deciding bodies for decision.
A.
Distinction from an Associations Jurisdiction
30 Not all deciding bodies set up by statutes or articles of association are true or real arbitral
tribunals. Instead e.g. in organised sport103 one often comes across so-called association or
federation tribunals or other corporate bodies that cannot be classified as arbitral tribunals.104
The prevailing opinion is that 1025 et seq. ZPO (including 1066 ZPO) do not apply to
the latter. However, it is not always easy to make a distinction in the individual case. In this
97
98
99
100
101
102
103
104
Zller-Geimer (2014), 1066 para.19; Geimer, FS-Schlosser (2005), p.198 (203).

Cf. Sss/Haas (Hrsg.), Erbrecht in Europa, Baden-Baden 2004, 1 paras37 seq.
Also concluded by Bandel, NotBZ 2006, 381 (383).
Bandel, NotBZ 2005, 381 (384); in this tenor also MnchKommZPO-Mnch (2013), 1066 paras10 seq.
Cf. MnchKommZPO-Mnch (2013), 1051 paras. 10 seq.; Wagner, FS-Schumann (2001), pp.535 (539
et seq.).
Cf. Haas, in: Haas/Haug/Reschke (eds) (2006), B. Chap. 2 paras123 et seq.
Cf. e.g. OLG Hamburg 29.01.2004, SchiedsVZ 2004, 266 (267); GroKommGmbHG-Raiser (2006), 13
para.41; Michalski-Rmermann (2010), 45 paras67 et seq.; cf. supra, Wagner, 1025 paras 8 et seq.
1066 Haas
565
regard, what the parties call the deciding body is not the decisive factor. Instead, the articles
of association or statutes must be interpreted on the basis of objective criteria.105
B.
Relevant Criteria for the Application of 1066 ZPO in the Company Law Context
If the deciding body set up by company law is a true arbitral tribunal, it is disputed whether 31
1029 ZPO or 1066 ZPO applies to it. The question is particularly important when deciding whether a party which has not directly consented to the arbitration agreement or even
objected to it may nevertheless be bound by it. At the time, the legislator left the question
unanswered and did not expressly mention arbitration agreements stipulated in statutes or
articles of association in either 1029 ZPO or in 1066 ZPO.106 Sometimes, the relevant
factor is considered to be whether the arbitration agreement contained in the articles of association or statutes have the effect of a legal norm or the effect of a contract on the person
concerned. In the former case, 1066 ZPO is to apply; otherwise, 1029 ZPO applies.107 By
contrast, the prevailing opinion does not consider the disputed legal nature of the articles of
association or the statutes to be the relevant factor; instead, it distinguishes between the respective corporate forms. 1066 ZPO applies e.g. to arbitration clauses that are contained108
in the articles or statutes of a legal entity (e.g. stock corporation (Aktiengesellschaft AG
or European Company SE),109 limited liability company (Gesellschaft mit beschrnkter
Haftung GmbH),110 association (Verein),111 or of an association which does not have legal
capacity (nicht rechtsfhiger Verein).112 By contrast and in accordance with prevailing opinion,
1066 ZPO does not apply to partnerships (Personengesellschaften).113 Only in isolated
cases is it presumed that 1066 ZPO also extends to arbitration clauses in the partnership
agreements.114
More recently, allocating (individual or all) arbitration agreements established under 32
company law to 1066 ZPO is generally called into question more and more often.115 The
reasons given are firstly that directing arbitral jurisdiction in statutes or in articles of associa105
106
107
108
109
110
111
112
113
114
115
BGH 27.05.2004, SchiedsVZ 2004, 205 (207 et seq.); OLG Hamburg 29.01.2004, SchiedsVZ 2004, 266
(267); Krll, ZIP 2005, 13 et seq.; Haas, in: Haas/Haug/Reschke (eds) (2006), B. Chap. 2 paras152 et
seq.
Explanatory statement given in Bill of the Arbitration Law Reform Act, BT-Drs. 13/5274, p.66; see also
Habersack, SchiedsVZ 2003, 241 (242).
On this see particularly the authorities in Schmidt, JZ 1989, 1077 (1078 seq.); Klbl (2004), pp.30 et seq.
MnchKommZPO-Mnch (2013), 1066 para.8; Schmidt, JZ 1989, 1077 (1082 et seq.); Baur, ZZP 1972,
3 (26); MnchKommBGB-Reuter (2013), 25 para.17; Zller-Geimer (2014), 1066 para.2.
Cf. BGH 04.07.1951, MDR 1951, 674.
Cf. BGH 25.10.1962, BGHZ 38, 155 (159); OLG Hamburg 29.01.2004, SchiedsVZ 2004, 266 (268); LG
Mnchengladbach 15.01.1986, NJW-RR 1987, 224.
BGH 27.05.2004, SchiedsVZ 2004, 205 (207); id. 03.04.2000, BGHZ 144, 146 (148); id. 11.10.1979,
NJW 1980, 1049.
BGH 11.10.1979, NJW 1980, 1049; RG 29.10.1940, RGZ 165, 140 (143); Schmidt, JZ 1989, 1077
(1082); Haas, SchiedsVZ 2007, 1 (2); Heskamp, RNotZ 2012, 415 (417 et seq.).
BGH 11.10.1979, NJW 1980, 1049; id. 02.06.1966, BGHZ 45, 282 (286); Musielak-Voit (2013), 1066
para.7; Stein/Jonas-Schlosser (2002), 1066 para.5; Zller-Geimer (2014), 1066 para.1, 13; Thomas/
Putzo-Reichold (2013), 1066 para.2; Ebbing, NZG 1998, 281 (282); MnchKommZPO-Mnch (2013),
1066 para.20.
Schmidt, BB 2001, 1857 (1862 seq.); id., JZ 1989, 1077 (1081 seq.); Zller-Geimer (2014), 1066 para.1,
13; partly also Habersack, SchiedsVZ 2003, 241 (243 et seq.).
Schwab/Walter (2005), Chap. 32 para.5; Stein/Jonas-Schlosser (2002), 1066 paras10 et seq.; SoergelHadding (2000), 25 para.26.
566
tion is a legal act, which is closer to 1029 ZPO than to 1066 ZPO.116 Secondly, the need
of the person affected to be protected is used as an argument. The fear is that if one wanted to
infer the closing element solely from the respective special law (here company law), then the
person affected could be deprived of the statutory judge without adequate protection (e.g. by
the requirement as to form in 1031 ZPO).117
33 A prerequisite for applying 1066 ZPO to arbitral tribunals established by company law
is that the act that establishes the arbitral tribunals jurisdiction must be comparable to the
testamentary disposition expressly mentioned in 1066 ZPO (see supra, para. 3).118 It is not
mandatory that all company law cases be classified in the same way (as falling under either
1066 ZPO or 1029ZPO).119 This can be seen by a mere glance at succession law where a
distinction is made between arbitral jurisdiction established by testamentary disposition and
arbitral jurisdiction established by testamentary contract (see supra, paras 715). If, however, company law cases do not all have to be classified in the same way, their comparability
with testamentary dispositions must be examined separately for each individual company
law case. There are, in particular,120 four possibilities of establishing an arbitral tribunals
jurisdiction under company law, namely establishing jurisdiction in the founding articles of
association (see 1.), by subsequently amending the articles of association or statutes (see 2.),
by admitting a new member (see 3.) or by transferring membership (see 4.).
1.
Arbitration Clause at the Time of Formation of the Company
34 If an arbitration clause is to be included in the partnership agreement, the articles of association or in the statutes already when the association is formed, the arbitration clause has a
binding effect on the founders (regardless of whether a legal entity or a partnership is formed)
only if they agreed to the clause upon formation.121 The closing element is therefore fundamentally different from that of a testamentary arbitration clause and is therefore considerably
closer to 1029ZPO than to 1066 ZPO.122 There is therefore no reason to allocate such
cases to 1066 ZPO. The power to establish arbitral jurisdiction in the founding articles of
association or founding statutes follows (directly)123 from 1029 ZPO.
35 If the company is an AG, it is disputed whether this power deriving from 1029ZPO is
limited by 23 (5)124 German Stock Corporation Act (Aktiengesetz AktG). 23 (5) AktG
provides that the articles of association may derogate from the provisions of the AktG only to
the extent that this is expressly permitted. Furthermore, 23 (5) sentence 2 AktG stipulates
116
117
118
119
120
121
122
123
124
Stein/Jonas-Schlosser (2002), 1066 para.10; Schwab/Walter (2005), Chap. 32 para.6.

Schwab/Walter (2005), Chap. 32 para.6; Schlosser, Das neue deutsche Recht der Schiedsgerichtsbarkeit,
in: Gottwald (Hrsg.), Revision des EuGV Neues Schiedsverfahrensrecht, Bielefeld 2000, p. 163
(205).
Similarly Stein/Jonas-Schlosser (2002), 1066 para.10.
Contra BGH 11.10.1979, NJW 1980, 1049 (1050); Reichert/Harbarth, NZG 2003, 379 (380).
See also for example Reichert/Harbarth, NZG 2003, 379 et seq.
OLG Mnchen 09.02.1999, NZG 1999, 780 (781).
Stein/Jonas-Schlosser (2002), 1066 para.11; Schwab/Walter (2005), Chap. 32 para.5; Reichert (2009),
para.4864; contra GroKommGmbHG-Raiser (2006), 13 para.37.
As in the case of a testamentary disposition, the power to stipulate an arbitral tribunal derives solely from
1025 et seq. ZPO, not from company law; contra Habersack, SchiedsVZ 2003, 241 (242).
The provision reads as follows: The articles may only make provisions which deviate from the provisions
in this act if expressly permitted. The articles may contain supplemental provisions, except insofar as this
Act contains a provision having conclusive effect.
1066 Haas
567
that supplementary provisions (ergnzende Bestimmungen) in the articles of association are

permitted only to the extent that the AktG does not contain an exhaustive regulation. Since
the AktG does not contain any rules on arbitrability (or derogation from state jurisdiction),
at most 23 (5) sentence 2 AktG will apply to arbitration clauses in articles of association.
However, the latter in turn fails in that it cannot be inferred from the silence of the AktG
that the legislators will was to provide an exhaustive regulation on arbitral jurisdiction.125
Therefore, the power granted by the ZPO to provide an arbitration agreement in articles of
association is according to the correct (but not predominant) opinion also not limited
in the case of an AG.126 The same is true of cooperative societies (Genossenschaften) (18
sentence 2 Act on Cooperative Societies (Genossenschaftsgesetz GenG)).
Since 1029 ZPO like 1066 ZPO regulates merely the power to establish arbitral 36
jurisdiction but not the prerequisites, one has to fall back on the appropriate provisions of
the special law (here company law) to fill the gap (see supra, paras 4 et seq.). Since the form of
the agreement does, in principle, also have a bearing on the closing element (see supra, para.
8), a conflict can arise between 1031 ZPO and the requirements as to the form required
under the special laws, here the articles of association. In so doing, 1031 ZPO only gains
independent significance where its requirements as to form go beyond those in the special
laws (cf. 1031 (5) 2nd sentence ZPO).127 Furthermore, in an individual case, 1031 (5)
ZPO can only apply if the main transaction underlying the arbitration agreement (here the
formation of the company) is a consumer transaction for one of the parties.128 A prerequisite
for this is that the formation of the company is not to be attributed to a commercial or independent occupation of one of the founders.129
2.
The Introduction of Arbitration Clauses by Amending the Partnership Agreement, the

Articles of Association or Statutes
An arbitration agreement can be introduced not only upon formation, but also later by way 37
of an amendment to the articles of association or statutes. Whether and to what extent such a
closing element is to be allocated to 1029 ZPO rather than to 1066 ZPO will be discussed
below, first using the example of an (incorporated) association ((rechtsfhiger) Verein) and
then for the other types of associations (Gesellschaften).
a. Association (Verein): Under 33 (1) sentence 1 BGB,130 amendments to the statutes of an 38
association (Verein) require a majority of three-quarters of the members present. Therefore,
125
126
127
128
129
130
For the comparable case of choice of forum clauses see Mlbert, ZZP 2005, 313 (322); Hffer, Aktiengesetz, Mnchen 2010, 23 para.38.
Bender, DB 1998, 1900 (1901); Ebbing (2003), p.137; Habersack, JZ 2009, 797 (798 seq.); contra OLG
Hamm 07.03.2000, NZG 2000, 1182 (1183); Musielak-Voit (2013), 1066 para.8; Schmidt, BB 2001,
1857 (1861); Raeschke-Kessler, SchiedsVZ 2003, 145 (152); Heskamp, RNotZ 2012, 415 (424); MnchKommAktG-Pentz (2008), 23 para. 161; Hffer (2012), 246 AktG para. 19; unclear BGH 29.03.1996
NJW 1996, 1753 (1754).
Heskamp, RNotZ 2012, 415 (418); contra Rowedder/Schmidt-Leithoff-Pentz (2013), 13 GmbHG
para.29.
For the authoritativeness of the main transaction, see MnchKommZPO-Mnch (2013), 1031 para.23;
Thomas/Putzo-Reichold (2013), 1031 para.8; Haas/Hauptmann, SchiedsVZ 2004, 175 (183).
On this see Heskamp, RNotZ 2012, 415 (418); Baumbach/Hopt-Hopt (2012), Einl vor 1 HGB paras89
et seq.; Ebbing, NZG 1998, 281 (282); Mlbert, ZZP 2005, 313 (329) (for choice of forum clauses).
33
(1)A resolution containing an amendment of the articles of association must have a majority of three
568
under the law governing associations, it is possible for a member to (initially) be bound by
amended statutes even against the members will. The starting point in the case of amendments to statutes is therefore similar to that in succession law; for here too, the heir (or
beneficiary) is bound by the unilateral testamentary disposition irrespective of any contrary
will there may be on his part (see paras 10 et seq.). However, just like an heir (or beneficiary)
in relation to a testator, an individual member of an association who has not consented to
the amendment to the statutes is also not left helplessly at the mercy of those who dominate.
Rather, the member who has been outvoted can reject being bound by the arbitration agreement created by the amendment to the articles of association by (like an heir or beneficiary)
exercising his non-deprivable right to leave the association (39 BGB131). Therefore, if the
subsequent introduction of an arbitration clause by amending the articles of association is
governed by 33 (1) sentence 1 BGB, this can be compared to cases of an arbitration agreement established by testamentary disposition, with the consequence that 1066 ZPO would
apply to this scenario, not 1029 ZPO.
39 One of the objections sometimes raised against the application of 33 (1) sentence 1 BGB
is that the provision does not satisfy the requirements deriving from the constitution that
have to be met if one is to be deprived132 of a state judge (Article 101 (1) German Constitution (Grundgesetz GG). Instead, the latter requires that all of the members must agree to
the subsequent introduction of the arbitration clause.133 This argument is not convincing.134
Firstly, when articles of association are amended, the starting point is no different than in
cases where arbitral jurisdiction is directed by testamentary disposition (see supra, paras 4 et
seq.). It does not appear very understandable why in the one case the (prior) consent of whoever is subjected to arbitral jurisdiction is required by the constitution whereas in the other
case it is not. Secondly, this opinion fails to appreciate that in the light of the constitutional
requirements, voluntarily maintaining membership is not an inferior form of waiving the
right to a state judge as compared to an arbitration agreement.135
40 Some authors derive the requirement for a consent of all of the members to an amendment
to articles of association in derogation from the statutory model in 33 (1) sentence 1
BGB from company law. According to this, a right of access to the state courts is part of
the essence of membership136 or is comparable to an amendment to the objects of the association (33 (1) sentence 2 BGB) or to the deprivation of special rights (35 BGB), with
the consequence that legal protection by the state courts is removed from the power of the
131
132
133
134
135
136
quarters of the votes cast. In order to alter the objects of the association, the approval of all members is
necessary; the approval of the members not present must be declared in writing.
39
(1) The members have the right to leave the association.
(2) The articles of association may specify that leaving is admissible only at the end of a business year
or only after a notice period; the maximum notice period is two years.
On the question of when there is deprivation, see BAG 23.08.1963, NJW 1964, 268 (269).
Stein/Jonas-Schlosser (2002), 1066 para.12; Schmidt, BB 2001, 1857 (1861); Reichert/Harbarth, NZG
2003, 379 (380 seq.); GroKommGmbHG-Raiser (2006), 13 para.37.
OLG Mnchen 09.02.1999, NZG 1999, 780 (781).
BGH 03.04.2000, BGHZ 144, 146 (150); id. 24.10.1988, NJW 1989, 1724 (1726); see also Schmidt, JZ
1989, 1077 (1080 seq.); Haas, ZGR 2001, 325 (341 seq.); also concluded by Klbl (2004), p.81; Reichert
(2009), para.4867.
Schmidt, JZ 1989, 1077 (1082); id., BB 2001, 1857 (1861 seq.).
1066 Haas
569
majority to dispose thereof.137 This opinion is not convincing either;138 for the introduction
of an arbitration clause leaves the company law rights and obligations unaffected. Arbitral
jurisdiction is one of the equivalent alternatives to state jurisdiction that only affects the
enforcement of members rights and obligations. If, however, the member is not deprived
of legal protection by reason of the establishment of arbitral jurisdiction, the introduction of
arbitral jurisdiction by an amendment to the articles of association cannot, from the outset,
be compared to cases where the essential part of membership is limited or abrogated.139
Finally, an objection raised against the application of 33 (1) sentence 1 BGB is an associa- 41
tion members special need of protection.140 The allocation (by chance) of the above scenario
to 1029 ZPO or 1066 ZPO may not according to this opinion cause the association
member to be left without protection. However, only if 1029 ZPO were to apply would
the requirement as to form under 1031 ZPO help the person concerned. The person concerned may not be deprived of this protection. This opinion also cannot be agreed with.141
Firstly, the premise that an association member is from the outset more worthy of protection
than an heir or a beneficiary is already questionable. Secondly, however, there are also no
gaps in the protection to the detriment of the association member if the closing element is
taken entirely from the law governing associations. After all, the protection for the person
concerned, which derives from the requirement as to form under 1031 ZPO, is limited. The
provision can, at most, warn against closing a legal transaction, i.e. make the parties aware of
the importance and implications of the legal transaction and thereby help to prevent a party
from being bound by an arbitration clause unwittingly.142 However, the law governing associations has mechanisms available which, in connection with an amendment to the articles
of association, secure this purpose pursued by 1031 ZPO equally well.143 Here, the focus
is on the requirement (under the law governing associations) that basic decisions which determine the life of the association (including the establishment of arbitral jurisdiction) must
be incorporated into the articles of association.144 This requirement, which serves to protect
the members,145 has the effect that at least according to the statutory model all association members can participate in the amendment to the articles of association. Furthermore,
the association members must be informed of the planned amendment to the articles when
137
138
139
140
141
142
143
144
145
Thus, for example, for a GmbH, Michalski/Hoffmann (2010), 53 GmbHG para.150; Schmidt, JZ 1989,
1077 (1082); left open in Reichert/Harbarth, NZG 2003, 379 (380).
Klbl (2004), pp.70 et seq.; see also (for partnerships) Habersack, SchiedsVZ 2003, 241 (245).
Ebbing, NZG 1999, 754 (755); id., Satzungsmige Schiedsklauseln, NZG 2000, 898 (899); Klbl
(2003), p.75.
Schwab/Walter (2005), Chap. 32 paras6, 16; critical in this regard Schmidt, JZ 1989, 1077 (1081).
On this see Haas, ZGR 2001, 325 (338 et seq.); Klbl (2004), pp.50 et seq.
BGH 22.09.1977, BGHZ 69, 260 (265); id. 31.01.1980, NJW 1980, 1797; Schmidt, JZ 1989, 1077
(1081); Haas, ZGR 2001, 325 (329); Klbl (2003), p.51.
In this tenor see also Haas, ZGR 2001, 325 (340); Klbl (2003), p.58.
Cf. BGH 24.10.1988, NJW 1989, 1724 (1725); id. 04.10.1956, BGHZ 21, 370, 373 et seq.; id. 18.09.1958,
BGHZ 28, 131 (135 seq.); id. 06.03.1967, BGHZ 47, 172 (178); id. 25.10.1983, BGHZ 88, 314 (316);
on this see also Haas, in: Haas/Haug/Reschke (eds) (2006), B. Chap. 2 paras12 et seq.; Klbl (2004),
pp.56 seq.; Schwab/Walter (2005), Chap. 32 para.16.
BGH 24.10.1988, NJW 1989, 1724 (1725); OLG Mnchen 29.12.1976, BB 1977, 865.
570
the members meeting is called (32 (1) sentence 2 BGB146).147 Although this obligation to
inform the members does not go so far as to hand out the text of the planned amendment to
the articles to the members,148 the overwhelming opinion is that the provisions of the articles
of association that are to be amended must be sufficiently described in the agenda149 so that
the participants in the meeting are protected against surprises and are given enough time to
prepare.150 To summarize, the introduction of an arbitration clause by an amendment to the
articles of association falls under 33 (1) sentence 1 BGB and this closing element is to be
classified as falling under 1066 ZPO.151
42 1. Problem: Limitations on a Members Right to Leave: It is questionable whether the application of 33 (1) sentence 1 BGB is different in the present scenario if the individual
association member suffers burdensome consequences (e.g. of an economic nature) when he
leaves the association. The question then arises as to how far the (limited) voluntary nature
of the membership still provides sufficient compensation for the unilateral establishment of
arbitral jurisdiction. How the (doubtless necessary) protection of the association member is
to be structured in such cases is a matter of controversy. The Federal Court of Justice (Bundesgerichtshof BGH) has expressly left the question unanswered.152 At first glance, there
would appear to be various solutions. The limited voluntary nature of the membership could
be compensated by changing from a majority principle to a principle of unanimity. Another
solution is to compensate the limited voluntary nature of the membership with a fair and
reasonable test in order to protect the individual against arbitrariness and being dictated to
by a third party.153
43 The better arguments support the latter solution (and therefore also classifying this scenario
under 1066 ZPO). Firstly, this is supported by a comparison with cases of testamentary
disposition. Here too, the rejection of arbitral jurisdiction by the heir or beneficiary is associated with disadvantages for the latter, without the prevailing opinion having any doubts
about the constitutional admissibility of testamentary arbitration agreements. The heir or
beneficiary is according to the prevailing opinion protected under 1066 ZPO only by
146
147
148
149
150
151
152
153
32
(1) The affairs of the association, to the extent that they are not to be attended to by the board or
another organ of the association, are dealt with by resolution in a meeting of the members. In
order for the resolution to be valid, it is necessary for the subject to be stated when the meeting is
convened. The resolution is decided by the majority of the votes cast.
In the event of breach the resolution is void, on this see BayObLG 09.03.1979, Rpfleger 1979, 196; OLG
Kln 04.07.1984, OLGZ 1984, 401 (403); OLG Frankfurt 19.12.1984, ZIP 1985, 213 (221); LG Bremen
10.08.1988, Rpfleger 1988, 523.
BGH 10.10.1988, NJW-RR 1989, 376 (378); Reichert (2009), para.556.
OLG Frankfurt 19.12.1984, ZIP 1985, 213 (219 seq.); BayObLG 09.03.1979, Rpfleger 1979, 196; OLG
Hamm 10.02.1999, BB 1999, Beilage No. 11, p.10 (12); LG Bremen 10.08.1988, Rpfleger 1988, 533;
Soergel-Hadding (2000), 32 para.13.
BGH 10.10.1988, NJW-RR 1989, 376 (378); BayObLG 03.09.1979, Rpfleger 1979, 196; OLG Frankfurt
19.12.1984, ZIP 1985, 213 (219 seq.); OLG Kln 04.07.1984, OLGZ 1984, 401 (403); Soergel-Hadding
(2000), 32 para.12; Reichert (2009), para.556.
OLG Mnchen 09.02.1999, NZG 1999, 780 (781); Zller-Geimer (2014), 1066 para.2; Haas, ZGR
2001, 325 (342); Klbl (2004), pp.87 et seq.; Baumbach/Lauterbach (2014), 1066 para.4; Musielak-Voit
(2013), 1066 para.8.
BGH 03.04.2000, BGHZ 144, 146 (150).
For an example of such a fair and reasonable test see OLG Mnchen 09.02.1999, NZG 1999, 780
(781seq.).
1066 Haas
571
a fair and reasonable test of the testamentary disposition (see supra, para. 26). It is not very
understandable why the solution in cases where an arbitration agreement is subsequently
introduced by way of an amendment to articles of association should be different. Furthermore, this solution compared with the requirement of unanimity is more reasonable; for
it is perfectly possible for there to be sensible reasons for an arbitration clause in the articles
of association.154 If, however, one does not agree with this opinion, arbitral tribunals would
be de facto excluded from deciding disputes between the association and its members.
Associations would thus be deprived of an effective mechanism for dispute resolution in
their internal affairs.
2. Problem: Exclusion of a Members Right to Leave: It is also questionable whether in some cir- 44
cumstances one has to change from the majority principle in 33 (1) sentence 1 BGB to the
principle of unanimity if the members right to leave is not only a poor alternative, but rather
no (real) alternative for the association member. The latter can be the case if the association
has a monopoly position and the individual member is dependent on his membership of the
association for economic or social reasons. There is no doubt that in such cases the association member merits protection. The only question is how such protection is to be realized.
Often an attempt is made to protect the association member with the help of the principle
of unanimity.155 However, others are of the opinion that, here too, the correct approach to
solving the problem is protection that derives from a fair and reasonable test.156
If one were to agree with the former opinion, the subsequent introduction of an arbitration 45
clause by way of an amendment to the statutes of associations having a monopoly would in
view of an individual members veto right be practically impossible. Associations having a
monopoly (as are often found in sport)157 would therefore be deprived of any possibility of a
party-autonomous alternative to state jurisdiction. This result would not be very sensible, not
only in view of the basic equivalence between state jurisdiction and arbitral jurisdiction, but
it would also hardly be tenable dogmatically; for in the relationship between a monopolist
and a contract partner, the protection of the weaker party is structured completely differently,
for here the latter does not have a right to veto the arbitration clause.158 The fact that the
requirement as to form under 1031ZPO has a bearing on contractual arbitration agreements also does not alter this different level of protection in contract law and in association
law. This is because one generally overestimates what a requirement as to form can achieve.
The intent and purpose of such a requirement is to drive home the significance of a legal
transaction (see supra, para. 41). A requirement as to form can, however, never guarantee
the voluntary nature of an agreement; for no matter how high the requirements as to form
are, they cannot prevent one party from forcing or coercing the other party from entering
into an agreement by employing social and economic superiority. If, therefore, in connection
with a contractual arbitration agreement the weaker party is protected only by a fair and
reasonable test and not by the deprivation of arbitrability, then nothing different can apply
154
155
156
157
158
Cf. OLG Mnchen 09.02.1999, NZG 1999, 780 (781).

Reichert (2009), para.4867; not clear BGH 03.04.2000, BGHZ 144, 146 (150), which says that the arbitration agreement cannot be cited in opposition to the association member who did not agree to the
amendment to the articles of association; criticised by Haas, ZGR 2001, 325 (345 seq.).
Haas, ZGR 2001, 325 (346 et seq.); Haas/Hauptmann, SchiedsVZ 2004, 175 (177 et seq.); Klbl (2004),
pp.105 et seq.
On the monopolistic status of umbrella federations in sport (for historical reasons) see, Haas, in: Haas/
Haug/Reschke (eds) (2006), B. Chap. 1 paras52 seq.
On this dualism that cannot be justified see, Haas, ZGR 2001, 325 (346).
572
to the introduction of an arbitration clause by way of an amendment to the statutes of an association. The subsequent introduction of an arbitration agreement by amending the articles
of association is therefore subject only to 33 (1) sentence 1 BGB, even in the event of an
association which has a monopoly, with the consequence that due to the comparability
with cases where arbitral jurisdiction is directed by testamentary disposition this group of
cases must also be classified as falling under 1066 ZPO.159
46 b. Other Associations (Gesellschaften): Whether and to what extent the above principles can
also be applied to other associations is questionable. This is initially unproblematic for an
unincorporated association (nicht rechtsfhiger Verein).160 By contrast, with other forms of
association a distinction must be made.
47 1. Partnerships (Personengesellschaften): As a general rule, an amendment to a partnership
agreement requires the consent of all of the partners. Such a closing element is considerably
closer to 1029 ZPO than to 1066 ZPO.161
48 However, the situation is different if the partners have stipulated the majority principle; this
also applies for amendments to the partnership agreement. In that case, the starting point
in partnership agreements is no different from in association law;162 for here too as in association law the voluntary nature of the membership is safeguarded by the mandatory
right whereby a member can ordinarily terminate the association or membership pursuant
to 723 and 724 BGB163 or 131 (3) No. 3 and 132 Commercial Code (Handelsgesetzbuch HGB). But then it is only consistent to also allocate the cases where an arbitration
159
160
161
162
163
Also concluded by Musielak-Voit (2013), 1066 paras7, 8; contra Schmidt, JZ 1989, 1077 (1082).
BGH 11.10.1979, NJW 1980, 1049.
Also concluded by Baumbach/Hopt-Hopt (2012), Einl vor 1 HGB para.90.
Rightly, according to Habersack, SchiedsVZ 2003, 241 (245); contra Baumbach/Hopt-Hopt (2012), Einl
vor 1 HGB para.90.
723
(1) If the partnership has not been set up for a definite period of time, then each partner may terminate
it at any time. If a period of time has been determined, then notice of termination prior to the
expiry of that period is admissible if there is a compelling reason. A compelling reason includes
without limitation
1. if another partner has intentionally or with gross negligence violated a fundamental duty
incumbent upon him under the partnership agreement or if the discharge of such a duty
becomes impossible,
2. if the partner has reached the age of eighteen.
The partner who has reached the age of majority may only give notice of termination under no.
2 within three months from the time when he knew of or should have known of his position as a
partner. There is no right to give notice if the partner was authorised in regard to the object of the
partnership to independently operate a trade or business under 112 or if the object of the partnership served solely to satisfy his personal needs. Under the same conditions, if a notice period
has been specified, termination is admissible without complying with the notice period.
(2) Notice of termination may not be premature unless there is a compelling reason for the premature
termination. If a partner gives premature notice of termination without such a reason, then he
must compensate the remaining partners for the damage thus incurred.
(3) An agreement by which the right to give notice is excluded or is limited contrary to these provisions is void.
724
If a partnership has been entered into for the lifetime of a partner, then it may be terminated in the
same way as a partnership set up for an indefinite period of time. The same applies if a partnership is
tacitly carried on after expiry of a stipulated period of time.
1066 Haas
573
agreement is introduced by subsequently amending the articles to 1066 ZPO so long as

the majority principle applies. It follows from this, that also with regard to partnerships in
principle the subsequent introduction of an arbitration clause by a majority decision is
possible.164
ii. Limited Liability Companies (GmbH) and Stock Corporations (AG): The starting point in 49
a GmbH is at first glance different when compared with an association (Verein). Although
here too the majority principle applies to amendments to the articles of association (53
(2) Act on Limited Liability Companies (Gesetz betreffend die Gesellschaft mit beschrnkter
Haftung GmbHG), the GmbHG does not include any statutory165 right to leave a company or ordinary right of termination166 that is comparable with the right under association
law. However, one cannot conclude from this that the principle of the voluntary nature of
membership has not found expression in the law governing the GmbH. Differently from
the legal situation in associations, a shareholder of a GmbH can in principle freely transfer
his share pursuant to 15 (1) GmbHG167 and can thereby leave the company. If, however,
the principle of the voluntary nature of the membership is also realized in the law governing
limited liability companies, this contrary to the prevailing opinion168 justifies applying
the above principles of association law to limited liability companies as well. The fact remains
that leaving a company by transferring ones share can in some circumstances be not as easy
in practice to realize as withdrawing ones membership from an association. This does not
alter the basic applicability of 53 (2) GmbHG if an arbitration agreement is subsequently
introduced by amending the articles of association; for as is shown by a comparison with
association law (see supra, para. 42 et seq.) even far-reaching limitations on the principle of
the voluntary nature of membership do not cause the majority principle to be set aside. In
any event, nothing different can be derived from 53 (3) GmbHG.169 Pursuant thereto unlike in association law170 an increase in the performances (Leistungen)171 incumbent upon
a shareholder under the articles of association requires the consent of all of the shareholders.
This provision does not sit well in relation to arbitration clauses in articles of association,
because no obligation to perform is thereby being imposed on the shareholder. Furthermore,
due to the basic equivalence of state jurisdiction and arbitral jurisdiction (see para. 26 supra),
one cannot consider the establishment of an arbitral tribunal to be an increase in obligations
to the detriment of the individual shareholder.
164
165
166
167
168
169
170
171
Habersack, SchiedsVZ 2003, 241 (245); contra the predominant view see supra, para.31; Schmidt, BB
2001, 1857 (1863).
Of course the articles of association can provide this, see OLG Hamm 28.09.1992, GmbHR 1993, 656
(657seq.).
Lutter/Hommelhoff (2012), 34 GmbHG para.70 et seq.; Habersack, SchiedsVZ 2003, 241 (245); however, on the possibility of terminating for good cause see, OLG Hamm 28.09.1992, GmbHR 1993, 656
(658); Lutter/Hommelhoff (2012), 34 GmbHG para.71 et seq.; Baumbach/Hueck-Fastrich (2013), Anh
34 GmbHG para.18 et seq.
Cf. BGH 13.06.1994, BGHZ 126, 226 (230 seq.); Reichert/Weller (eds) (2006), 15 para. 4.
Reichert/Harbarth, NZG 2003, 379 (380 seq.); GroKommGmbHG-Raiser (2006), 13 para.37; Lutter/
Hommelhoff (2012), Anh 47 GmbHG para.98; Baumbach/Hueck-Zllner (2013), Anh 47 GmbHG
para.41; Michalski-Hoffmann (2010), 53 GmbHG para.17; Berger, ZHR 164 (2000) 295 (300 seq.);
Heskamp, RNotZ 2012, 412 (422 seq.).
Klbl (2004), pp.73 seq.; contra Lutter/Hommelhoff (2012), Anh 47 GmbHG para.98.
Cf. Reichert (2009), paras882 seq.
On the definition of performance (Leistung) see Michalski-Hoffmann (2010), 53 GmbHG para.87.
574
50 If one agrees with the opinion held here, then nothing different can apply to amendments to
articles of association in an AG than in a GmbH.172
3.
Joining as a New Member
51 One can also become bound by the articles of association or statutes (and the arbitration
agreement contained therein) by joining a company. Whether 1029ZPO and 1031 ZPO
applies in this case or 1066 ZPO is a matter of controversy. Ultimately, this depends on
what form the closing element takes.
52 If the shareholder is admitted by way of a contract with all of the members (e.g. in a partnership), then in principle nothing different applies than in the case of a company formation (see
supra, para. 34 et seq.). In this case, therefore, 1029 ZPO and 1031 ZPO apply173 because
there is a lack of comparability with the cases expressly stipulated in 1066 ZPO.
53 A (new) member may join by way of legal transaction between him and the company. For
instance, a (new) member may join the entity by entering into an admission agreement
(Aufnahmevertrag) with the association174 or by way of a subscription agreement (bernahmevertrag) in connection with a capital increase (e.g. 55 (1) GmbHG). Whether these
legal transactions fall under 1029 ZPO or under 1066 ZPO is not so clear; for the prerequisites subject to which the person joining becomes bound by the arbitration agreement
contained in the statutes are in part quite controversial. For the law governing limited liability
companies, it is arguably the prevailing opinion that once a new shareholder has joined the
company (and his act of joining has been completed), he or she is automatically bound by
the arbitration agreement contained in the articles of association or statutes without having
to declare his consent to the arbitration agreement separately.175 By contrast, for the law governing associations, the prevailing opinion tends to make a distinction, according to which
the person joining can automatically be bound by the arbitration agreement contained in
the statutes only if the person joining does not have a (statutory) right to be admitted, i.e. the
association in question is not a monopoly association.176 Therefore, as between the person
joining and the monopoly association, an arbitration agreement in the articles of association
is only binding if the person joining has submitted to the arbitration clause separately in the
course of joining.
54 According to the correct opinion, a distinction must be made between various levels of regulation, namely the acquisition of membership on the one hand and the rights and obligations
that ensue from membership on the other hand. If the membership is acquired by way of an
admission agreement or subscription agreement with the company, the closing element is
one that is more akin to 1029 ZPO than to 1066 ZPO. The power to include an arbitration clause in such a contract therefore follows from 1029 ZPO.177 Of course, the reach of
172
173
174
175
176
177
Bender, DB 1998, 1900, 1901, contra Bork, ZHR 1996, 374 (384).
Also to partnerships BGH 11.10.1979, NJW 1980, 1049.
Cf. Reichert (2009), paras935 et seq.
See for example Heskamp, RNotZ 2012, 415 (421); Habersack, SchiedsVZ 2003, 241 (244); Berger,
ZHR 2000, 295 (300 seq.); Rowedder/Schmidt-Leithoff-Pentz (2013), 13 GmbHG para.29; Baumbach/
Hueck-Zllner (2013), Anh 47 GmbHG para.39; GroKommGmbHG-Raiser (2006), 13 para.38;
Zller-Geimer (2014), 1066 para.9; MnchKommZPO-Mnch (2013), 1066 para.8; contra Stein/
Jonas-Schlosser (2002), 1066 para.13; Schwab/Walter (2005), Chap. 32 para.21.
Goette, DStR 2000, 937 (939); criticized by Haas, ZGR 2001, 325 (347 seq.).
Cf. Schwab/Walter (2005), Chap. 32 para.6; Stein/Jonas-Schlosser (2002), 1066 para.8.
1066 Haas
575
an arbitration clause contained in the admission agreement is limited, for it merely covers the
question of whether the person to be admitted has acquired membership or not.
However, for the question of what rights and obligations are associated with the membership, 55
only the articles of association or statutes are relevant. Whether and to what extent an arbitral
tribunal has jurisdiction for disputes arising out of the (validly acquired) membership can
therefore never ensue from the admission agreement, but rather only from the articles of
association or statutes. If the articles of association or statutes contain an arbitration agreement, said agreement is an indivisible part of the membership with the consequence that the
person admitted is automatically bound by it. This case, where the person being admitted is
bound (because of the will of the former member) by the arbitration agreement contained
in the articles of association completely irrespective of whether or not the latter previously
agreed to this, is similar to cases where arbitral jurisdiction is directed by testamentary disposition; for there too the heir or beneficiary is initially bound by the arbitration regardless of
his or her will. However, like in inheritance law, a new member is not left helpless in the face
of a unilaterally directed obligation to be bound by arbitration; for if any attempt by him to
amend the articles of association or the statutes is unsuccessful he can withdraw from the
obligation to be bound by arbitration because his membership is voluntary. Therefore, if he
remains a member, he thereby expresses that he wishes to be bound by the arbitration clause
contained in the articles of association or in the statutes. Unlike the acquisition of membership itself, the closing element, which results in the person being admitted also being bound
by the arbitration clause contained in the articles of association, therefore falls under 1066
ZPO. However, the closing element must therefore be inferred solely from the special acts
governing company law. As such, 1031 ZPO does not apply.178 This does not give rise to a
lacunae in the protection of the person to be admitted; for company law has compared with
1031 ZPO more conformist mechanisms available to protect the person to be admitted
(fair and reasonable test,179 possibility of inspection at the commercial register and register
of associations, imposition of certain obligations to provide information,180 etc.).
Of course, there can be exceptions to the necessity of differentiating between the two levels 56
of regulation (admission and content of the membership). This is, for instance, the case if the
partnership agreement181 or the statutes182 provides the person to be admitted with a right
to be admitted. Membership is then acquired not on the basis of an independent admission
agreement, but rather on the basis of the articles of association or the partnership agreement.
If that contains an arbitration agreement, then said arbitration agreement can provided it
has been drafted appropriately broadly also refer to disputes in relation to the acquisition of
membership. The closing element must then as a whole be classified as falling under 1066
ZPO.
4.
Transfer of Membership
One can also become bound by the statutes or articles of association by acquiring member- 57
ship from another member. If the statutes or articles of association contain an arbitration
178
179
180
181
182
Also concluded by Klbl (2004), p.64.

Cf. Musielak-Voit (2013), 1066 para.8; Haas, ZGR 2001, 325 (347 seq.).
For the association law see for example, Klbl (2004), pp.68 et seq.
For such a case in partnership law, see BGH 31.01.1980, NJW 1980, 1797.
For associations (Vereine) see for example RG 23.11.1922, RGZ 106, 120 (126); Reichert (2009), paras978seq.
576
agreement, the question arises whether said acquisition of membership is to be classified as

falling under 1029 ZPO or under 1066 ZPO. In legal literature, this closing element is
sometimes classified as falling under 1066 ZPO.183 However, the overwhelming opinion
in legal literature as well as in leading cases allocates this act to 1029 ZPO. Surprisingly,
even though the majority view holds 1029 ZPO applicable, it denies protection of the
acquirer through 1031 ZPO. Consequently, also according to the prevailing opinion, there
is no need for a separate declaration by the new member, such as requiring a specific form
and relating to the arbitration agreement contained in the statutes or in the articles of association.184 This view is sometimes justified by referring to 401 BGB, which provides that
ancillary rights pass automatically (independently from the will of the parties) in the event
of an assignment.185 Occasionally a historical argument is also used, namely that by creating
1031 ZPO (or 1027 ZPO pre-1998) the legislator did not intend to make the transfer of
membership more difficult.186
58 According to the correct opinion, in cases of legal succession like in cases where a new
member joins a company the different levels of regulation have to be kept apart. Whether a
legal successor has acquired membership results from a legal transaction between the former
member and the new member. If the legal position was acquired by contract, said act of
acquisition is considerably more akin to 1029 ZPO than to 1066 ZPO. The consequence
of this is that an arbitral tribunal will have jurisdiction with regard to a dispute in connection
with the acquisition of membership only if 1029 ZPO and 1031 ZPO have been fulfilled.
A separate question is the extent to which the member is subject to the arbitration agreement
contained in the statutes or articles of association with regard to the rights and duties that
ensue from membership. Basically, company law extends the content of the articles of association or statutes to the new member completely irrespective of whether and to what extent
the new member agreed to said rules and regulations. In other words, the new member is
subject to the will of the former member that is laid down in the articles of association or
statutes and can withdraw from it only by leaving the company or transferring his membership. This company law closing element is considerably closer to 1066 ZPO than it is to
1029 ZPO, with the consequence that the new member is with regard to his corporate
rights and duties subject to the arbitration clause contained in the articles of association or
in the statutes completely irrespective of whether or not he consented thereto by declaration
(requiring a specific form). In view of the public disclosure made by the commercial register
or insofar as the membership of an association is transferable by the register of associations and the principle of the voluntary nature of membership, the protection afforded to a
new member is not deficient.
5.
Submitting (by Agreement) to the Statutes or Articles of Association
59 In practice, it is frequently the case that third parties submit to the application of statutes or
articles of association by agreement. An example of submission by a third party under the
183
184
185
186
Schmidt, JZ 1989, 1077 (1082); Habersack, SchiedsVZ 2003, 241 (244).

BGH 05.05.1977, BGHZ 68, 356 (359); id. 02.03.1978, BGHZ 71, 162 (164 seq.); id. 02.10.1997, NJW
1998, 371; id. 01.08.2002, NZG 2002, 955; OLG Hamburg 29.01.2004, SchiedsVZ 2004, 266 (268);
Zller-Geimer (2014), 1066 para.9; Reichert (2009), para.4890.
OLG Hamburg 29.01.2004, SchiedsVZ 2004, 266 (268); Reichert/Weller (eds) (2006), 15 para.69;
Roth-Altmeppen, GmbH-Gesetz, Mnchen 2012, 15 GmbHG para. 22; Baumbach/Hueck-Fastrich
(2013), 15 GmbHG para.28; criticised by Habersack, SchiedsVZ 2003, 241 (244).
BGH 31.01.1980, NJW 1980, 1797.
1066 Haas
577
articles of association is when a third party is appointed as the managing director (Geschftsfhrer) of a GmbH or as a director (Vorstand) of an AG. It is the acquisition of the position
as an officer of the company as its managing director or as a director that constitutes the act
whereby the third party submits to the articles of association. Such an acquisition always
requires the consent of the person concerned. No one can be appointed as an officer of a
company against their will. In keeping with the acquisition of the position as an officer of
the company, the officer is then bound by the articles of association.187 Separate consent to
the articles of association or a specific intention to submit to the articles of association is
not required for this, as in the case of acquiring membership.188 Rather, the person is bound
solely by reason of having acquired the position as an officer of the company.189 Finally, a
further example of submission under the articles of association is found in organised sport.
Here, athletes often submit to the statutes, rules and regulations of the sports associations in
licence agreements or other agreements without acquiring the position as a member of the
association.190
It is debatable whether someone becoming bound by the statutes or articles of association 60
(and the arbitration clause contained therein) in the manner described above constitutes a
case that falls under 1066 ZPO. Sometimes this is disputed and it is pointed out that 1066
ZPO covers only those arbitration clauses in statutes or articles of association to which the
person concerned has submitted by virtue of membership. By contrast, other forms of being
bound by the statutes are not covered by the provision.191 This view is surprising because
on the one hand, the act of submitting to the rules and regulations must qualify as falling
under company law. On the other hand, structural differences between for example an
admission agreement (Aufnahmevertrag), where a third party acquires membership of the
association, and a bilateral act of appointment to a managing director or director are not
apparent. However, it is not really understandable why 1066 ZPO should apply to cases
where membership of an association is acquired (see supra, paras 51 et seq.), but not to cases
where the position as an officer of the company is acquired. Therefore, the better reasons
support the argument that 1066 ZPO is to apply.192
C.
Legal Requirements for Establishing an Arbitral Tribunal by Company Law
1.
Minimum Content of the Arbitration Agreement
If a company law arbitration agreement falls under 1066 ZPO, the question arises as to 61
which of the provisions in 1029 et seq. ZPO are to be applied mutatis mutandis. Basically,
the minimum content is to be taken from 1029 (1) ZPO for company law arbitration
agreements.193 This particularly applies to the requirement of certainty and clarity. According
187
188
189
190
191
192
193
Baumbach/Hueck-Zllner/Noack (2013) 35 GmbHG para. 13 et seq.; cf. also Lutter/Hommelhoff-Kleindiek (2012), Anh zu 6 para. 1.
Cf. supra, paras 51 et seq.
Cf. Haas/Hossfeld, FS-Schneider (2011), p.407 (714).
Haas/Hauptmann, SchiedsVZ 2004, 175 et seq.
Cf. MnchKommZPO/Mnch (2013), 1066 paras 16seq.; contra Zller/Geimer (2014), 1066 para. 5;
Haas/Hossfeld, FS-Schneider (2011), p.407 (715).
Cf. in detail Haas/Hossfeld, FS-Schneider (2011), pp.407 (715 et seq.).
578
to the prevailing opinion, an arbitration clause whereby an arbitral tribunal is to have jurisdiction for all claims that flow mutually from the membership is sufficiently certain and clear.194
62 For statutory clauses in the statutes of an association, the Federal Court (Bundesgerichtshof BGH) found in an older decision that, apart from the minimum content, the statutes
must also lay down the selection of the arbitrators and their appointment.195 This opinion has
found many adherents.196 Sometimes, this opinion is also extended to other legal entities.197
However, this view must be rejected. The Higher Regional Court (Oberlandesgericht
OLG) Hamburg was therefore right to refuse to apply these principles to a GmbH.198 If there
is an absence of procedural arrangements, the arbitration agreement is not void; rather, in
such case the statutory provisions in 1034 et seq. ZPO come into play.
2.
Requirement as to Form
63 If 1066 ZPO applies to company law arbitration agreements, the closing element as in
the case of arbitral tribunals established by testamentary disposition is entirely controlled
by the provisions of the applicable company law (HGB, AktG, GmbHG, etc.). The closing
element also includes the requirements as to the form of the arbitral clause to be observed.
Thus, 1031 ZPO is ousted by the respective provisions of the applicable company law.199
3.
An Arbitration Agreements Subjective Reach
64 Usually, the company itself is not involved even in the act that establishes the arbitral jurisdiction. This is, for example, the case upon formation of the company and also in the case of
subsequent amendments to the articles of association or the statutes. The question therefore
arises as to whether not only the individual members but also the company is bound by the
arbitration agreement.200 The prevailing opinion (rightly) assumes this and explains this view
with the argument that the reach of the obligation to be bound by the arbitration agreement
derives from the law that governs the closing element,201 i.e. company law. According to this
view, the company is bound by its own articles of association or its own statutes in all disputes
concerning the companys affairs.202
194
195
196
197
198
199
200
201
202
LG Mnchengladbach 15.01.1986, NJW-RR 1987, 224 seq.; Schwab/Walter (2005), Chap. 32 para.20;
Stein/Jonas-Schlosser (2002), 1066 paras7, 14.
BGH 25.10.1983, NJW 1984, 1355.
OLG Hamm 13.01.1993, NJW-RR 1993, 1536; Baumbach/Lauterbach (2014), 1066 para.4; MnchKommZPO-Mnch (2013), 1066 para.10; Thomas/Putzo-Reichold (2013), 1066 para.1; contra OLG
Mnchen 09.02.1999, NZG 1999, 780 (781).
Musielak-Voit (2013), 1066 para.8; Schwab/Walter (2005), Chap. 32 para.16.
OLG Hamburg 29.01.2004, SchiedsVZ 2004, 266 (268).
LG Mnchengladbach 15.01.1986, NJW-RR 1987, 224; Schmidt, JZ 1989, 1077 (1080); Stein/JonasSchlosser (2002), 1066 para. 4; Zller-Geimer (2014), 1066 para. 24; MnchKommZPO-Mnch
(2013), 1066 para.14; Musielak-Voit (2013), 1066 para.7; Heskamp, RNotZ 2012, 415, 421.
On this problem see generally Bork, ZHR 1996, 374 (379); Bayer, ZIP 2003, 881 (885 seq.).
See alternatively Reichert, Beschlussmngelstreitigkeiten und Schiedsgerichtsbarkeit Gestaltungs- und
Reaktionsmglichkeiten, in: Habersack/Hommelhoff et al. (eds), FS-Ulmer (2003), p.511 (530); Bayer, ZIP 2003, 881(886).
BGH 29.03.1996, BGHZ 132, 278 (284 seq.); see also Bork, ZHR 1996, 374 (379); Bayer, ZIP 2003, 881
(886); also concluded by Berger, ZHR 2000, 295 (302).
1066 Haas
579
Shareholders who have left the company also remain bound for disputes that arise out of 65
their membership insofar as the company law or the statutory arbitration agreement so
provides.203
4.
An Arbitration Agreements Reach in Terms of the Subject Matter Covered
In terms of subject matter, an arbitration agreement in the statutes or articles of association 66

can only refer affairs of the association/company to an arbitral tribunal, but not the private
or affairs of the shareholders or affairs of the shareholders that are not related to the association/company. Examples of disputes covered by the arbitration agreement in the statutes or
articles of association are claims of the shareholder against the company for its approval of
a transfer of shares in the company ( 15 (5) GmbHG), for the provision of information
( 51 GmbHG), disputes relating to the existence and the extent of shareholder rights (e.g.
the right to claim a distribution of profits), claims of a company to call in unpaid capital
from the shareholder or any claims among shareholders that have their origin in company
law.204 Issues which concern the members with regard to their individual claims outside the
membership relationship are also not covered.205 Sometimes it may be difficult to establish
whether a dispute originates in a membership relationship. The reason is that for some forms
of company (e.g. GmbH) the parties are in principle free to incorporate provisions in the
statutes that go beyond the membership relationship. The question then is whether disputes
in relation to such provisions which are contractual rather than statutory in nature are
covered by an arbitration clause in the statutes. The guiding principle for determining the
reach of the statutory arbitration clause in terms of the subject matter is whether in order to
have binding effect on the shareholders the provision requires that it be part of the statutes
or whether it can alternatively be concluded in a separate agreement.206
5.
The objective arbitrability of the dispute referred to the arbitral tribunal depends, in the 67
case of company law arbitration agreements, on 1030 ZPO.207 Pursuant to this provision,
it is admissible to use an arbitral tribunal to decide disputes between an association and
its members, between the members as well as issues of rights and duties arising out of the
membership.208 Accordingly, examples of matters which can be referred to arbitration are209
disputes in connection with a shareholders individual right to information (e.g. 51a, b
203
204
205
206
207
208
209
RG 04.05.1926, RGZ 113, 321 (323); BGH 01.08.2002, NZG 2002, 955; LG Konstanz, in: Haas/Haug/
Reschke (eds) (2006), Dok.-No.10181 (p.4); Schwab/Walter (2005), Chap. 32 para.12; MnchKommZPO-Mnch (2013), 1066 para.17; Stein/Jonas-Schlosser (2002), 1066 para.9; Heskamp, RNotZ 2012,
412, 422.
Cf. Heskamp, RNotZ 2012, 415 (430 seq.).
BGH 25.10.1962, BGHZ 38, 155 (161); OLG Hamm 07.02.1990, GmbHR 1990, 557 (558); Schmidt,
JZ 1989, 1077 (1083); Schwab/Walter (2005), Chap. 32 para.10; Stein/Jonas-Schlosser (2002), 1066
para.6; MnchKommZPO-Mnch (2013), 1066 para.18; Musielak-Voit (2013), 1066 para.9; ZllerGeimer (2014), 1066 para.4; Heskamp, RNotZ 2012, 412 (422).
Heskamp, RNotZ 2012, 412 (422).
Stein/Jonas-Schlosser (2002), 1066 para.4; GroKommGmbHG-Raiser (2006), 13 para.39; limited
Baumbach/Lauterbach (2014), 1066 para.3; GroKommGmbHG-Raiser (2006), 13 para.39; Reichert
(2009), para.4873.
Cf. also Heskamp, RNotZ 2012, 412 (429 seq.).
580
GmbHG,210 166 (3)HGB,211 the raising and maintenance of capital,212 other contribution
obligations,213 the distribution of profits, the acquisition and loss of membership (e.g. by
expulsion),214 disciplinary measures under the law governing associations,215 a shareholders
indemnification216 or the distribution of assets by the liquidators.217 An organs disputes can
also be referred to arbitration.218 In the past, leading cases have allegedly denied the arbitrability of disputes relating to the validity of shareholders resolutions of a GmbH or an AG.
However, in a widely acclaimed decision of 6 April 2009 (Schiedsfhigkeit II), the BGH stated
that disputes regarding the validity of shareholders resolutions are arbitrable, provided that
the arbitral proceedings offer a level of protection that is comparable to court proceedings.219
6.
Fair and Reasonable Test
68 Just like every other legal transaction, the establishment of arbitral jurisdiction in statutes
or in articles of association are subject to the fair and reasonable tests under 134 and
138 BGB.220 Apart from these general rules, the special company law concepts provide for
a more in-depth fair and reasonableness test (e.g. 242 BGB in the case of economically
and socially powerful associations,221 307 et seq. BGB applied mutatis mutandis to public
companies,222 etc.) particularly for special risky situations in which, because of a special balance of power, a decision which reasonably takes the interests of the company into account
cannot be expected.223 This protection also applies in the context of 1066ZPO (see supra,
para. 26). What is problematic in terms of a fair and reasonable test is, for example, if in
view of a legal dispute, which has already arisen between an association and a member the
association introduces an arbitration clause by amending the statutes so as to prevent the
member from having recourse to the state courts.224
210
211
212
213
214
215
216
217
218
219
220
221
222
223
224
OLG Hamm 07.03.2000, NZG 2000, 1182 (1183) (note by Ebbing); GroKommGmbHG-Raiser (2006),
13 para.39; Bork, JZ 1987, 100 seq.; contra LG Mnchengladbach 15.01.1986, NJW-RR 1987, 224 (225).
BayObLG, BayObLGZ 1978, 294, 298 seq.; Baumbach/Hueck-Zllner (2013), 51b GmbHG para.3.
BGH 19.07.2004, BGHZ 160, 127, 133 seq.; different view GroKommGmbHG-Raiser (2006), 13
para.39 note 67.
OLG Nrnberg 31.07.1975, OLGZ 1975, 437 (438).
Reichert (2009), paras4870, 4877.
Stein/Jonas-Schlosser (2002), 1066 para. 7; Haas, in: Haas/Haug/Reschke (eds) 2006, B. Chap. 2
para.158.
Scholz-Schmidt, GmbH-Gesetz, Kln 2010, 72 para.6.
Reichert (2009), para.4871; Zller-Geimer (2014), 1066 para.5.
BGH 06.04.2009, DNotZ 2009, 938; for comments on this judgment see Albrecht, NZG 2010, 486 et
seq.; Borris, NZG 2010, 481 et seq.; Nolting, NotBZ 2009, 241 et seq.; for further references cf. Heskamp,
RNotZ 2012, 415 (430) Hauschild, DNotZ 2012, 577, footnote 34.
Schwab/Walter (2005), Chap. 32 para.13; Haas/Hauptmann, SchiedsVZ 2004, 175 (177 et seq.).
Haas, in: Haas/Haug/Reschke (eds) 2006, B. Chap. 2, paras34 et seq.; Haas/Hauptmann, SchiedsVZ
2004, 175 (177 et seq.).
Schmidt, BB 2001, 1857 (1863).
Cf. also Heskamp, RNotZ 2012, 415 (427 et seq.).
RG 09.03.1934, RGZ 144, 96 (102 et seq.); contra OLG Hamm 10.02.1999, BB 1999, Beilage No. 11,
p.10(12).
1066 Haas
D.
581
Statutory Arbitration Clauses and Foreign Law Applicable to the Company
It is debatable which law governs the arbitration clause in the statutes/articles of association 69
if a foreign law applies to the company. Occasionally there is support for the opinion that in
such cases the foreign lex causae applies.225 However, this opinion must be rejected. Instead,
the power as to whether arbitral jurisdiction can be established by an arbitration clause in
the statutes/articles of association must be categorised as a question of procedural law and
therefore in principle depends on the domestic law of the forum (lex fori).226 If the arbitral
tribunal is domiciled in Germany, the power to establish arbitral jurisdiction by arbitration
clauses inserted in statutes/articles of associations is governed by German law.
V.
Other Cases in which Arbitral Jurisdiction is Established Unilaterally
An arbitral tribunal within the meaning of 1066 ZPO can also be set up by endowment227 70
or by the offer of a reward (657 et seq. BGB).228 The offer of a reward includes prize competitions (661 BGB), whereby the judges who decide on the awarding of the prize but do
not act as arbitrators because what they have to decide is not a legal contest, but rather it is a
performance contest.229
VI. 1066 ZPO and the New York Convention 1958

Occasionally there is support for the opinion that awards that are based on a disposition 71
that falls under 1066 ZPO do not fall within the scope of application of the New York
Convention 1958 (NYC). The reasons given for this are that the NYC only covers awards
which are made on the basis of an arbitration agreement.230 In practical terms, this opinion
would have the consequence that foreign awards by arbitral tribunals that are not based on
an agreement could not be enforced in Germany; for in relation to recognition and enforcement 1061 ZPO refers to the NYC.231 However, this opinion must also be rejected from
a legal aspect.232 The NYC must be interpreted autonomously.233 The inherent distinction
made in German law (but not necessarily in other legal orders)234 between arbitral tribunals
whose legitimation is based on various forms of private autonomy (but which are equivalent
in terms of merit) cannot be taken as a basis for the NYC. Also, the wording of the NYC does
not force one to interpret the conventions sphere of application narrowly; for Article I (2)
NYC expressly states that the convention applies to all awards made by an arbitral tribunal to
which the parties have submitted. According to this provision, it is therefore necessary that that
225
226
227
228
229
230
231
232
233
234
Heskamp, RNotZ 2012, 415, 424 seq.

Zller-Geimer (2014), 1066 para. 2; Musielak-Voit (2013), 1066 para. 6; Thomas/Putzo-Reichold
(2013), 1066 para.1; Stein/Jonas-Schlosser (2002), 1066 para.3; Stumpf, SchiedsVZ 2009, 266.
Stein/Jonas-Schlosser (2002), 1066 para.3; Musielak-Voit (2013), 1066 para.6; Thomas/Putzo-Reichold (2013), 1066 para.1.
Moller, Schiedsverfahrensnovelle und Vollstreckung auslndischer Schiedssprche, NZG 1999, 143
(145); Kreindler/Schfer/Wolff (2006), para.87; in this tenor, for awards of an arbitral tribunal established by testamentary disposition see Bandel, NotBZ 2005, 381 (382).
See supra, Krll, 1061 para. 1.
Zller-Geimer (2014), 1066 para.26; Haas, SchiedsVZ 2011, 289 (291 et seq.); Weigand-Haas (2002),
NYC, Art. I para.53.
Weigand-Haas (2002), NYC, Preliminary Remarks para.8
Beckmann (2007), pp.221 et seq.
582
award was made on a party-autonomous basis. However, Article I NYC does not stipulate
any particular form of private autonomy.
72 No limitation on the scope of application can be derived from the material on the convention either. Furthermore, objectively there is no reason for a restrictive interpretation; for the
private autonomy realized in company law or inheritance law is not inferior when compared
with contractual autonomy. Secondly, they create relationships between the persons concerned that are similar to those between parties to a contract. It is precisely this consideration
which moved the European Court of Justice (ECJ) to put choice of forum clauses contained
in statutes235 on par with contractual choice of forum clauses and to treat them uniformly in
accordance with Article 23 of the Regulation on Jurisdiction and Enforcement of Judgements
in Civil and Commercial Matters.236 If such a broad understanding of the term agreement
is possible under this European regulation, then it does not seem very cogent why the same
should not be possible with regard to the scope of application of the NYC.237
73 At first glance, the requirement as to form contained in Art. II (2) NYC seems to set an insurmountable hurdle for the recognition and enforcement of arbitral awards rendered on the
basis of 1066 ZPO.238 However, when examined more closely, the difficulties are put into
perspective as, from a comparative law point of view, there is clearly a trend towards softening
the requirement as to form under Art. II (2) NYC. Starting points for this are, firstly, the
most-favoured nation clause in Art. VII (1) NYC. This provision allows recourse to such
rules and regulations as are more favourable than the NYC for the party pursuing recognition and enforcement.239 Secondly, there is a trend towards categorizing Art. II (2) not as
a minimum standard, but merely as a maximum standard.240 Finally, there is also a trend
towards softening Art. II (2) NYC by interpreting the provision in the light of the revised
Art. 7 UNCITRAL Model Law.241
235
236
237
238
239
240
241
On this in detail see Mlbert, ZZP 2005, 313 et seq.

ECJ 10.3.1992, RIW 1992, 492 (493); on this see Hess, ZZPInt 1998, 457 (463); Haas, SchiedsVZ 2011,
289 (292 seq.).
Haas, SchiedsVZ 2011, 289 (293 seq.).
Geimer, IPRax 2006, 233 (235).
Cf. Haas, SchiedsVZ 2011, 289 (295 et seq.).
Born (2009), pp. 538 et seq.; Schramm/Geisinger/Pinsolle, in: Kronke/Nacimiento/Otto/Port (eds), Recognition and enforcement of foreign arbitral awards (2010) pp. 75 seq.; cf. also Haas, SchiedsVZ 2011,
289 (297 et seq.).
Haas, SchiedsVZ 2011, 289 (298 et seq.).
PART III
COMMENTARY ON THE ARBITRATION RULES OF THE
DIS Introduction
Francesca Mazza
I.
Background and Profile of the Institution
The German Institution of Arbitration (DIS) is one of the worlds leading international 1
arbitration institutions. The DIS is located in Germany and administers both domestic and
international cases. The DIS is the most important and widely used arbitral institution on
the German territory and has developed a solid position in the arena of international arbitration institutions over the years. The DIS has a longstanding tradition as a dispute resolution
service provider that reaches back to the 1920s. The DIS as known today, a private and
independent not-for-profit association, was formed on 1 January 1992 as an amalgamation
of the German Arbitration Committee (DAS founded in 1920 by leading organizations
of German business and industry) and the German Arbitration Institute (DIS founded
in 1974 by business federations, academics and arbitration practitioners). The DIS is now
well-established both for international and domestic arbitrations and is known for its commitment to excellence and efficiency.
The DIS is a private and fully independent institution that sets its own policy and is not at- 2
tached to any chamber of commerce, government or other body. It is a modern and innovative
institution that quickly responds to the needs of the market, as the following two examples
might illustrate. The first is the Court of Arbitration for Sport and the second is the Conflict
Management Rules. Since 2008 the DIS, unlike most of the other leading international commercial arbitration institutions worldwide, hosts a Court of Arbitration for Sport devoted to
the resolution of sports-related disputes. This reflects the economic importance of modern
sport. The DIS founded the Court of Arbitration for Sport in 2008 with a stand-alone set of
DIS Arbitration Rules for Sport in order to facilitate the resolution of sport-related disputes
by means of procedural rules adapted to the specific needs of the sports world. Sport-related
disputes include disputes relating to breaches of anti-doping rules, disputes arising in the
context of sports events, transfer disputes, disputes concerning licensing and sponsoring
agreements.
Another example of DIS innovative fuel is the Conflict Management Rules, which were is- 3
sued in 2010 and which recognize that the needs of the users of an arbitral institution are best
served if in appropriate cases the arbitration can be avoided. The DIS Conflict Management
Rules (effective since 1 May 2010) provide for the appointment of a conflict manager by the
DIS, who will assist the parties in selecting an appropriate dispute resolution mechanism
once a dispute has arisen and, possibly, in agreeing on a procedural frame in order to control
time and costs. Pursuant to DIS Conflict Management Rules, the conflict manager may make
proposals regarding the dispute resolution procedure to the parties; however, the conflict
manager has no decision-making power.
II.
Structure of the Institution
The DIS is an association with its legal seat and an office in Berlin and its headquarters in 4
Cologne. At the time of writing, the DIS has more than 1,150 members from Germany and
elsewhere in the world, including practitioners and academics engaged in domestic and
586
international arbitration, major trade organizations and chambers of commerce, companies,

judges and other people or entities with an interest in dispute resolution. However, the
dispute resolution services are independent from the associations other activities and are
therefore accessible for non-members as well.
5 The DIS operates with the following organs:
Board of Directors: 19 Members at the time of writing
Advisory Board: 19 Members at the time of writing
Appointing Committee: 3 Members + 3 Alternate Members at the time of writing
6 The DIS Secretariat performs the day-to-day-management of its dispute resolution and
other services under the directions of the DIS Secretary General. The DIS Secretariat has
a multi-national and multi-lingual staff, whose commitment, professionalism and efficiency
are highly valued by its users. Certain decisions concerning the case management (e.g., default nomination of arbitrators, increase of arbitrators fees) are made by the DIS Appointing
Committee, which decides through written majority vote.
III. The Dispute Resolution Services of the DIS

7 The DIS has a long tradition as a dispute resolution service provider and a wealth of experience in administering dispute resolution procedures. It offers a wide range of dispute resolution services for commercial disputes, based on first-rate sets of rules (arbitration, mediation,
conflict management, adjudication, expert determination, expertise, conciliation). The DIS
dispute resolution rules and tools may all be used as stand-alone sets of rules, as well as concurrently or successively.
8 The following sets of rules are available to the users:
DIS Arbitration Rules, Supplementary Rules for Expedited Proceedings, Supplementary Rules for Corporate Disputes
DIS Mediation Rules
DIS Rules on Expert Determination
DIS-Rules on Expertise
DIS Adjudication Rules
DIS Conciliation Rules
DIS Conflict Management Rules
UNCITRAL Rules administered by the DIS
DIS Arbitration Rules for Sport
9 The above-mentioned rules, as well as corresponding model clauses, are available in several
different languages on the DIS website (DIS Rules, DIS Model Clauses).
10 In all cases, the DIS provides a neutral, efficient and reliable dispute resolution service. The
DIS staff members pride themselves on commitment, rigour, excellence and enhanced
customer value. The staffs concern is always to provide an efficient and straightforward solution to any issue that might arise at any stage of the arbitration or other dispute resolution
procedure.
DIS Introduction Mazza
587
The following table sets out the DIS dispute resolution instruments in the areas of ADR and 11
arbitration. It illustrates both the practical results of the different proceedings and their legal
effects. As can be seen from the table, the DIS covers the entire spectrum of dispute resolution mechanisms. There are only two situations in which the DIS is naturally not present:
where the parties decide to enter into settlement negotiations or chose to take the matter to
a state court.
Aimed at resolution through
settlement
Negotiations between the parties
without involvement of a third
party
Negotiations between the parties
with the support of a neutral
third party:
DIS Mediation Rules
DIS Conciliation Rules
Aimed at a determination by a third person
Decision of a sole
Adjudicator/Dispute
Adjudication Board
(DAB):
DIS Adjudication Rules
If no objection
within a month
(Negotiations between the

Experts decision:
parties on the basis of the nonRules on Expert
binding opinion of a neutral third Determination
party: DIS Rules on Expertise)
AMICABLE SETTLEMENT/
SETTLEMENT AGREEMENT
PRELIMINARILY
BINDING DECISION
BINDING ON A CONTRACTUAL BASIS
Arbitral award
of an arbitral
tribunal:
DIS Arbitration
Rules
Judgement of state
court
BINDING
DECISION
BINDING
DECISION
ENFORCEABLE
IV. Other Services Offered by the DIS

The DIS works to promote the development of dispute resolution-related scholarship and 12
teaching. It regularly organizes conferences and it publishes the German Arbitration Journal,
which includes articles on topical issues in arbitration, as well as arbitration case law, with
contributions from distinguished arbitration practitioners and academics. Every two years,
the DIS awards a prize to recognize outstanding academic work in the field of arbitration
or other types of alternative dispute resolution. The DIS also provides access to state court
jurisprudence in arbitration-related matters through its online database.
A.
Arbitration under the DIS Rules
1.
Introduction
The DIS Arbitration Rules can be used for resolving disputes of any size and sector of 13
economy by parties from any part of the world, both through domestic and international
arbitration. Parties may agree on the application of the DIS Rules without having to be members of the DIS. Over the past five years, approximately 35 per cent of the cases administered
588
by the DIS involve parties of different nationalities. Parties come from most parts of Europe:
almost all of the Eurozone countries (Austria, Belgium, Cyprus, Finland, France, Germany,
Greece, Ireland, Italy, Luxembourg, Monaco, the Netherlands, Portugal, Slovenia and Spain),
as well as many other European countries such as Bulgaria, Czech Republic, Denmark,
Hungary, Latvia, Liechtenstein, Norway, Poland, Romania, Serbia, Sweden, Switzerland and
the United Kingdom. The list of non-European parties over the past few years includes the
following countries: Australia, Azerbaijan, Canada, Chile, Hong Kong, India, Iran, Japan,
Korea, the Peoples Republic of China, Russian Federation, Singapore, South Africa, Taiwan,
Turkey, the Ukraine, the United Arab Emirates and the United States.
2.
DIS Arbitration Rules and Supplementary Rules
14 The 1998 DIS Arbitration Rules are a modern set of arbitration rules that places a strong
emphasis on party autonomy in order to accommodate the diverse needs of its large user
constituency. For the convenience of users, the DIS Arbitration Rules are available in German (official text), English, French, Spanish, Turkish, Russian and Chinese.
15 Responding to the concerns and interests of its users, the DIS issued Supplementary Rules
for Expedited Proceedings on 1 April 2008. These rules supplement the 1998 DIS Arbitration Rules. Their salient features are: the resolution of the dispute by a sole arbitrator as the
default mechanism (with the flexibility to opt for a three-member tribunal), a limitation of
the number of briefs to be exchanged between the parties (request for arbitration and answer,
followed by one round of additional briefs), one oral hearing only and a total duration of less
than six months (in case of a sole arbitrator) and nine months (in case of a three-member
tribunal) for the arbitral proceedings.
16 The DIS also issued Supplementary Rules for Corporate Law Disputes on 15 September
2009. These rules supplement the DIS 1998 Arbitration Rules and are designed specifically
for resolving disputes relating to resolutions of limited liability companies.
17 The DIS Arbitration Rules and the above-mentioned supplementary rules, as well as corresponding model clauses, are available in several different languages on the DIS website (DIS
Rules, DIS Model Clauses).
3.
Expeditious, Smooth and Cost-Effective Case Administration
18 With the DIS, the dispute resolution procedures are less heavily administered than with other
institutions although parties, counsel or arbitrators may of course require the assistance of
the institution at any time. This choice was made in order to maintain a maximum degree
of flexibility and help increase the time efficiency, significantly reduce costs, and constantly
improve the quality of services.
19 In DIS arbitrations, a cap on both the institutions administrative fees and the fact that there
is no range for the arbitrators fees (but rather a fixed amount) helps in controlling the costs
of the arbitration. Both the DIS administrative fee and the arbitrators fees are calculated on
the basis of an ad valorem scale (cf. schedule of costs contained in Appendix to Section 40.5).
Another cost relevant factor is that many of the arbitrations administered under the DIS
Arbitration Rules are resolved in less than a year from the time of filing. The average duration
of the cases closed over the past years, from the filing of the statement of claim with the DIS
through the final award, was 14 months.
B.
589
DIS Arbitration at a Glance
The DIS Arbitration Rules are characterized by a high degree of flexibility and the possibility 20
to tailor the proceedings to fit the specific nature of the individual dispute, as well as the
needs and expectations of the parties involved in that dispute. There is, however, a frame
and pattern that the DIS arbitrations will follow. The typical steps of DIS arbitration and
recurrent issues of procedural relevance are set out briefly below.
1.
Statement of Claim
The arbitration commences with the filing of the statement of claim with the DIS Secretariat 21
(Section 6). The DIS Rules do not provide for a filing fee. However, in practice, parties often
pay the DIS administrative fee and the provisional advance already at the time of filing the
statement of claim (a cost calculator is available on the DIS website). The DIS Secretariat
welcomes this practice, as the upfront payment underlines the seriousness of claimants intention to proceed and accelerates the initial steps.
2.
Case Manager and Case Assistants
Upon receipt of the statement of claim by the DIS, the case is assigned to a case manager 22
responsible for the day-to-day administration of the case with the assistance of paralegal staff.
Throughout the entire proceedings, the case management team is available to answer any
questions the parties, their counsel or the arbitrators may have.
3.
Acknowledgement of Receipt
The first step taken by the case manager is to acknowledge receipt of claimants statement 23
of claim. To the extent the statement of claim or its exhibits have not been submitted in the
requisite number of copies or the statement of claim is otherwise incomplete (see Sections
6.2 and 6.3), the DIS Secretariat also sets a time limit for claimant to comply (Section 6.4).
The DIS Secretariat also requests the claimant to pay an amount which corresponds to the 24
sum of the DIS administrative fee and the provisional advance on the arbitrators fees (Section 7.1) and sets a time limit for payment (Section 7.2). If payment has already been made
at the time of filing the request, the amount already paid will be credited towards any further
payment requested at this stage of the proceedings.
In the case that the claimant does not comply with the Secretariats requests within the set 25
time limit, the proceedings are terminated without prejudice to the claimants right to later
reintroduce the same claim (Section 6.4).
The DIS Rules do not foresee any formal process of jurisdictional review. However, if the DIS 26
Secretariat considers that there is a manifest and serious jurisdictional problem, it will inform
the claimant before taking any further steps.
4.
Delivery of Statement of Claim to Respondent
The DIS Secretariat may make delivery of the statement of claim to the respondent contin- 27
gent upon receipt of the requisite number of copies of the statement of claim and payment
of the requested payment (Section 8). In practice, the Secretariat will generally make use of
this power. It will therefore generally not proceed with the delivery to respondent until the
requested payment and a sufficient number of copies of the statement of claim are received.
The DIS Arbitration Rules do not foresee a fixed time limit for respondent to file its statement
590
of defence. Rather, this deadline is fixed by the arbitral tribunal once fully constituted (Section 8; see below).
5.
Constitution of Arbitral Tribunal
28 The DIS Rules foresee a three-member tribunal (Section 3). They also envisage that for a
three-member tribunal, the chairman is nominated by the two co-arbitrators, as described
further below (Section 12.2). However, the parties may of course agree that the case be heard
by a sole arbitrator. Parties may ask the DIS Secretariat for a proposal of suitable arbitrators
(Section 2.3).
a)
Nomination of an Arbitrator
29 Sole Arbitrator: Where the dispute is to be determined by a sole arbitrator, the parties may
jointly nominate a person to act as sole arbitrator within 30 days after receipt of the statement
of claim by respondent. Failing an agreement, each party may request that the DIS Appointing Committee nominate the sole arbitrator (Section 14).
30 Arbitrator Nominated by Claimant: Where the dispute is to be determined by a three-member
arbitral tribunal, the claimant is required to nominate an arbitrator at the time of filing its
statement of claim (Section 6. 2, no. 5), failing which the DIS Secretariat will set a time limit
for nomination (Section 6.4).1
31 Arbitrator Nominated by Respondent: Where the dispute is to be determined by a threemember arbitral tribunal, the DIS Secretariat requests the respondent to nominate an arbitrator within 30 days from receipt of the statement of claim (Section 12. 1; extendable upon
request). If no such nomination by respondent is received, the claimant may request the DIS
Appointing Committee to nominate an arbitrator (Section 12.1). In practice, claimants will
often already include such request in the statement of claim.2
32 Presiding Arbitrator: The two arbitrators nominated by the parties or on their behalf are
invited to select and jointly nominate the chairman of the arbitral tribunal (Section 12.2, Section 13.2). In practice, the two arbitrators are invited by the DIS Secretariat to do so within
30 days following their confirmation by the DIS Secretary General, pursuant to Section 17
(see below). If the DIS Secretariat does not receive a nomination, each party may request
nomination of the chairman by the DIS Appointing Committee (Section 12.2, see below).3
33 Default Nomination by the DIS Appointing Committee: If the DIS Appointing Committee has
been requested to nominate an arbitrator, it will do so upon proposal of a candidate by the
DIS Secretariat. If the Appointing Committee nominates the proposed candidate, the parties are then notified of the Appointing Committees decision, provided with the arbitrators
1
If claimant does not nominate an arbitrator within such time limit, the proceedings may be terminated
without prejudice to claimants right to later reintroduce the same claim (Sections 6.4, 39.3). In practice,
however, the foregoing scenario is very rare since most cases of a declaration of termination by the DIS
relate to failure by claimant to pay the DIS administrative fee and provisional advance (Section 7.2, see
above).
If no such request from claimant is received and respondent does not nominate an arbitrator (even after
the 30-day period has expired), the DIS Secretariat may terminate the proceedings after having consulted
the parties (Section 39.3).
If no such request is received, the DIS Secretariat may terminate the proceedings after having consulted
the parties (Section 39.3).
591
declaration of acceptance and given an opportunity (usually three days) to comment prior to
any confirmation under Section 17.
b)
Acceptance of Office of Arbitrator
Prior to be being considered for confirmation or, as the case may be, proposal to the DIS 34
Appointing Committee (see above), the nominee is requested by the DIS Secretariat to declare whether he accepts the nomination (Section 16). Each arbitrator must be impartial and
independent (Section 15) and shall disclose all circumstances which are likely to give rise to
doubts as to his independence and impartiality (Section 16.1). This obligation to disclose
is a continuing one throughout the proceedings (Section 16.3). Once the DIS Secretariat
has received the arbitrators declaration of acceptance, it forwards such declaration to the
parties and gives them an opportunity to comment. In the case of the arbitrators nominated
by the parties, the parties are granted ten days, irrespective of whether the arbitrators declaration is qualified (i.e., circumstances apparent which are likely to give rise to doubts as to his
impartiality or independence) or unqualified (i.e., no such circumstances disclosed). In the
case of the chairman, the parties are granted ten days to comment in the case of a qualified
declaration and three days in the case of an unqualified declaration.
Confirmation by DIS Secretary General/ DIS Appointing Committee: Once the parties have 35
had an opportunity to comment on the arbitrators declaration of acceptance and no party
objects to the confirmation of such arbitrator within the time limit set (Section 17.1), the
DIS Secretary General may confirm the nominated arbitrator(s). This also applies to arbitrators nominated by the DIS Appointing Committee (see above). Where the arbitrator has,
however, provided a contested declaration of acceptance, the DIS Appointing Committee
(not the Secretary General) decides on the confirmation of that arbitrator (Section 17.2). In
practice, in the case of a three-member tribunal, the two co-arbitrators are confirmed at the
same time and, thereafter, the chairman is confirmed.
6.
Transmission of the File to the Arbitral Tribunal
Once the tribunal is fully constituted (Section 17.3), the DIS Secretariat transmits the case 36
file to each arbitrator. Upon receipt of the file, the chairman presides over the proceedings
(Section 24.3). All communications shall thereafter be sent directly to the arbitral tribunal
by the parties. It should, however, be noted that any counterclaim must be filed with the
DIS (Section 10.1), notwithstanding the tribunals constitution. From this stage on, the
Secretariat will no longer exercise a pro-active role, but is always available upon request by
the parties or the tribunal.
Setting a Time Limit for Statement of Defence: Once constituted, the tribunal will set a deadline 37
for the respondent to file its statement of defence. In doing so, the arbitral tribunal exercises
its discretion but will take into account the date on which the respondent received the statement of claim (Section 9). In addition, the tribunal will consider the complexity of the case
and the size of the file. In practice, arbitral tribunals, after consulting the parties, tend to
set reasonably short deadlines (approximately 3-4 weeks) for submission of statements of
defence. This is because a certain amount of time between the date the respondent receives
the statement of claim and the date on which the tribunal is constituted has usually elapsed.
Decisions Regarding Seat, Language and Applicable Law: As mentioned above, DIS arbitrations 38
are less heavily administered than the proceedings under the rules of some other international
592
arbitral institutions. Indeed, a number of decisions are left to the arbitral tribunal (sections
2.11, 22.1 and 23) in the absence of a parties agreement. In practice, however, parties often
agree on the seat, language or applicable law.
39 Handling of Advance Payments: When transferring the file, the DIS Secretariat transfers the
provisional advance on arbitrators fees (paid by the Claimant in the initial phase of the
arbitration) to the chairmans account. The tribunal is thereafter responsible for collecting
any further arbitrators fees and may make continuation of proceedings contingent upon payments of advances on the anticipated costs of the tribunal (Section 25). In doing so, the tribunal will request each party to pay one half of the advance (taking into account the provisional
advance already paid by claimant to the DIS, and, as the case may be, any counterclaim4).
40 Deciding on any Challenge: Pursuant to Section 18, the Arbitral Tribunal will decide on any
challenge filed by a party. In practice, the challenged arbitrator will abstain from the decision.
41 Conduct and Closing of the Proceedings: The DIS Rules provide both the tribunal and the parties considerable flexibility in the conduct of their arbitration, so that they may tailor the
proceedings to the nature of the dispute and the needs of the parties. In DIS arbitrations, an
oral hearing will generally take place. The parties may, however, agree otherwise (Section
28), although this is rare in practice. In most cases, a hearing will take place after one or more
rounds of written submissions. The tribunal may, when satisfied that the parties have had a
sufficient opportunity to present their case, set a time limit after which it may reject further
pleadings by the parties respecting the facts of the case (Section 31).
42 Awards: The arbitral tribunal is under an obligation to render an award within a reasonable
period of time (Section 33.1). In practice, as reflected by the short average duration of DIS
arbitrations, most DIS arbitral tribunals proceed promptly with deliberations after closing
the proceedings and then prepare the award. In the case of a three-member tribunal, any
decision of the tribunal shall be made by a majority of the tribunal (Section 33.3). The award
is made in writing, then dated and signed by the arbitrators (Section 34); it is then sent in the
requisite number of signed original copies to the DIS Secretariat (Section 36.1). Prior to notification, the DIS Secretariat performs a brief review of the award. Unless the review unveils
any issues that require clarification or correction, the DIS Secretariat usually dispatches one
original of the award to each party (Section 36.2) within one business day of receipt.
Since a counterclaim is usually only filed after the arbitral tribunal has been constituted and has set a time
limit for the respondent to file a response to the claim, the DIS Rules do not foresee that Respondent pay
to the DIS a provisional advance on the arbitrators fees in the case of a counterclaim causing an increase
to the amount in dispute. Rather, it is left to the arbitral tribunal to request the parties to make any further
advances on their fees resulting from the increased amount in dispute.
Section 1 Scope of Application1

1.1
The Arbitration Rules set forth herein apply to disputes which, pursuant to an
agreement concluded between the parties, are to be decided by an arbitral tribunal
in accordance with the Arbitration Rules of the German Institution of Arbitration
(DIS).
1.2
Unless otherwise agreed by the parties, the Arbitration Rules in effect on the date
of commencement of the arbitral proceedings apply to the dispute.
I.
Scope
The provision determines the general applicability of the German Institution of Arbitration 1
(Deutsche Institution fr Schiedsgerichtsbarkeit DIS) Arbitration Rules to a certain dispute
as well as the specific version of the Rules.
II.
Detailed Commentary
A.
Nature of Arbitration Rules
Arbitration rules are a non-statutory set of rules. By virtue of the arbitration agreement, 2
the arbitration rules regulate the multi-sided relationship between the parties, between the
parties and the arbitration institution, as well as between the parties, the arbitrators and the
institution on the manner in which the arbitration is to be conducted.
The arbitration agreement must be incorporated into the contract between the parties by 3
inclusion of a contract clause or by concluding a separate agreement. Neither the arbitration
institution nor the potential arbitrators are directly involved at this stage.
The requirements for valid incorporation are determined, inter alia, by the law applicable to 4
the arbitration agreement, which may vary from country to country.
B.
1.
Content of the Agreement
The content of the agreement is to resolve disputes by arbitration to the exclusion of the 5
state courts. For example, under German arbitration law the exclusion of the competence
of state courts must be clear and unequivocal. An agreement granting one party the right to
choose between arbitration and state courts is permissible under German law, as long as the
circumstances under which the choice is to be exercised is clear and cannot be reversed once
the other party has initiated proceedings.
2.
Designation of the DIS
Where the parties refer to an arbitration institution, the institution must be clearly and un- 6
equivocally designated.
The name of the institution or its commonly known abbreviation is usually a sufficient des- 7
ignation. The registered name of DIS is Deutsche Institution fr Schiedsgerichtsbarkeit e.V.
1
594
(DIS); its English translation is German Institution of Arbitration. Minor deviations, e.g.
German Institute of (or for) Arbitration, do not render the designation unclear.
8 If an arbitration agreement contains a reference to a German arbitration institution, the
courts tend to accept it as a reference to the DIS. This may even occur if the designated
institution does not exist as such, e.g. Arbitration Court of the Central German Chamber of
Commerce. In this particular case, the court accepted that the parties intended to designate
an existing German institution that provides arbitration services on a nation-wide (and international) level and for all sectors of the economy and (as was apparent from the reference to
the Central Chamber of Commerce) that closely cooperates with the German chambers of
industry and commerce and its representative body, German Association of Chambers of
Industry and Commerce (Deutscher Industrie- und Handelskammertag DIHK). As all of
these characteristics applied to DIS, the court held that in spite of the erroneous designation,
the parties had actually intended to refer the dispute to arbitration under the DIS Arbitration
Rules.2
9 Nevertheless, this case may serve as caution for parties to take care in drafting arbitration
agreements. In order to avoid uncertainty and delays resulting from an unclear and therefore
possibly invalid designation, it is strongly recommended to keep arbitration clauses short
and simple and to deviate from the wording of the recommended arbitration clause3 only if
strictly necessary.
10 The DIS has concluded agreements with a number of German chambers of industry and
commerce,4 pursuant to which the DIS administers arbitrations under their arbitration rules.
These arbitration rules provide uniformly that the proceedings are conducted by the DIS in
accordance with the DIS Arbitration Rules, except that by default the place of arbitration is
the seat of the respective Chamber of Industry and Commerce, that proceedings may also
be filed at the respective chamber of industry and commerce in deviation of Section 6.1 DIS
Rules5 and that substitute nominations of arbitrators pursuant to Sections 12, 13 or 14 DIS
Rules are made by the chamber of industry and commerce.
3.
Unclear Designation of Arbitral Institution
11 If the designation of the institution is unclear, the arbitration agreement is subject to interpretation. Courts and arbitral tribunals generally tend to interpret arbitration agreements in
favour of their validity and will uphold them if in spite of an unclear designation of the arbitral
institution there is sufficient evidence of the parties intention to refer their dispute to a distinct and existing institution.6 If the arbitration agreement refers to two (or more) conflicting
2
3
4
KG Berlin 15.10.1999, RPS 37/2000, 13; KG Berlin, Beschluss vom 3. 9. 2012 20 SchH 2/12.
See supra, Mazza, Introduction to DIS, paras 33 et seq.
Currently agreements to this effect exist with the Chambers of Industry and Commerce of Berlin, Bonn/
Rhein-Sieg, Cologne, Frankfurt am Main, Stuttgart, Munich, Bodensee-Oberschwaben, Reutlingen,
Mittlerer Niederrhein (Krefeld-Mnchengladbach-Neuss), Ulm, Mnster, Heilbronn-Franken, Bielefeld, Gera, Sdthringen-Suhl and Siegen. Other chambers are also considering to conclude an agreement with DIS.
If the claim (or after commencement any other brief) is filed with the chamber of industry and commerce, the statement of claim or brief is transmitted to the DIS Main Secretariat in Cologne where the
proceedings are administered.
KG Berlin 15.10.1999, RPS 37/2000, 13 (German Central Chamber of Commerce); OLG Oldenburg
20.06.2006, SchiedsVZ 2006, 39 (Internationales Schiedsgericht in sterreich); KG Berlin, Beschluss
vom 3. 9. 2012 20 SchH 2/12 (German Chamber of Commerce).
Section 1 Bredow/Mulder
595
arbitration institutions,7 or combines two distinct existing arbitration rules, e.g. UNCITRAL
Arbitration Rules and DIS Arbitration Rules the situation is more problematic.
Since the DIS does not review the validity of arbitration agreements upon the filing of a 12
statement of claim, in the case of controversy a decision on which set of arbitration rules if
any are applicable to the dispute can only be rendered by the arbitral tribunal still to be
constituted.8
C.
The dispute must fall within the scope of the arbitration agreement. If an objection is raised 13
to the competence of the arbitral tribunal on this ground, the arbitral tribunal must decide
whether the dispute in question falls within the scope of the arbitration agreement.
If the place of arbitration is in Germany, a decision of the arbitral tribunal confirming its 14
jurisdiction can be reviewed by the state courts.9
D.
Validity of the Arbitration Agreement
The validity of the arbitration agreement is determined by the law applicable to the arbitration 15
agreement, which may be distinct from the law applicable to the substance of the dispute.10
The DIS Arbitration Rules neither contain provisions on the validity of an arbitration agree- 16
ment nor on the law applicable to the arbitration agreement. To the extent that there are no
overriding statutory provisions, the parties are free to determine the law applicable to the
arbitration agreement.
The DIS Arbitration Rules also do not contain a provision on the arbitrability of claims. 17
Therefore, they can apply to disputes involving any claim which is arbitrable under the relevant law. In Germany for instance, the arbitrability of the claim in dispute is governed by
1030 Code of Civil Procedure (Zivilprozessordnung ZPO).
Similarly, the DIS Arbitration Rules do not contain provisions governing the form of arbitra- 18
tion agreement, as these are determined by the relevant statutory provisions.11
III. DIS Practice

The DIS Arbitration Rules do not provide for a compulsory prima facie review of the validity 19
of the arbitration agreement12 by the DIS when a statement of claim is filed. Therefore, even
if the reference to applicability of the DIS Arbitration Rules is ambiguous or non-existent,
the DIS will not refuse to administer the proceedings. It will, however, draw the claimants
attention to possible problems in respect to the validity (or scope) of the arbitration agreement and to the fact that in the case of an objection by the respondent to the validity of the
agreement, it is for the arbitral tribunal still to be constituted to decide whether it has
jurisdiction for the dispute.
7
8
9
10
11
12
E.g. International Chamber of Industry and Commerce Frankfurt.

See infra, paras 19 et seq.
1040 (3) ZPO.
See e.g. Lachmann(2008), paras 267 et seq.
E.g. in Germany 1031 ZPO.
To be submitted when filing a statement of claim, s. 6.2 (4) DIS Rules.
596
20 If in the light of these considerations the claimant elects to pursue his claims under the DIS
Arbitration Rules, DIS will continue to administer the proceedings and, if all other prerequisites are met, deliver the statement of claim to the respondent. It will not of its own accord
inform the respondent of any possible concerns regarding the validity in order not to appear
to prejudge the issue or to jeopardize the possibility that the respondent accepts the jurisdiction of the arbitral tribunal by entering into argument on the merits of the case without
objecting to the competence of the arbitral tribunal.
21 If the respondent objects to the competence of the arbitral tribunal,13 the decision on the
validity of the arbitration clause rests with the arbitral tribunal.14 In order to obtain a decision
of the arbitral tribunal, it must be constituted pursuant to the DIS Arbitration Rules. If the
respondent does not nominate an arbitrator within the set time limit of 30 days, the claimant
may request nomination by the Appointing Committee in order to continue the constitution
of the arbitral tribunal.
22 If the place of arbitration is in Germany, the arbitral tribunals decision affirming its jurisdiction15 is subject to review by the state courts. A request to review the decision must be filed
by the objecting party within one month of having received written notice of the arbitral
tribunals decision.16
23 A decision by the arbitral tribunal rejecting its jurisdiction is rendered by a final procedural
award (Prozessschiedsspruch) which can only be reviewed in proceedings (before the state
courts) in an application to set aside the award pursuant to 1059 ZPO.17
IV. Comparison to Other Arbitration Rules

24 Comparable provisions governing the scope of application and transition of arbitration
rules are found in the arbitration rules of other arbitral institutions as well. Like Section 1
DIS Rules, Article 6 of the Rules of Arbitration of the International Chamber of Commerce
(ICC),18 Article 1 of the Swiss Rules of International Arbitration (Swiss Rules)19 and the
Preamble of the London Court of International Arbitration (LCIA) Arbitration Rules20
provide that save for an agreement by the parties to the contrary, the arbitration rules apply
to all proceedings commenced on or after the date of entry into force of the arbitration rules,
irrespective of the date of conclusion of the arbitration agreement.
25 Though the wording of Article 47 of the Rules of Arbitration of the International Arbitral
Centre of the Austrian Federal Economic Chamber (Vienna International Arbitration
Center, VIAC)21 does not mention it explicitly, in light of Article 25 sentence 2 of the previous version of the Vienna Rules (of 1 January 2001), it must be assumed that also under
13
14
15
16
17
18
19
20
21
If the place of arbitration is in Germany, the objection must be raised no later than the submission of the
statement of defence, 1040 (2) ZPO.
OLG Oldenburg 20.06.2005, SchiedsVZ 2006, 223.
The arbitral tribunals decision affirming its jurisdiction is issued in principle by means of a preliminary
ruling, 1040 (3) ZPO.
1040 (3) ZPO.
BGH 06.06.2002, SchiedsVZ 2003, 39.
Effective as of 1 January 2012.
Effective as of 1 June 2012.
Effective as of 1 January 1998.
Effective as of 1 July 2013.
597
the Vienna Rules it will still be possible for parties to agree explicitly that a previous set of
arbitration rules may be applied to the proceedings.
Section 2 Selection of Arbitrators1

2.1
The parties are free in their selection and nomination of arbitrators.
2.2
Unless otherwise agreed by the parties, the chairman of the arbitral tribunal or the
sole arbitrator, as the case may be, shall be a lawyer.
2.3
Upon request, the DIS will make suggestions for the selection of arbitrators.
I.
Purpose and Background
1 The provisions contained in Section 2 DIS Rules incorporate the principle that the parties to
the arbitration are free to select and nominate the arbitrators. As a consequence, the parties
have great flexibility and have the decisive role in forming the arbitral tribunal.
II.
Detailed Commentary and DIS Practice
A.
Section 2.1 DIS Rules
2 The selection of an arbitrator refers to the internal decision making process of a party concerning the person of the arbitrator. Generally, each party is free to set up standards under
which it intends to select an arbitrator and to apply such standards.
3 The only restrictions in this respect are qualifications of the arbitrator agreed upon in the
arbitration agreement and the requirement that the chairman of the arbitral tribunal or the
sole arbitrator must be a lawyer (Section 2.2 DIS Rules), unless the parties agree otherwise.
4 In addition, the right of free selection might be limited for other reasons stemming from the
sphere of the arbitrator. German state judges, for example, may only act as arbitrators if they
have been granted permission by their supervising authorities (mainly the President of the
competent Higher Regional Court) pursuant to 40 (1) German Judges Act (Deutsches
Richtergesetz DRiG).2 Permission is (among other requirements) only granted if the judge
who is to act as arbitrator is appointed by both parties or by an organization independent
from the parties (such as the German Institution of Arbitration (Deutsche Institution fr
Schiedsgerichtsbarkeit DIS)).3 It is important to note in this context that the stipulation
in the arbitration agreement pursuant to which a judge may act (also) as party-appointed
arbitrator is not regarded as an anticipated approval under 40 (1)DRiG.4
5 There is no obligation on the selecting party to disclose the reasons for its selection to the
other party.
6 The result of the selection process, i.e. the name of the respective arbitrator, has to be communicated to the DIS Secretariat and is called the nomination. In the event that an arbitral
tribunal consisting of three arbitrators is to be constituted, the claimant nominates an arbitrator in the statement of claim (see Section 6.2 (5) DIS Rules) and the respondent nominates
an arbitrator in response to the respective request of the DIS Secretariat pursuant to Section
1
2
3
Lachmann (2008), paras 847 et seq.; Rtzel/Wegen/Wilske (2005), p. 119.
Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 2 para. 4 (p. 154); Weigand-Hanefeld (2009),
Germany, para.49.
OLG Hamm 18.09.2003; KG Berlin 06.05.2002, SchiedsVZ 2003, 186.
Section 2 Elsing
599
12.1 DIS Rules. If a sole arbitrator is to be appointed, the parties in the event that they
could agree on a person either communicate the nomination jointly to the DIS Secretariat
or one of the parties forwards the nomination followed by a confirmation of the other party
pursuant to which it agrees to the nomination.
The nomination is regarded as a constitutive declaration of intent (gestaltende Willenserkl- 7
rung) which becomes binding as soon as it has been received by the DIS Secretariat (see also
Section 12.1 DIS Rules).5
The nomination should not be confused with the appointment of an arbitrator. The arbitra- 8
tor is appointed to office only upon confirmation by the DIS Secretary General pursuant to
Section17.1 DIS Rules.
B.
With regard to the selection of the chairman of the arbitral tribunal or of a sole arbitrator, 9
Section 2.2 DIS Rules contains a limitation on the parties right of free selection provided
that the parties have not agreed otherwise, that the person to be nominated must be a lawyer.
It is not a matter of course that an arbitrator must have a legal background. One of the ad- 10
vantages of arbitration is that the parties may select arbitrators who have special expertise in
certain areas, such as technicians or accountants, and thereby tailor the arbitral tribunal (and
its expertise) to the needs of the dispute.
However, an arbitrators experience and knowledge in procedural (arbitration) law can be 11
regarded to be as important as special expertise.6 The satisfactory resolution of the dispute is
aided considerably if the chairman or sole arbitrator is a lawyer even though the freedom of
the parties to select arbitrators is (slightly) limited thereby. There are also practical advantages
to a lawyer as arbitrator. The involvement of a lawyer intends to minimize the risk of violation
of procedural requirements which could ultimately lead to the annulment of the award. In
addition, a lawyer might be more suitable to assess whether the subject matter of the dispute
is arbitrable or if it is covered by the scope of the arbitration agreement.
A lawyer is anyone who has fully completed a legal education regardless of whether such 12
legal education has been obtained in Germany or in another State.7 The current wording
of Section 2.2 DIS Rules reflects the criticism of the previous version of Section 2.2 DIS
Rules pursuant to which, in proceedings involving only German parties, the chairman of the
arbitral tribunal or the sole arbitrator must have been qualified to hold judicial office. Such
wording was taken from 5 DRiG,8 which provides that the qualification to act as a judge is
obtained upon successful completion of the German second state law exam. The provision
led, however, to uncertainties as to the question when an arbitrator with a non-German legal
education would fulfil the requirement set.9 In order to remedy these uncertainties, Section
2.2 DIS Rules now uses the more neutral word lawyer (Jurist) as opposed to attorney
5
6
7
8
9
Schtze-Theune(2011), DIS-Schiedsgerichtsordnung, 2 para. 1 (p. 153).

Schlosser, Befugnisse und Pflichten des Schiedsgerichtsobmanns, SchiedsVZ 2003, 1.
Bredow, DIS MAT IV (1998), p. 111 (114); Lachmann, Klippen fr die Schiedsvereinbarung, SchiedsVZ
2003, 28 (32); Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 2 para. 2 (p. 154).
In force since 19 April 1972 (BGBl. 1972 I, 713).
Bredow, Die Mitwirkung der Deutschen Institution fr Schiedsgerichtsbarkeit bei der Durchfhrung von
Schiedsgerichtsverfahren, in: Plantey et al. (eds), FSGlossner, 1994, p. 51 (54); Schtze-Theune (2011),
DIS-Schiedsgerichtsordnung, 2 para. 2 (p. 155).
600
(Rechtsanwalt) which under German terms means a lawyer who is admitted to the German
bar.
C.
13 This subsection basically constitutes a service offered by DIS. Upon a request made by a
party, DIS (without assuming any responsibility in this regard) provides such party with
information concerning persons who might be considered as arbitrator based on their respective expertise and experience.
III. Comparison with Other Arbitration Rules

14 While Section 2 DIS Rules is generally in line with provisions in rules of other institutions,
there are some differences in detail. The provision contained in Article 13 (5) International
Chamber of Commerce (ICC) Arbitration Rules, for example, places more emphasis on the
fact that the chairman of the arbitral tribunal or the sole arbitrator should (in general) be of a
nationality other than those of the parties. A similar provision can be found in Article 6 (1)
London Court of International Arbitration (LCIA) Arbitration Rules.
15 The requirement that, absent an agreement between the parties, the chairman of the arbitral
tribunal or the sole arbitrator must be a lawyer is not contained in the ICC Rules, LCIA
Rules, Swiss Rules, Vienna Rules or the American Arbitration Association (AAA) International Dispute Resolution Procedures.
Section 3 Number of Arbitrators1

Unless otherwise agreed by the parties, the arbitral tribunal consists of three arbitrators.
I.
In domestic and international arbitrations, disputes are generally decided by a sole arbitrator 1
or by an arbitral tribunal consisting of three arbitrators. In very limited cases, panels with
five or more arbitrators are constituted. In the event that the arbitration agreement does not
state the number of arbitrators, the institutional rules to be applied should give the parties
respective guidance. For arbitrations under the DIS Arbitration Rules, Section 3 DIS Rules
provides that, in the absence of agreement between the parties, the arbitral tribunal shall
consist of three arbitrators. Its wording is similar to 1034 (1) Code of Civil Procedure
(Zivilprozessordnung ZPO).
II.
When determining the appropriate number of arbitrators, several considerations must be 2

taken into account by the parties. One of the most important aspects is the quality of the
arbitration. The constitution of an arbitral tribunal consisting of three arbitrators allows the
parties to agree on arbitrators with expertise in different areas. In the case of a three-arbitrator
panel, it can also be specified that one of the arbitrators should have a certain technical expertise without limiting the entire arbitration panel to this expertise. In this way, parties may
ensure that a specific expertise is represented on the panel while at the same time they may
ensure that the other arbitrators have, or the chairman of the arbitral tribunal has, extensive
experience in other fields. In the assessment of many parties, a three-arbitrator panel also
guarantees proceedings with fewer flaws, as three arbitrators are more likely to detect any
errors than just one. It should be noted in this context that, in contrast to proceedings in
state courts which may only be completed after the third and final appeal, arbitration in most
cases is completed upon the rendering of the final award, i.e. after only one instance. The
award might be followed by proceedings regarding its recognition or its setting aside. Such
proceedings can, however, not be regarded as an appeal on the merits; as a general rule, they
are limited to the review of the award in respect of specific (procedural) errors (e.g. violation
of public policy), and not of its merits. Thus, having only one full level of proceedings available, both parties share an interest that the arbitration is carried out without any procedural
or other errors. In addition, from a psychological point of view, parties have the comfort of
knowing that they have appointed a member of the arbitral tribunal who is competent to
(finally) decide the dispute.
On the other hand, the costs of the arbitration obviously increase when three arbitrators are 3
to be appointed (and paid). In particular, in arbitrations involving a low amount in dispute
and/or uncomplicated legal issues, the appointment of a sole arbitrator would therefore appear to be more reasonable.2 In addition, proceedings under a sole arbitrator may be quicker
1
2
See also Hantke, Die Bildung des Schiedsgerichts, SchiedsVZ 2003, 269; Redfern/Hunter (2009), paras
4.25 et seq.
602
as the arbitrator does not have to deliberate or coordinate dates for the oral hearing or for
conferences with fellow arbitrators.
4 Taking into account the above mentioned aspects, the German Institution of Arbitration
(Deutsche Institution fr Schiedsgerichtsbarkeit DIS) made a decision that, as a general
rule and in the absence of a respective agreement between the parties, an arbitral tribunal in
arbitrations under the DIS Arbitration Rules consists of three arbitrators. This policy decision has been criticized as being too inflexible and inappropriate for certain disputes.3 Such
criticism is, however, not justified and not shared by other legal authorities.4 The advantages
of a three-arbitrator panel as set out above are obvious and it is therefore reasonable to make
this general rule if the parties have not agreed on one arbitrator.
5 Nevertheless, it should be noted that Section 3 DIS Rules places the burden of responsibility on the parties. They must decide when drafting the arbitration clause if disputes under
the contract(s) should be decided by an arbitral tribunal consisting of three arbitrators. If
they prefer a sole arbitrator or a panel with more than three arbitrators, they must include an
express stipulation in the arbitration clause to this effect.

6 Compared with other institutional rules such as the rules of the International Chamber of
Commerce (ICC), London Court of International Arbitration (LCIA), American Arbitration Association (AAA), Vienna International Arbitration Centre (VIAC), Stockholm
Chamber of Commerce (SCC) or the Swiss Rules, it is striking that the DIS Arbitration
Rules are the only set of rules which provide for the constitution of a three-arbitrator panel if
the parties have not agreed otherwise.5
7 The provision set forth in Article 12 (2) ICC Arbitration Rules, for example, provides that,
in the absence of a respective agreement between the parties, the ICC International Court
of Arbitration shall appoint a sole arbitrator unless it comes to the conclusion that the dispute is such as to warrant the appointment of three arbitrators. While this wording provides
for more flexibility, it also causes a higher degree of uncertainty for the parties who, when
drafting the arbitration agreement without a stipulation regarding the number of arbitrators,
cannot anticipate whether the dispute will be resolved by a sole arbitrator or by a threearbitrator panel. This may lead to the situation that a claimant (in a situation in which the
arbitration agreement provides for arbitration under the ICC Arbitration Rules and contains
no stipulation as to the number of arbitrators) is of the opinion that the dispute warrants the
appointment of three arbitrators. It contacts and finally appoints an arbitrator in its arbitral
complaint. However, such appointment may be disregarded when the ICC International
Court of Arbitration decides that a sole arbitrator is to be appointed. Thus, the price for
higher flexibility may not only be a higher degree of uncertainty, but also an increased (and
finally redundant) volume of administrative work in preparation of the arbitral complaint.
8 Similarly to Section 3 DIS Rules, Article 7 of the UNCITRAL Arbitration Rules also provides for a three-member tribunal unless the parties have previously agreed otherwise. In
the context of investment arbitration, Article 37 (2) (b) of the ICSID Convention on the
3
4
Aden (2003), Part C, 3 paras 1, 2.

Hantke, Die Bildung des Schiedsgerichts, SchiedsVZ 2003, 269; Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 3 para. 1 (p. 155).
Kreindler/Schfer/Wolff (2006), para. 293.
Section 3 Elsing
603
Settlement of Investment Disputes between States and Nationals of Other States in conjunction with Rule 2 of the ICSID Rules of Procedure for Arbitration Proceedings (ICSID
Arbitration Rules) foresees the constitution of a three-arbitrator panel in the absence of an
agreement between the conflicting parties.
Section 4 Requisite Copies of Written Pleadings and Attachments1

All written pleadings and attachments shall be submitted in a number of copies at least
sufficient to provide one copy for each arbitrator, for each party and, in case the pleadings are filed with DIS, one copy for the latter.
I.
Scope and Statutory Background
1 Section 4 DIS Rules specifies the number of copies of the written communications that must
be submitted and exchanged by mail. The provision governs (i.) communications between
the parties and the German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) as well as (ii.) communications between the parties and the arbitrators.2
2 The DIS Secretariat does not maintain a full file of the arbitral proceedings. Its primary function is to ensure the proper constitution of the arbitral tribunal. After constitution of the
arbitral tribunal, it is not necessary to submit a copy of every brief or communication to the
DIS Secretariat. DIS only requires copies of briefs exchanged between the parties and the
arbitral tribunal in specific situations.3
3 Neither the UNCITRAL Model Law nor German arbitration law contains an express provision to the same effect. The provision in the DIS Arbitration Rules draws to some extent on
133 Code of Civil Procedure (Zivilprozessordnung ZPO), which applies to proceedings
before state courts only and not to arbitral proceedings. It serves to secure due process by
ensuring that each arbitrator has full access to the pleadings of the parties and that each party
is fully informed of the pleadings of the other side. It must be read in conjunction with Section 5.1 DIS Rules below.
II.
Detailed Commentary
4 Up to the time of constitution of the arbitral tribunal, communications between the parties and the arbitrators (after their nomination) are transmitted by DIS to the participants.
Thereafter, the arbitral tribunal is in charge of the proceedings, and written submissions are
in principle exchanged only between the arbitrators and the parties. After constitution of
the arbitral tribunal, pleadings need to be filed with DIS only where the Arbitration Rules so
provide, e.g. in the case of extensions/amendments of the relief claimed by the claimant or
a joinder (Section 6.1 and 10 DIS Rules mutatis mutandis), a counterclaim (Section 10 DIS
Rules) or a challenge to an arbitrator (Section 18.2 DIS Rules). Only in these cases must a
copy of the brief be provided for DIS.
5 As each arbitrator maintains a full file of the proceedings, a copy of every written communication must be provided for each arbitrator. Thus, a total of five copies in the case of a
three-member arbitral tribunal (one for DIS, one for the other party and three for the arbitral
tribunal) or three copies in the case of a sole arbitrator (one for DIS, one for the other party
and one for the sole arbitrator) must be distributed.
1
2
3
See also infra, Bredow/Mulder, s. 5 paras 3 et seq.
See infra, para. 4.
605
Only one copy needs to be provided for each other party, even where that party is represented 6
by counsel. However, it is common practice and advisable to submit an additional courtesy
copy of the statement of claim (without attachments) in those cases where the respondent is
(or is likely to be) represented by counsel.
If several parties are represented by the same counsel, a copy must be provided for each party, 7
though in practice other arrangements4 can be made and are made for reasons of convenience, e.g. where the briefs are particularly voluminous or where briefs are (also) submitted
by e-mail.
Failure to observe a request for additional copies in the case of a statement of claim will result 8
in the statement of claim being deemed incomplete.5 The proceedings will then be terminated without prejudice to the claimants right to reintroduce the same claim.
III. DIS Practice

When a statement of claim (or counterclaim) is filed with DIS without the requisite number 9
of copies, DIS will request the submitting party to supply the additional copies within a
reasonable period of time, usually 30 days.
An extension of the time limit can be granted if the need is sufficiently justified. In the case of 10
repeated requests for extension, DIS may grant the extension and draw the requesting partys
attention to the fact that the time of commencement pursuant to Section 6.1 DIS Rules may
be affected by the delay in submitting a complete statement of claim.
IV. Comparison with Other Arbitration Rules

Similar provisions on the number of copies which must be submitted to the institution, 11
and more particularly provisions stipulating that a copy must be provided for every party
and every arbitrator as well as for the arbitration institution, are found e.g. in Article 3 (1)
International Chamber of Commerce (ICC) Arbitration Rules, Article 3 (3) Swiss Rules
and Art. 7 (2) Vienna Rules. A somewhat different approach is taken by the London Court
of International Arbitration (LCIA) Arbitration Rules, where it is up to the parties to deliver
the written communications (Request for Arbitration and Response) to each other,6 so
that pursuant to Articles 1 (2) and 2 (2) LCIA Arbitration Rules the submitting party only
needs to submit one copy for each arbitrator and one for the registrar.
5
6
E.g. the parties and the arbitral tribunal may agree that a lesser number of copies (one or two) for counsel
of the multiple party side will be sufficient.
See s. 6.4 DIS Rules.
Cf. Art. 1 (1)(f), (g) and Art. 2 (1)(e) LCIA Rules.
Section 5 Delivery of Written Communications1

5.1
The statement of claim and written pleadings, containing pleas as to the merits of
the claim or a withdrawal of the claim, shall be delivered by registered mail/return
receipt requested or by courier, telefax or other means of delivery inasmuch as
they provide a record of receipt. All other written communications may be delivered by any other means of delivery. All written communications and information
submitted to the arbitral tribunal shall likewise be conveyed to the other party at
the same time.
5.2
Delivery of all written communications by the parties, the arbitral tribunal or the
DIS Secretariat shall be made to the last-known address, as provided by the addressee or, as the case may be, by the other party.
5.3
If the whereabouts of a party or a person entitled to receive communications on

his behalf are not known, any written communication shall be deemed to have
been received on the day on which it could have been received at the last-known
address upon proper delivery by registered mail/return receipt requested, or by
courier, telefax or other means of delivery inasmuch as they provide a record of
receipt.
5.4
If a written communication delivered in accordance with subsection1 of this Section is received by any other means, delivery is deemed to have been effected not
later than at the time of actual receipt.
5.5
Where a party has retained legal representation, delivery should be made to the
latter.
I.
1 Since the statutory provisions for service in state court proceedings do not apply to privately organized dispute resolution, securing proper delivery of the essential documents in
a proceeding, and therefore the opportunity for the opposing party to properly receive and
respond to the allegations contained therein, is an essential aspect of due process.
2 Section 5 DIS Rules does not regulate the actual receipt, but only the manner of delivery to
ensure that the addressee has the opportunity to take note of the communication.
II.
Detailed Commentary
3 Section 5 DIS Rules reflects Article 3 UNCITRAL Model Law and 1028 Code of Civil
Procedure (Zivilprozessordnung ZPO). It also takes into account current international
practice of using available and secure means of delivering written communications.
4 Section 5 DIS Rules covers a number of different aspects of effecting delivery of written
communications in a German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) arbitration.
A.
607
The statement of claim as well as written pleadings affecting the subject matter of the dispute, 5
i.e. additional claims, extension to additional parties, counterclaims or a withdrawal of the
claims or part thereof, must be delivered in such a manner that a record of receipt is provided.
The parties are free to use any means of delivery, i.e. by courier, registered mail (with return 6
receipt), facsimile or email2 to the extent that a record of receipt is provided. When such
pleadings are filed with the DIS Secretariat, DIS will confirm receipt thereof in writing (as a
rule, on the same day by fax or shortly thereafter) without undue delay, thus providing the
parties with a record of receipt irrespective of the means of delivery.
Section 5.1 sentence 2 DIS Rules merely serves to clarify that other written communications 7
can be delivered in any preferred manner.
Subsection 1 sentence 3 determines that it is up to the party sending a communication to 8
ensure that the communication is directed to all persons involved, i.e. the arbitral tribunal
and the other party, at the same time. It is not the function of either the chairman of the
arbitral tribunal or the DIS to ensure that the pleadings are forwarded to the parties and the
co-arbitrators.
However, in practice, parties sometimes send all copies of a brief or communication to the 9
chairman or to DIS, expecting them to transmit the copies to the other participants to the
proceedings even after constitution of the arbitral tribunal. To avoid delay, DIS will usually
forward the brief to the members of the arbitral tribunal and the other party, drawing the
submitting partys attention to Section5.1 sentence 3 DIS Rules.
For practical purposes, the arbitral tribunal and the parties may agree that receipt by the chair- 10
man of the arbitral tribunal or the sole arbitrator shall be the definitive moment of receipt for
the purpose of complying with time limits. The arbitral tribunal may also set additional rules
for the manner of delivering written pleadings where pleadings are filed by telefax or e-mail.
B.
Deliveries are to be made to the last known address of a party. It is not the duty of the arbitral 11
tribunal or DIS to establish the actual whereabouts of the parties. Rather, it follows from
the arbitration agreement that parties to an arbitration agreement are obliged to inform each
other of address changes.3 If a party fails to do so, it will not affect the proper delivery of
communications to the last known address.
In consequence, DIS will deliver the communications to the last known address provided 12
by the requesting party. If it transpires that the addressee is no longer available at that address, DIS will forward that information to the requesting party and give it the opportunity
to obtain the correct address.
C.
This provision, which is modelled on Article 3 UNCITRAL Model Law and 1028 ZPO, 13
elaborates on the previous subsection and establishes that communications delivered to the
2
Bredow, Part O, in: Kronke/Melis/Schnyder (eds.), Handbuch Internationales Wirtschaftsrecht, Kln

2005, para. 503.
608
last known address will be deemed to have been received by that party if the current whereabouts of that party are not known.
14 If a party has failed to inform the arbitral tribunal or the other party of a change of address,
the alleged failure to receive the relevant communication will not constitute a violation of the
procedural rights of that party.4
D.
15 This provision deals with the situation that delivery of a written communication envisaged
by subsection 1, i.e. a statement of claim, etc., is made by any other means. Under subsection 4, such other delivery will be deemed to be proper delivery for the purpose of the DIS
Arbitration Rules and the communication will be deemed to have been received on the date
of the actual receipt.
E.
16 This provision extends a well-entrenched principle of attorney-client relations in DIS arbitration, i.e. that where a party is represented by a lawyer, communications are only to be made to
the lawyer. It is therefore essential for a party to inform the other party, the arbitral tribunal
and DIS of any change in the legal representation so as to ensure that at all times all relevant
written communications can be transmitted to the proper addressee.
17 In DIS arbitration, there is no requirement that a party must be represented by a lawyer or
that a lawyer must be admitted to practice to a certain bar or country. Parties are therefore
free to select their representative.
18 The Arbitration Rules do not contain any specific rules on the professional relationships
between the parties, their lawyers and the arbitrators. While the relationship between a party
and its legal representative will be primarily governed by the professional rules (including
provisions on the remuneration of services) applicable to the lawyers professional domicile,5
the international context in which many arbitrations take place may give cause to consider
also the professional rules applying at the place of arbitration or at the seat of the party represented. Since arbitration rules are an expression of party agreement and it is not up to the
parties to regulate the professional conduct of lawyers, arbitration rules are not the proper
forum to regulate such matters. It is rather up to the arbitral tribunal to determine in the
event that such an issue is raised if the relevant professional rules have been complied with,
in particular if the relationship between lawyer and party has been properly established.
19 To this end, an arbitral tribunal may request from a lawyer (or any other person) representing a party in arbitral proceedings proof of proper authorization. There is no specific form
required for presenting such proof and the arbitral tribunal is free to evaluate the proof
submitted in its discretion.
III. DIS Practice

20 In DIS practice, proper authorization of counsel representing the parties is usually submitted in the form and manner prescribed by the rules governing the conduct of lawyers at the
lawyers professional domicile. For German lawyers, it means that it is normally sufficient to
4
5

BGH 02.03.2006.
609
allege proper authorization and to submit an actual (original) copy of the authorization only
if so requested by the other party.

Similar provisions aimed at ensuring proper delivery of written communications to the par- 21
ties are found in Article 3 International Chamber of Commerce (ICC) Arbitration Rules,
Article 12 Vienna Rules, Article 8 of the Arbitration Rules of the Stockholm Chamber of
Commerce6 and Article 4 London Court of International Arbitration (LCIA) Arbitration
Rules.
In force as of 1 January 2010.
Section 6 Commencement of Arbitral Proceedings1

6.1
The claimant shall file the statement of claim with a DIS Secretariat. Arbitral proceedings commence upon receipt of the statement of claim by a DIS Secretariat.
6.2
The statement of claim shall contain:

(1) identification of the parties,
(2) specification of the relief sought,
(3) particulars regarding the facts and circumstances which give rise to the
claim(s),
(4) reproduction of the arbitration agreement,
(5) nomination of an arbitrator, unless the parties have agreed on a decision by
sole arbitrator.
6.3
In addition, the statement of claim should contain:

(1) particulars regarding the amount in dispute,
(2) proposals for the nomination of an arbitrator, where the parties have agreed
on a decision by sole arbitrator,
(3) particulars regarding the place of arbitration, the language of the proceedings
and the rules applicable to the substance of the dispute.
6.4
If the statement of claim is incomplete or if the copies or attachments are not submitted in the requisite number, the DIS Secretariat requests the claimant to make
a corresponding supplementation and sets a time limit for compliance.
Commencement of the arbitral proceedings pursuant to subsection1, sentence2
of this section is not affected as long as supplementation is made within the set
time limit; otherwise, the proceedings are terminated without prejudice to the
claimants right to reintroduce the same claim.
I.
1 In particular, parties who are not familiar with arbitral proceedings require guidance as to
where the statement of claim must be filed and what constitutes the mandatory and facultative content. This information is in Section 6 DIS Rules.
II.
A.
2 Pursuant to Section6.1 DIS Rules, the statement of claim has to be filed with a DIS Secretariat.2 DIS Secretariats are currently located in Cologne, Berlin and Munich.3 In situations
in which the prospective respondent is domiciled in a foreign state and the claimant is not
1
2
3
German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS).
Since all proceedings are administered by the Main Secretariat in Cologne, briefs are forwarded from the
Secretariats in Berlin and Munich to Cologne.
Section 6 Elsing
611
familiar with the rules for the service of process with respect to such state, Section 6.1 DIS
Rules may be of substantial assistance for the claimant. This is because the claimant does not
have to deal with unknown or complicated rules of service of process and instead simply has
to file the statement of claim with a DIS Secretariat, which then handles the delivery of the
statement of claim to the respondent (Section 8 DIS Rules).
As soon as the respective DIS Secretariat has received the statement of claim, the arbitral pro- 3
ceedings are commenced.4 This may have several consequences: first of all, the commencement of the arbitral proceedings may depending on the law to be applied to the arbitral
proceedings have the effect that it tolls or interrupts the running of statutes of limitations
(in Germany, for example, pursuant to 204(1) No.11 Civil Code (Brgerliches Gesetzbuch
BGB). In addition, the filing of the statement of claim, based on the legal doctrine of litis
pendens, has the effect that subsequent proceedings between the same parties regarding the
same subject matter as in the arbitration commenced would be inadmissible.
With regard to the relationship between the claimant and DIS, the filing of the statement of 4
claim implies an offer by the claimant towards DIS to enter into a service agreement under
which DIS would render the services as set out in the DIS Arbitration Rules. DIS accepts
such an offer by accepting and dealing with the statement of claim.5
B.
Section6.2 DIS Rules states the mandatory content of the statement of claim. The statement 5
of claim must contain an identification of the relief sought, particulars regarding the facts and
circumstances which give rise to the claim, a reproduction of the arbitration agreement and
a nomination of an arbitrator (unless the parties have agreed on a decision by a sole arbitrator). The quotation of the arbitration agreement in the statement of claim enables the DIS
Secretariat and later the arbitral tribunal to verify the existence and validity of the arbitration
agreement.6
In arbitrations under the DIS Arbitration Rules, it is generally not expected that the statement 6
of claim already contains all particulars regarding the facts and circumstances which give rise
to the claim, including the offer for evidence. In general, following the constitution of the
arbitral tribunal, the parties are given the opportunity to file a detailed statement of claim and
a detailed statement of defence. Nevertheless, the claimant should prepare the statement of
claim as detailed as possible, as it is usually the first document which the arbitrators read and,
as such, constitutes a chance for the claimant to inform the arbitrators in detail about its case
before they read the statement of defence. Claimants should be able to rely on the fact that
they are not required to set out every detail of the claim already in the statement of claim; this
is only done in cases of severe urgency.
C.
The facultative content of a statement of claim is listed in Section6.3 DIS Rules. The claimant 7
is well advised to include in the statement of claim the information mentioned in Section6.3
DIS Rules in order to avoid delays in the proceedings. This is, in particular, true for the
4
5
6
Upon receipt of the statement of claim, the DIS Main Secretariat confirms receipt of the statement of
claim and, where applicable, requests the claimant to supplement the statement of claim.
Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 6 para. 1 (p. 160).
612
statement of the amount in dispute (which is also determinative for the DIS administrative
fee and the provisional advance on costs pursuant to Section 7 DIS Rules and to Annex to
Section 40.5 DIS Rules) and the proposal for the nomination of an arbitrator (where the
parties have agreed on a decision by a sole arbitrator). Details regarding the place of arbitration, the language of the arbitral proceedings and the rules applicable to the substance of the
dispute are often already contained in the arbitration agreement but should nevertheless be
reproduced.
D.
8 In the event that the statement of claim does not contain the mandatory information as
set forth in Section6.1 DIS Rules or if the copies or attachments are not submitted in the
required number, the DIS Secretariat requests that the claimant files the missing information
or documentation within a certain time limit.
9 Non-compliance with the DIS Secretariats additional requests within the time limit set7
may have serious consequences for the claimant, since the second sentence of Section6.4
DIS Rules provides that the proceedings would then be terminated without prejudice to the
claimants right to reintroduce the same claim in the event of non-compliance.
10 The wording of Section6.4 DIS Rules has been criticized as being too vague since it would
not be clear whether the termination of the proceedings implies that the proceedings, despite
the incompleteness of the statement of claim, had commenced (with the possible effect of
the tolling or interruption of the statute of limitations) or whether Section6.4 DIS Rules
must be read in a way that the arbitral proceedings have not commenced from the outset.8
Since Section6.4 DIS Rules uses the term termination, it can be argued that only proceedings which have commenced can be terminated. Hence, the first interpretation appears to be
preferable.9 A further criticism is that the failure to provide the required number of copies
leads to a termination, which is surely not an appropriate sanction.10 Furthermore, unresolved remains the question whether the DIS Secretariat may extend the time limit set for
the correction of any deficiencies of the statement of claim.11 Unlike other provisions, where
the DIS Secretariats authorization is expressly foreseen,12 Section 6.4 DIS Rules is silent in
this regard. Hence, one could argue e contrario that the DIS Secretariat would not be entitled
to extend the deadline. On the other hand, the right to set a time limit logically includes the
right to make an extension thereof.13 Practical considerations, especially with regard to the
far reaching consequences of dismissal, seem to support the DIS Secretariats entitlement to
extend any deadlines within Section 6 DIS Rules.
11 In practice, however, the scope of application of Section6.4 DIS Rules is very limited. If
arbitrations are declared to be terminated by DIS, in most instances this action is based on
7
8
9
10
11
12
13
In practice, most requests under Section 6.4 relate to an insufficient number of copies of the statement
of claim (see supra, Bredow/Mulder, Section 4 DIS Rules, paras 5 et seq.) or a missing nomination of an
arbitrator pursuant to Section6.2(5).
Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 6para.13 (p. 162).
Lachmann (2008), para. 3373; Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 6 para. 12 (p.
161).
E.g. Sections 7.2 and 11.2 DIS Rules.
Section 6 Elsing
613
Section7.2 DIS Rules, i.e. the claimant has failed to pay the DIS administrative fee and the
provisional advance on the arbitrators costs within the time limit set by DIS.

Provisions comparable to Section6 DIS Rules can be found in Article 4 ICC Arbitration 12
Rules, Article 1 LCIA Arbitration Rules, Article 3 Swiss Rules and Article 2 American Arbitration Association (AAA) International Dispute Resolution Procedures.
Section 7 Costs upon Commencement of Proceedings1

7.1
Upon filing the statement of claim, the claimant shall pay to the DIS the administrative fee as well as a provisional advance on the arbitrators costs in accordance with the schedule of costs (appendix to Section40.5) in force on the date of
receipt of the statement of claim by the DIS Secretariat.
7.2
The DIS Secretariat invoices the claimant for the DIS administrative fee and the
provisional advance and, if payment has not already been made, sets a time limit
for payment. If payment is not effected within the time limit, which may be subject
to reasonable extension, the proceedings are terminated without prejudice to the
claimants right to reintroduce the same claim.
I.
1 Arbitration laws only rarely and only in very general terms contain provisions on the costs of
arbitral proceedings. Yet, since arbitration is an entirely privately organized form of dispute
resolution, the parties are responsible for determining the costs of the proceedings an essential element of the proceedings from the perspective of the parties.
2 Institutional arbitration rules like the DIS Arbitration Rules usually contain detailed provisions on the costs of proceedings.2 The predictability of procedural costs is a major advantage
of institutional arbitration over ad hoc arbitration, which is based solely on the applicable
statutory rules usually at the place of arbitration and parties agreement and therefore
often leaves the parties at the mercy of arcane or unclear provisions on the remuneration of
arbitrators.
3 The institutional provisions on costs create greater transparency and make it easier for parties
to assess in advance the costs of proceedings.
II.
DIS Practice
4 The DIS regime for the costs of the arbitral proceedings (which consists of the DIS administrative fee and the arbitrators costs) that comprises their fees and expenses3 is based on the
amount in dispute. Details on the calculation of the costs are contained in the appendix to
Section 40.5 (Schedule of Costs).
5 Section 7 DIS Rules specifies the costs payable upon filing of the statement of claim. At the
outset, the claimant must pay the DIS administrative fee (in full), based on the amount in
dispute at the time of the filing of the statement of claim, as well as an advance on the arbitrators fees, amounting to the fee for a co-arbitrator.4 If the amount in dispute is not quantified
in the statement of claim5 or not determinable, the DIS will make a provisional assessment
1
2
3
4
5
See infra, Bredow/Mulder, Section 40 DIS Rules paras 2 et seq.
No. 17 Schedule of Costs.
S. 6.3 (1). As a rule, DIS bases its calculations at this stage on the indications made by the claimant in
the statement of claim. If the arbitral tribunal eventually assesses a different amount in dispute, DIS will
adjust its administrative fee accordingly and, where applicable, request payment of the increased administrative fee.
615
of the amount in dispute or determine the amount due as administrative fee or provisional
advance on the arbitrators costs.6
The amount of the administrative fee and the arbitrators fees are calculated on the basis of 6
the schedule of costs contained in the appendix to Section 40.5 DIS Rules in force on the day
of the receipt of the statement of claim by DIS. The current appendix became effective on 1
January 2005. A cost calculator to facilitate the determination of the costs of the proceedings
is available on the DIS website.7
The DIS administrative fee is subject to VAT in Germany, irrespective of the place of origin 7
of the parties or the place of arbitration. The invoice for the provisional advance on the arbitrators fees does not include VAT since any VAT liability of the arbitrators cannot yet be
determined with certainty at this stage of the proceedings.
If payment of the administrative fee and the provisional advance is not made upon filing of 8
the statement of claim, DIS invoices the claimant for the amount due and sets a time limit
usually 30 days for the payment. The time limit can be reasonably extended at the discretion of the DIS. As a rule, a single extension of two weeks is granted for payment of the DIS
administrative fee. With regard to the provisional advance, the approach to extensions of the
time limit is more flexible, particularly if the parties are involved in settlement negotiations
and do not wish to continue proceedings for the time being.
If payment is not timely made, the proceedings are terminated without prejudice to the right 9
of the claimant to file the claim anew.
The provisional advance on the arbitrators fees was introduced by the review of the DIS 10
Arbitration Rules in 1998 to address a common occurrence. Previously, it was entirely up
to the arbitral tribunal to ensure that the necessary advances on the arbitrators costs were
paid by the parties. In cases where the parties settled the dispute prior to the constitution
of the entire arbitral tribunal, no advance was paid and the arbitrators were often left to seek
remuneration from the parties for activities and expenses undertaken prior to the constitution of the arbitral tribunal, e.g. for perusal of the file in order to familiarize oneself with the
case, prior to determining whether to accept the mandate or to select a chairman.
Since under the present Arbitration Rules the delivery of the statement of claim to the re- 11
spondent and the arbitrators is made (in principle) only if the provisional advance has been
paid, payment of such expenses incurred by the arbitrators can, if the parties agree to it, be
made out of the provisional advance. At any rate, the provisional advance ensures that sufficient funds are available to the arbitral tribunal to cover their costs until such time as it has
had the opportunity to request and receive the further advances from the parties.
Once the arbitral tribunal is constituted, DIS transmits the provisional advance to the ac- 12
count of the chairman or the sole arbitrator as the case may be. The arbitral tribunal then
requests a further advance on the arbitrators costs, based on the full amount of fees due
(including any applicable VAT) as well as the anticipated expenses of the arbitral tribunal
pursuant to Section 25 DIS Rules.
6
7
S. 40.6 DIS Rules.

Section 8 Delivery of Statement of Claim to Respondent1

The DIS Secretariat delivers the statement of claim to the respondent without undue
delay. The DIS Secretariat may make delivery of the statement of claim contingent on
having received the number of copies of the statement of claim and attachments required
pursuant to Section4 as well as payment required pursuant to Section7.
I.
DIS Practice
1 Under the DIS Arbitration Rules, it is the task of the German Institution of Arbitration
(Deutsche Institution fr Schiedsgerichtsbarkeit DIS) to deliver the statement of claim to
the respondent. As a rule, the statement of claim is delivered as soon as the claimant has
complied with the requirements of Sections 6, 4 and 7 DIS Rules, i.e. when the statement of
claim contains all necessary details pursuant to Section 6.2 DIS Rules, and the statement and
attachments are submitted in the requisite number and payment of the DIS administrative
fee and the provisional advance has been made. In exceptional cases, the DIS will also make
delivery of the statement of claim prior to the fulfilment of these requirements if sufficient
assurance is given that the missing requirements will be submitted within the set time limit.
2 Only one copy of the statement of claim must be delivered to the respondent, regardless of
whether the respondent is represented by counsel or not. In practice however, an additional
courtesy copy is often provided by the claimant for the respondent respectively respondents
counsel.
3 The DIS transmits the statement of claim to the respondent by a means that provides a record
of delivery at the address of service specified by the claimant, usually by courier. A confirmation of receipt form to be returned by the respondent, or by counsel where the respondent
has already retained counsel, is also included as an additional means of proof of receipt.
4 The delivery of the statement of claim is combined with a request to the respondent to
nominate an arbitrator in cases where the arbitration agreement provides for a three-member
arbitral tribunal or where the parties have not made a specific provision regarding the number of arbitrators. Where the parties have agreed on a sole arbitrator, the parties have an
opportunity of 30 days to agree on the sole arbitrator.
5 If the parties have not agreed in advance to submit the dispute to a sole arbitrator and the
claimant has proposed in his statement of claim that the dispute is to be resolved by a sole
arbitrator,2 the DIS will give the respondent a period of 30 days to comment on the claimants
proposal. If the respondent concurs with the proposal, the dispute will be decided by a sole
arbitrator.3 The parties then have a further opportunity of 30 days to agree on a sole arbitrator
pursuant to Section 14 DIS Rules.
1
2
If the claimant, in the absence to an agreement pursuant to s. 3 DIS Rules, wishes to refer the dispute to
a sole arbitrator, he may include a proposal to that effect in the statement of claim. However, in spite of
this proposal, the claimant still has to nominate a co-arbitrator in order to comply with the requirements
of the arbitration agreement and in particular with s. 6.2 (5) DIS Rules in case the respondent does not
concur with the proposal to submit the dispute to a sole arbitrator.
The nomination of a co-arbitrator made by the claimant in his statement of claim by way of precaution is
then rendered moot.
II.
617
Comparison with Other Arbitration Rules
While the Arbitration Rules of other institutions provide (like the DIS Arbitration Rules) 6
that the institution delivers the statement of claim to the respondent (cf. Article 4 (5) International Chamber of Commerce (ICC) Arbitration Rules, Article 3 (6) Swiss Rules, Article
Art. 7(5) Vienna Rules or Article 5 Stockholm Chamber of Commerce (SCC) Arbitration
Rules), the consequences of the delivery differ. Receipt of the statement of claim by the
respondent triggers the obligation on the respondent to submit an answer or a response to
the statement of claim within 30 days (cf. Article 5 (1) ICC Arbitration Rules and Article 3
(7) Swiss Arbitration Rules). In the case of the SCC Arbitration Rules (Article 5 (1)), the
institution sets a time limit for the respondent to submit a reply.
Under the DIS Arbitration Rules, upon delivery of the statement of claim the respondent is 7
only invited to nominate an arbitrator (in the case of a three member arbitral tribunal) or to
participate in the nomination of the sole arbitrator. It is up to the arbitral tribunal once it is
constituted to set a time limit to the respondent to respond to the statement of claim.
Section 9 Statement of Defence1

After constitution of the arbitral tribunal pursuant to Section17, the arbitral tribunal
sets a time limit for the respondent to file the statement of defence. When setting the
time limit, appropriate consideration shall be given to the date the respondent received
the statement of claim.
I.
1 The statement of defence is the first means available for the respondent to introduce its
defences against the claim made by the claimant. The provision of Section 9 DIS Rules2
provides details as to the time limit for the filing of the statement of defence.
II.
2 Under Section9 DIS Rules, the arbitral tribunal has the authority to set the time limit for the
respondent to file the statement of defence. This implies that the DIS Arbitration Rules do
not provide for a fixed time limit for the filing of the statement of defence and instead give the
arbitral tribunal the discretion to determine an appropriate period.
3 When exercising such discretion, the second sentence of Section9 DIS Rules requires the
arbitral tribunal to take into account the date on which the respondent received the statement of claim. This is necessitated by the principle of equal treatment and the right to be
heard.3 In addition, the arbitral tribunal must consider the complexity of the case and the
volume of the file at the time when the decision is made.
4 As a general rule, respondents in DIS arbitrations should be aware that arbitral tribunals tend
to grant a rather short time limit for the filing of the statement of defence because considerable time may pass from the date the respondent receives the statement of claim up to the
date of the constitution of the arbitral tribunal.
5 In the event that a respondent comes to the conclusion that it cannot finalize the statement
of defence within the time limit set by the arbitral tribunal, it may apply for an extension.4
Unless the parties have agreed otherwise, the arbitral tribunal has discretion to grant such
an extension. Generally, arbitral tribunals in DIS arbitrations tend to grant a first extension
(with or without first hearing the claimant) if the respondent can provide a reasonable explanation for its application.
6 Unlike the provisions relating to the statement of claim, Section9 DIS Rules does not contain any details as to the content of a statement of defence. The statement of defence should
contain statements of fact as well as legal arguments which address the issues raised in the
statement of complaint.
1
2
3
4
Section 9 Elsing
619

A provision similar to Section 9 DIS Rules can be found in Article 19 Swiss Rules and in 7
Article 5 of the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber
of Commerce (SCC). Though unlike the DIS provision, these provisions provide that the
statement of defence, respective the answer to the request, shall include specific particulars.
Article5 International Chamber of Commerce (ICC) Arbitration Rules follows a different
approach both with regard to the time limit for filing the statement of defence and its content. Pursuant to Article5 ICC Arbitration Rules, the statement of defence must be filed
within 30 days from the receipt of the statement of claim and must contain the information
as further specified in Article5(1)ICC Arbitration Rules. Also, Article 3 London Court of
International Arbitration (LCIA) Arbitration Rules provides for a time limit for the filing of
the statement of defence 30 days following receipt of the request for arbitration filed by the
claimant.
Compared to these approaches, Section9 DIS Rules appears to provide for more flexibility. 8
It should, however, be noted that the time limit of 30 days in these arbitrations can also be extended so that in practice the difference in wording does not have any substantial significance.
Section 10 Counterclaim1
10.1 Any counterclaim shall be filed with a DIS Secretariat. Section6 subsections 14
apply mutatis mutandis.
10.2 The arbitral tribunal decides on the admissibility of the counterclaim.
I.
1 Based on the approach that attack is often the best form of defence, the counterclaim constitutes an important defensive strategy for the respondent. The filing of a counterclaim
signals to the arbitral tribunal that not only the claimant has rights and claims, but also the
respondent (and counterclaimant). It is not uncommon that counterclaims are filed in arbitrations mainly for this (tactical and psychological) reason. Regardless of the motivation of
the respondent for filing the counterclaim, Section 10 DIS Rules provides details as to where
the counterclaim must be filed and further details regarding the competence to rule on its
admissibility.
II.
A.
2 Even though not expressly stated in Section 10 DIS Rules, it is implied in this provision
that, in arbitrations under the DIS Arbitration Rules, a respondent generally may file a
counterclaim. If the respondent chooses to do so, he must file the counterclaim with a DIS
Secretariat.2 At first glance, this is surprising since in the vast majority of the cases the arbitral
tribunal is already constituted when the counterclaim is filed, such that one could expect the
arbitral tribunal to be the competent addressee. In fact, respondents sometimes overlook this
detail and forward the counterclaim to the members of the arbitral tribunal in which case
they must be advised by the arbitral tribunal to file the counterclaim with a DIS Secretariat
pursuant to Section 10.1 DIS Rules.
3 The rationale behind subsection 1 is, however, that the counterclaim leads to an increase
in DIS administrative fees. As there is generally no obligation on the parties or the arbitral
tribunal to keep DIS informed about the status of the proceedings, the DIS would (in the
absence of Section 10.1 DIS Rules) most likely first become aware of a counterclaim only
after it has been sent the original of the award pursuant to Section 36.1 DIS Rules. In order
to ensure that the increase of the DIS administrative fee is reflected in the decision on costs
as contained in the final award, it is therefore required that the DIS be made aware of the
counterclaim prior to the rendering of the final award.3
B.
4 Section 10.2 DIS Rules states that the arbitral tribunal is competent to decide on the admissibility of the counterclaim.
1
2
3
Schtze-Theune, DIS-Schiedsgerichtsordnung, 10 para. 2 (p. 167).
Section 10 Elsing
621
In forming its respective decision, the arbitral tribunal will, in particular, review whether 5
the claim made by the counterclaim is subject to the arbitration agreement under which the
claimant has commenced the arbitral proceedings. In the event that the counterclaim is not
subject to the arbitration clause, the arbitral tribunal must nevertheless deal with the counterclaim if the claimant has not raised any jurisdictional pleas and also pleads in response to
the counterclaim.
The arbitral tribunal will also review whether the admissibility of the counterclaim must be 6
denied due to the fact that it has been filed for purposes of obstruction only. This issue will
certainly not arise if the counterclaim is filed together with the statement of defence. However, if the counterclaim is raised at a very late stage of the proceedings and no reasonable
grounds for such delay are apparent, resulting in the assumption that its sole purpose is to
delay the completion of the arbitral proceedings, the arbitral tribunal may consider whether,
based on its discretion to determine the procedure as arising from Section 24.1 DIS Rules,
it should not admit the counterclaim. In this event, the respondent must (provided that it
seriously intends to pursue the claim as laid down in the counterclaim) commence a separate
arbitration.

Concerning the admissibility of counterclaims, the International Chamber of Commerce 7
(ICC) Arbitration Rules follow a different approach. The first difference is that pursuant to
Article 5 (5) ICC Arbitration Rules, the respondent must file any counterclaims together
with its answer to the statement of claim. Furthermore, also the Terms of Reference have relevance for the admissibility of counterclaims. Article 18 (4) ICC Arbitration Rules provides
that, after the Terms of Reference have been signed or approved by the ICC International
Court of Arbitration, no party shall make new claims which fall outside the limits of the
Terms of Reference unless it has been authorized to do so by the arbitral tribunal. In these
instances, the tribunal must consider the nature of such new claims, the stage of the arbitration and other relevant circumstances. Thus, in order to safeguard its interests, a respondent
in arbitrations under the ICC Arbitration Rules is well advised to make at least a reservation
in the Terms of Reference pursuant to which it reserves the right to file a counterclaim. In
arbitrations under the DIS Arbitration Rules, the respondent is not required to formally
make such a declaration since it can file a counterclaim at any stage of the proceedings. It
should, however, at least announce as early as possible that it might file a counterclaim in
order to avoid the impression that the sole motivation for the counterclaim is to obstruct the
proceedings.
An additional difference between the DIS and the ICC Arbitration Rules is that, under 8
Article 5 (5) ICC Arbitration Rules, a certain minimum content of the counterclaim is prescribed (description of the nature and circumstances of the dispute, statement of the relief
sought) while the DIS Arbitration Rules provide for the compliance of some particulars, but
not for any prescribed minimum content. In practice, however, and even in the absence of a
respective rule, a respondent should describe the nature and the circumstances of the dispute
and should also state the relief sought.
Similar to the ICC Arbitration Rules, in Article 15 (3) London Court of International Ar- 9
bitration (LCIA) Arbitration Rules, it is a stated rule that the counterclaim must be filed
together with the statement of defence. Pursuant to Article 22 (1) (a) LCIA Arbitration
Rules, the arbitral tribunal may, however, allow the respondent to amend its counterclaim at a
622
later stage. Comparable provisions are Article 3 (10), 20 Swiss Rules and Article 3 American
Arbitration Association International Dispute Resolution Procedures.
Section 11 Costs of Filing Counterclaim1

11.1 Upon filing a counterclaim, the respondent shall pay to the DIS the administrative
fee in accordance with the schedule of costs in force on the date of commencement of the proceedings (appendix to Section40.5).
11.2 The DIS Secretariat invoices the respondent for the DIS administrative fee and, if
payment has not already been made, sets a time-limit for payment. If payment is
not effected within the time limit, which may be subject to reasonable extension,
the counterclaim is deemed not to have been filed.
11.3 The DIS Secretariat delivers the counterclaim to the claimant and the arbitral
tribunal without undue delay. The DIS Secretariat may make delivery of the counterclaim contingent on having received the number of copies of the counterclaim
and attachments required pursuant to Section 4 as well as payment required
pursuant to subsection1 of this Section.
I.
DIS Practice
Under the DIS Arbitration Rules, counterclaims are in principle admissible.2 The filing of a 1
counterclaim has an effect on the costs of a proceeding under the DIS Arbitration Rules since
the amounts in dispute of claim and counterclaim are added to form an aggregate amount on
dispute, on the basis of which the DIS administrative fee and the fees of the arbitral tribunal
are calculated. Therefore, unless the overall maximum DIS administrative fee of EUR 37,500
is already attained by the statement of claim,3 the filing of a counterclaim leads to an increase
of the amount in dispute and therefore to an increase of the DIS administrative fee, which is
invoiced to the respondent.
As far as the advance on the DIS administrative fee for a counterclaim is concerned, this is 2
raised exclusively from the respondent, just as the advance on the DIS administrative fee for
a claim is raised only from the claimant. At the end of the proceedings, it is up to the arbitral
tribunal to decide which party is to eventually bear these costs.
The administrative fee for a counterclaim is a minimum of EUR 350. The DIS maximum 3
administrative fee for multiple party proceedings or counterclaims is currently fixed at EUR
37,500 (No. 18 Schedule of Costs).
Section 11.1 DIS Rules only refers to the DIS administrative fee since a counterclaim is usu- 4
ally filed only after the arbitral tribunal is constituted and has set a time limit to the respondent to file a response to the claim. Once the arbitral tribunal is constituted, it is up to the
arbitral tribunal to request the parties to make the requisite further advances on the fees of
the arbitral tribunal resulting from the increased amount in dispute.
The provisions regarding counterclaims (Sections 10 and 11 DIS Rules), in particular regard- 5
ing the costs, apply mutatis mutandis to extensions of claim and the inclusion of additional
parties. The provisions regarding counterclaims also apply mutatis mutandis if the statement
1
2
3
As a result of the participation of multiple parties on claimant or respondent side, see No. 18 (5) Schedule
of Costs.
624
of defence contains a subsidiary set-off (Hilfsaufrechnung). However, since a subsidiary setoff only leads effectively to an increase of the amount in dispute if the arbitral tribunal is
actually called upon to decide on the merits of the set-off, the increased arbitrators fees and
DIS administrative fee only fall due if the arbitral tribunal decides on the set-off. Under these
circumstances it is up to the arbitral tribunal to decide if it will already request an advance
on the prospective increased arbitrators fees at the time of the filing of the set-off or if it will
only request the advance when it becomes evident that it will have to decide on the set-off.
As regards the advance for the prospective increase of the DIS administrative fee, the DIS will
follow the arbitral tribunals decision regarding the request for an advance for the increased
arbitrators fees.
6 In view of the diminishing scale of the arbitrators fees, the costs of filing a counterclaim (or
an extension of claim) are usually substantially lower than filing the counterclaim as a new
claim in separate proceedings.
7 Counterclaims and extensions of claims are frequently filed in DIS proceedings. In 2012, in
addition to the 121 cases newly filed at the DIS Secretariat, extension of claims or counterclaims were filed in 47 pending DIS arbitrations.
II.
Comparison with Other Arbitration Rules
8 While the arbitration rules of other arbitral institutions also contain provisions on counterclaims, the procedure under Section 11 DIS Rules, which specifies that a separate administrative fee falls due upon filing of a counterclaim and that a counterclaim must be delivered in
principle by DIS to the respondent and the arbitral tribunal, is unique to DIS arbitration.
Section 12 Arbitral Tribunal with Three Arbitrators1

12.1 Upon delivery of the statement of claim, the DIS Secretariat calls upon the
respondent to nominate an arbitrator. If the DIS Secretariat does not receive a
nomination from the respondent within 30 days after receipt of the statement of
claim by the respondent, the claimant may request nomination by the DIS Appointing Committee. The DIS Secretariat may extend the 30 day time limit upon
application. A nomination is still timely after expiry of the period of 30 days as
long as the DIS Secretariat receives such nomination prior to a request by the
claimant for nomination by the DIS Appointing Committee.
A party is bound by his nomination of an arbitrator once the DIS Secretariat has
received the nomination.
12.2 The two arbitrators nominate the chairman of the arbitral tribunal and notify the
DIS Secretariat thereof without undue delay. When making such nomination,
the arbitrators should take into account concurring proposals by the parties. If
the DIS Secretariat does not receive a nomination of the chairman of the arbitral
tribunal from the two arbitrators within 30 days after calling upon them to do so,
each party may request nomination of the chairman by the DIS Appointing Committee. A nomination is still timely after expiry of the period of 30 days as long
as the DIS Secretariat receives such nomination prior to a request by one of the
parties for nomination by the DIS Appointing Committee.
I.
Sections 1214 DIS Rules govern the nomination of arbitrators. Like the UNCITRAL Mod- 1
el Law (ML) and the German arbitration law, under the DIS Arbitration Rules, an arbitral
tribunal consists of three arbitrators unless the parties have agreed otherwise.2 Section 12
DIS Rules therefore regulates the practically most relevant situation of the nomination of a
three-member arbitral tribunal.
II.
Detailed Commentary
A.
Nomination of the Co-Arbitrator for the Respondent
Section 12 DIS Rules mirrors the nomination procedure for a three-member arbitral tribunal 2
of Article 11 (3) (a) ML and 1035 (3) sentence 2 Code of Civil Procedure (Zivilprozessordnung ZPO). While the claimant has to nominate an arbitrator in the statement of claim,3
the respondent has to nominate an arbitrator within 30 days of having received the statement
of claim.4
1
2
3
4
See s. 3 DIS Rules.
See s. 6.2 (5) DIS Rules.
The respondent does not have to submit a substantive response to statement of claim at this stage. Pursuant to s. 9 DIS Rules, the arbitral tribunal, after being constituted, sets a time limit for the submission of
the statement of defence.
626
3 Since the DIS Arbitration Rules provide that the DIS Appointing Committee will nominate
an arbitrator for the respondent only upon request of the claimant,5 a nomination by the respondent after expiry of the 30 day time limit is still timely if the nomination is received prior
to a request for nomination of the arbitrator for the respondent. To expedite the constitution
of the arbitral tribunal, the claimant may already include the request for a nomination of an
arbitrator for the respondent (and the nomination of a chairman of the arbitral tribunal) by
the Appointing Committee upon expiry of the time limit in the statement of claim.
4 The time limit for nominating an arbitrator may be extended upon application. Prior to
granting an extension, the claimant will be heard on the request. If the claimant consents
to the extension,6 the request will be granted. If the claimant objects to the extension, the
German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) has
discretion to grant or deny the request for extension. Extensions will be granted if no request
for nomination by the DIS Appointing Committee has yet been made and if sound reasons
have been advanced why it was not possible to nominate an arbitrator in the set time limit.
The extension will only be granted for a reasonable period. An extension of, for example,
more than 30 days will only be granted with the consent of the claimant.
5 As a rule, the timeliness of the nomination is not affected if the arbitrator is subsequently not
confirmed in office, e.g. because he does not accept the mandate7 or if grounds exist that give
rise to doubts as to his impartiality or independence. Under these circumstances, the party
who has nominated the arbitrator is given another opportunity to nominate an arbitrator,
even if the 30 day time limit had expired already at the time of the initial nomination.
6 Under exceptional circumstances, e.g. if respondents nomination fails at least twice, or
if the arbitrator cannot be contacted (e.g. because the respondent does not provide full or
adequate contact details enabling DIS to contact the arbitrator without undue delay), this
may be considered as non-nomination, and nomination may be made upon request of the
claimant by the Appointing Committee.
B.
Nomination of the Chairperson of the Tribunal
7 Section 12.2 DIS Rules provides that the co-arbitrators have to nominate the chairperson
of the arbitral tribunal within 30 days of being called upon to do so by DIS. To avoid delays,
DIS as a rule calls on the co-arbitrators to nominate the chairperson once the co-arbitrator
has been nominated by the respondent. However, the period for nominating the chairperson
will only commence once both co-arbitrators are confirmed in office. This distinction may
be relevant if either of the co-arbitrator cannot be confirmed in office right away because he
has disclosed grounds that may give rise to doubts as to his impartiality or independence.
Under these circumstances, the period for the nomination only begins when both arbitrators
are confirmed.
8 As in the case of the arbitrator to be nominated by the respondent, the DIS Appointing
Committee will only appoint the chairperson after expiry of the time limit if either party has
5
6
7
S. 12.1 sentence 2 DIS Rules

This is often the case if the parties are conducting settlement negotiations.
It is strongly advised that parties contact the arbitrator they intend to nominate in advance to ensure
that the arbitrator is willing and able to serve as arbitrator. Nonetheless, it may occur that an arbitrator
discovers only after receiving the statement of claim from the DIS that grounds exist that prevent him
from accepting to serve as arbitrator.
627
requested a substitute nomination by the Appointing Committee. Section 12.2 DIS Rules
does not provide for an extension of the time limit. However, a nomination by the coarbitrators is timely even after expiry of the time limit, if it is received prior to a request for a
substitute nomination.
In the absence of a concurring proposal of the parties, the co-arbitrators are free in their 9
selection of the chairperson. In practice, the co-arbitrators will and even should consult
with the parties prior to nominating the chairperson. This should serve to strengthen the
parties confidence in the arbitral tribunal. Since the co-arbitrators have to maintain their
independence and impartiality, they are not prevented from nominating a chairperson to
whom the parties have not consented if the parties are not in agreement on the person or the
qualifications of the chairperson. But this only rarely occurs in practice.
If the co-arbitrators are not able to nominate the chairperson within the time limit granted 10
yet expect to be able to do so within a foreseeable period, they may advise the parties thereof.
It is then up to the parties to decide if they will refrain from requesting a substitute nomination by the Appointing Committee until the co-arbitrators have been able to nominate the
chairperson.
If the co-arbitrators are not able to jointly nominate a chairperson, they are not entitled to 11
request substitute nomination by the Appointing Committee. Rather, the co-arbitrators
must inform DIS and/or the parties of their inability to jointly nominate an arbitrator.
Alternatively, if DIS does not receive a joint nomination by the co-arbitrators within the time 12
limit of 30 days, DIS will inform the parties accordingly, drawing attention to the right to
request substitute nomination of the chairperson by the DIS Appointing Committee.
III. Practical Relevance

In DIS practice, the parties and co-arbitrators usually exercise their right to nominate an 13
arbitrator. The DIS Appointing Committee is rarely called upon to nominate an arbitrator
(only in approximately 10 per cent of all cases). Most often the DIS Appointing Committee
has to nominate a sole arbitrator.
The Appointing Committee nominates arbitrators upon proposal of the Executive Com- 14
mittee. The DIS Executive Committee selects a nominee on the basis of the specific circumstances and requirements of each case from its database of prospective arbitrators. In
selecting the nominee, the DIS as a rule takes into account the subject-matter of the dispute,
the applicable law, any specific qualifications agreed upon by the parties or resulting from
the circumstances of the case and, where appropriate, the place of arbitration and language
of the proceedings and the nationality of the parties. Prior to proposing a nominee to the
Appointing Committee, the Executive Committee requests the nominee to submit a declaration conditional on being nominated by the Appointing Committee stating his acceptance of the office and confirming his independence and impartiality. Only a nominee who
has submitted an unqualified statement of acceptance8 may be proposed to the Appointing
Committee.9
8
9
See also infra, Bredow/Mulder, s. 17 DIS Rules para. 5.

For details regarding the nomination procedure of the Appointing Committee, see supra, Introduction to
DIS, paras 20 et seq.
628
15 The system for nominating an arbitral tribunal may be amended by party agreement. In
particular in order to expedite proceedings, the periods for nominating arbitrators may be
shortened, or parties may provide that all arbitrators are to be nominated by the DIS Appointing Committee. Parties are however well advised to consider carefully before curtailing
the right to nominate an arbitrator as such an automatism may restrict the scope for settlement negotiations at an early stage.

16 The procedure for the nomination of a three-member arbitral tribunal mirrors the basic
procedure for the nomination of an arbitral tribunal under Article 7 (1) UNCITRAL Arbitration Rules. It strengthens the ability of the parties to choose and determine the members
of the arbitral tribunal and reduces the ability of the institution to impose arbitrators on the
parties to the necessary minimum, i.e. to those cases where the proceedings cannot continue
because a party does not participate in the process of nominating arbitrators.
17 Similar provisions are contained in Article 8 (1) and (2) Swiss Rules and Article 17 (4) and
(5) Vienna Rules. However, unlike these provisions, Sections 12.1 and 2 DIS Rules state
explicitly that in the event of a party not nominating its arbitrator or of the co-arbitrator not
nominating the chairman of the arbitral tribunal, a substitute arbitrator will only be nominated by the Appointing Committee upon application of a party. Thus it is ultimately up to
the parties to ensure that the arbitral tribunal is constituted.
Section 13 Multiple Parties on Claimant or Respondent Side1

13.1 Unless otherwise agreed by the parties, multiple claimants shall jointly nominate
one arbitrator in their statement of claim.
13.2 If two or more respondents are named in the statement of claim, unless otherwise agreed by the parties, the respondents shall jointly nominate one arbitrator
within 30 days after their receipt of the statement of claim. If the respondents have
received the statement of claim at different times, the time limit shall be calculated
by reference to the time of receipt by the respondent who last received the statement of claim. The DIS Secretariat may extend the time limit. If the respondents
fail to agree on a joint nomination within the time limit, the DIS Appointing Committee, after having consulted the parties, nominates two arbitrators, unless the
parties agree otherwise. A nomination made by the claimant side is set aside by
the DIS Appointing Committees nomination.
The two arbitrators nominated by the parties or the DIS Appointing Committee
nominate the chairman of the tribunal. Section12 subsection 2 applies mutatis
mutandis, in which case the request of one party is sufficient.
13.3 The arbitral tribunal decides on the admissibility of the multi-party proceedings.
I.
Neither the UNCITRAL Model Law nor the German arbitration law contains an explicit 1
provision on the conduct of arbitral proceedings involving more than one party on claimant
and/or respondent side (multi-party proceedings). In Germany, as in most other countries,
it is recognized that multi-party arbitral proceedings are in principle admissible. Certain
aspects of multi-party proceedings, however, may pose a problem in the specific context
of arbitration and therefore require a specific regime. The German legislator purposefully
omitted the inclusion of a provision on multi-party arbitration in the 1998 Arbitration Law,
considering that the many different constellations in which a multi-party problem may arise
would be better regulated on a case by case basis. To the extent that the presence of multiple
parties on one side gives the other side a preponderant influence on the composition of the
arbitral tribunal and thus creates an imbalance between the parties,2 1034 (2) Code of Civil
Procedure (Zivilprozessordnung ZPO) provides for a corrective.
II.
DIS Practice
Against this background, Section 13 DIS Rules was included in the DIS Arbitration Rules 2
in 1998.3 It deals with the nomination of an arbitral tribunal in a multi-party proceeding. It
covers only the nomination of an arbitral tribunal consisting of three persons. Where the
1
2
Cour de Cassation 07.01.1992, Judgment No. 42 P + R, RPS 1/1992, 27, in which the French court held
that forcing multiple parties on one side to jointly nominate an arbitrator, while the other party may
select an arbitrator entirely of its own liking, constitutes a breach of the fundamental principle of equal
treatment.
630
parties have agreed that the dispute is to be decided by a sole arbitrator, the regular nomination procedure of Section 14 DIS Rules applies.
A.
Composition of the Arbitral Tribunal
3 One of the main advantages of arbitration is the ability of parties to select the arbitrators. The
right to select an arbitrator is also a necessary corollary of party autonomy and must therefore
be particularly safeguarded.
4 In multi-party arbitrations, where the arbitral tribunal is to consist of three arbitrators, the
right to nominate an arbitrator of the side with multiple parties is restricted. If the multiple
parties are on the claimant side, this does not pose a problem because if the claimants cannot agree on a joint nomination of an arbitrator, they are in principle free to file separate
proceedings.
5 However, if there are multiple parties on the respondent side, the respondents do not have
this option and are therefore compelled to agree on a joint nomination of an arbitrator, thus
creating a disadvantage for the respondents vis--vis the claimant(s). In line with French and
German case law on this issue, the DIS Arbitration Rules seek to redress this imbalance.
6 Section 13.2 DIS Rules provides that where the multiple respondents are not able to agree
on a joint nomination of an arbitrator, the DIS Appointing Committee will nominate an
arbitrator for both the claimant and the respondent side after having consulted the parties
and absent an overriding agreement by the parties. The nomination of the arbitrator by the
claimant becomes void. In practice, the consultation with the parties on the nomination of
both arbitrators often triggers an agreement between the multiple parties on the respondent
side to jointly nominate an arbitrator after all, so that no substitute nomination by the Appointing Committee needs to be made.
7 In view of Section 13.2 sentence 5 DIS Rules, the arbitrator nominated by the claimant(s)
will be confirmed pursuant to Section 17 DIS Rules only when the arbitrator jointly nominated by the respondents is confirmed.
8 While the DIS Arbitration Rules are in essence a party agreement, the extent to which the
parties may deviate from the nomination procedure laid down in Section 13.2 DIS Rules is
limited. It is for instance debatable if parties can agree after the dispute has arisen that in case
the respondents fail to agree on a joint nomination of an arbitrator, only the arbitrator to be
nominated for the respondent side is to be nominated by the DIS Appointing Committee.4
9 The two arbitrators nominated then nominate the chairman of the arbitral tribunal. The DIS
Arbitration Rules differ in this respect from other arbitration rules,5 by restricting its interference with the nomination procedure to the strictly necessary boundaries.
10 If the co-arbitrators fail to nominate a chairman, any party may request the nomination by the
DIS Appointing Committee. For the sake of clarification, Section 12.2 para. 2 expressly states
that if the respondent side requests nomination, the request of one party will be sufficient.
This notion was expressed by the Cour de Cassation in the Dutco case, and there are indications that German courts would follow this notion, see BGH 29.03.1996, RPS 2/1996, 18 (21).
E.g., Art. 12 (8) ICC Arbitration Rules, which provides that in case multiple respondents fail to nominate
jointly an arbitrator, the institution will nominate the entire arbitral tribunal.
B.
631
Admissibility of Multi-Party Proceedings
The DIS Arbitration Rules do not provide a ruling on the admissibility of multi-party pro- 11
ceedings. The situations in which a multi-party proceeding may arise are so manifold that
like in the case of the counterclaim it is left to the arbitral tribunal to decide whether the
proceedings may be conducted as multi-party proceedings.
A common problem which arises in this respect is whether all the parties involved are 12
covered by the arbitration agreement. Particularly where a claim is directed at an entity in a
group of companies, the claimant may have an interest to sue not only his direct contracting
party but also other entities within the same group. Neither the German arbitration law nor
the DIS Arbitration Rules give an indication as to whether the arbitration agreement may be
extended to such non-signatories.
C.
Effect on the Arbitral Award
Related to multi-party proceedings is the issue of joining non-signatory parties to arbitration 13

proceedings or of extending the effect of an arbitral award to interested non-participating
parties. Since the effect of an award is restricted to the parties to an arbitration, it is in principle not possible to enforce an award against a third party, save where the arbitration agreement provides for it. In view of the variety of possible situations in which an extension of the
agreement to third parties is desirable, the DIS Arbitration Rules omitted a provision to that
effect. It is therefore up to the parties at the time of drafting the arbitration clause to make a
corresponding provision if it is foreseeable that a situation may arise in which third parties
will be affected by the arbitral award.
D.
Practical Implications
The number of multi-party proceedings in DIS arbitrations amounts to approximately 15 14

per cent of all cases. In most cases, the nomination of the arbitral tribunal does not pose a
problem. Since the entry into force of the 1998 DIS Arbitration Rules, there has been only
one case where multiple respondents on one side did not agree on a joint nomination of an
arbitrator and the Appointing Committee had to nominate both arbitrators. The lack of a
need for substitute appointments is in no small way due to the DIS practice of consulting the
parties prior to nominating two substitute arbitrators by the Appointing Committee.

In view of the far-reaching implications of the French Cour de Cassations Dutco decision, 15
many arbitration institutions have implemented provisions on the nomination of a threemember arbitral tribunal in multi-party proceedings. Some of them provide, like Article 12
(8) International Chamber of Commerce Arbitration Rules, that if multiple respondents
cannot jointly nominate an arbitrator, the institution will nominate all three arbitrators.6
Cf. also Art. 8 (1) LCIA Arbitration Rules and Art. 13 (4) SCC Arbitration Rules.
Section 14 Sole Arbitrator1

Where the arbitral tribunal is to consist of a sole arbitrator and the parties do not reach
agreement on a sole arbitrator within 30 days after receipt of the statement of claim by
the respondent, each party may request nomination of a sole arbitrator by the DIS Appointing Committee.
I.
1 Section 14 DIS Rules deals with the nomination of the sole arbitrator. It applies only if the
parties have agreed, in their arbitration agreement or later, on a one-member tribunal. This
follows from Section 3 DIS Rules which, in line with 1034 (1) Code of Civil Procedure
(Zivilprozessordnung ZPO), provides that the arbitral tribunal shall consist of three arbitrators, unless the parties have agreed otherwise.
II.
Detailed Comment and DIS Practice
2 The nomination of the sole arbitrator will be effected primarily by agreement of the parties.
Section 6.3 (2) DIS Rules provides that the statement of claim should contain proposals
for the nomination of an arbitrator where the parties have agreed on a decision by a sole
arbitrator. If the statement of claim does contain such a proposal and the respondent agrees
to the nominee proposed by the claimant and notifies the German Institution of Arbitration
(Deutsche Institution fr Schiedsgerichtsbarkeit DIS) of his approval, both sides are bound
by their nomination. The same principle is expressed in Section 12.1 DIS Rules for the
nomination of a three-member tribunal. In many cases, the respondent will not agree with
the claimants initial proposal. In those cases, the parties will seek to reach agreement on the
nomination of a sole arbitrator through exchange of names or short-lists. The parties have 30
days after receipt of the statement of claim by the respondent (see Section 8 DIS Rules) to
reach that agreement.
3 There is no need for the parties to request an extension of this deadline. If the parties continue their search of a sole arbitrator beyond the 30-day time limit, the DIS Secretariat will
remain passive until it receives a request to nominate a sole arbitrator from either side. The
DIS Arbitration Rules do not provide that DIS appoints the sole arbitrator ex officio after the
expiration of the 30-day time limit.
4 Each party may request nomination of a sole arbitrator by the Appointing Committee2 only
if the parties are unable to reach agreement within the initial 30 day deadline or within the
extended deadline. The only purpose of the 30-day time limit is to indicate the moment
when each side has the right to abandon the parties search for a sole arbitrator and to request
the appointment by the Appointing Committee. This procedure, on which the parties have
agreed by referring to the DIS Arbitration Rules in their arbitration agreement, substitutes
the statutory appointment procedure under 1035 (3) ZPO. Under the DIS Arbitration
Rules, it is the Appointing Committee and not the Higher Regional Court (Oberlandesgericht) ( 1061 (1) No. 1 ZPO) which nominates the sole arbitrator for the parties. Section14
1
2
For details regarding the nomination procedure of the Appointing Committee, see supra, Mazza, Introduction to DIS, paras 19 et seq.
Section 14 Berger
633
DIS Rules replaces 1035 (3) ZPO in toto3 so that neither side may have the decision by the
Appointing Committee set aside or altered by the court.
In making the nomination decision, the Appointing Committee will seek guidance from 5
1035 (5) ZPO. That section states that the court, in appointing an arbitrator, shall have due
regard to any qualifications required of the arbitrator by the agreement of the parties and to
such considerations as are likely to secure the appointment of an independent and impartial
(Section 15 DIS Rules) arbitrator. 1035 (3) ZPO also provides that, in appointing a sole
arbitrator, the court must also take into account the advisability of appointing an arbitrator of
a nationality other than those of the parties. In any event, the Appointing Committee must
make sure that the nominee is a lawyer (Section 2.2 DIS Rules), unless otherwise agreed to
by the parties.
Unlike the Higher Regional Court under 1035 (3) ZPO, the Appointing Committee does 6
not appoint but merely nominates the sole arbitrator for the parties. The actual appointment is reserved for the DIS General Secretary pursuant to Section 17.1 DIS Rules. It will
be effected once DIS has received the nominees declaration of acceptance pursuant to Section16 DIS Rules, provided that no circumstances likely to give rise to doubts regarding the
impartiality or independence of an arbitrator or his fulfilment of agreed qualifications are
apparent from the declaration, or if, within the time limit set by Section16.2 DIS Rules, no
party objects to the confirmation of that arbitrator.
If the tribunal consists of only one arbitrator, the appointment of that arbitrator then coin- 7
cides with the constitution of the arbitral tribunal pursuant to Section 17.3 DIS Rules. It
marks the moment when control over the proceedings is shifted from the parties and DIS to
the arbitral tribunal.
Bredow, Part O, in: Kronke/Melis/Schnyder (eds), Handbuch Internationales Wirtschaftsrecht, Kln

2005, para. 528.
Section 15 Impartiality and Independence1

Each arbitrator must be impartial and independent. He shall exercise his office to the
best of his knowledge and abilities, and in doing so is not bound by any directions.
I.
1 Section 15 DIS Rules must be seen in connection with Sections 16 and 18 DIS Rules. These
provisions serve to implement and safeguard one of the cornerstones of the arbitral process.
Together with the basic procedural rights of the parties to be heard and to be treated equally
laid down in 1042 (1) Code of Civil Procedure (Zivilprozessordnung ZPO) and Section
26.1 DIS Rules, the independence and impartiality of the arbitrator(s) serve to ensure that
dispute settlement through arbitration enjoys the same degree of legitimacy and worldwide
acceptance as adjudication before domestic courts. In fact, the preservation and safeguarding of these principles is the very reason why arbitration has the same standing as dispute
resolution before domestic courts and why 1055 ZPO provides that an arbitral award has
the same effect between the parties as a final and binding judgement rendered by a domestic
court.
II.
2 The arbitrators duty to disclose all circumstances which are likely to give rise to doubts as to
his impartiality or independence pursuant to Section 16 DIS Rules and the parties right to
challenge an arbitrator in case of such grounds (pursuant to Section 18 DIS Rules) reveals
the paramount significance of these requirements. From the outset of the proceedings and
throughout the arbitration until the final award is rendered or until the arbitration is otherwise terminated, each arbitrator must be and remain impartial and independent. This means
that he or she must be able to decide the dispute without partiality in favour of the party
with the better case.2 The arbitrator can be favourably disposed towards the legal position
of the party who appointed him, but he must have an open mind and must be and must
always remain in a position to decide the dispute against the party that appointed him. Predisposition as properly defined in this context means that he may be from the same country,
the same type of legal system, the same culture or the same industry as the party that has
appointed him. He may also have written or lectured on the area of law involved or even the
type of dispute involved, provided that any positions taken were generic, i.e. not specific to the
case in which he is appointed. A mere favourable disposition of an arbitrator towards a legal
issue that might be relevant for a partys case does not guarantee that party one panel vote.3
As a consequence of these considerations, Section 15 provides that the arbitrator, whether
party-appointed, sole arbitrator or chairman, may not follow directions from anybody during
the arbitration. Rather, any arbitrator must rely solely on his own judgment and skills when
conducting the arbitration and deciding the dispute. This follows also from the fact that
the mandate of an arbitrator involves a personal duty vis--vis the parties,4 the performance
1
2
3
4
Bishop/Reed, Practical Guidelines for Interviewing, Selecting and Challenging Party-Appointed Arbitrators in International Commercial Arbitration, Arb.Int. 1998, 395 (396).
Bishop, in: Bishop (ed.) The Art of Advocacy in International Arbitration, 1st ed., New York 2004, p. 459.
MnchKommZPO-Mnch (2013), Vor 1034 para. 17; Lrcher/Lrcher (2001), para. 102.
Section 15 Berger
635
of which may not be transferred to or exercised by or under the control or supervision of

someone else.
The concepts of impartiality and independence are intentionally formulated rather broadly 3
in order to cover all possible circumstances, which might justify a challenge from one of the
parties.5 Sometimes, a strict distinction between both concepts is advocated. Independence is seen to refer to the relationship between the parties and the arbitrators, while the
arbitrators impartiality is said to require a judgment that relates more to the arbitrators
relationship with the substance of the dispute.6 In reality, the differences in this field are more
a matter of how these grounds can be detected than a matter of substance. In general, these
concepts must be interpreted so as to cover all biased behaviour of the arbitrators during the
arbitral proceedings.7
Section 15 DIS Rules does not distinguish between party appointed arbitrators and chair- 4
men/sole arbitrators. All types of arbitrators are subject to the same standards of independence and impartiality,8 as mandated by 1036 paras 6 et seq. ZPO.
This standard of independence and impartiality of arbitrators under the DIS Rules resembles, 5
as a rule, the standard that applies to German state court judges.9 In international arbitrations, however, inspiration may be drawn from the IBA Guidelines on Conflict of Interest in
International Arbitration. Even though the Guidelines are intended to set an international
or rather transnational standard, this soft-law or best practice instrument, developed by a
private IBA Working Group, neither desires10 nor can supersede domestic law, including
the standards developed in the case law of the German courts. In construing the notions of
impartiality and independence in German law, German courts seem to accept that the IBA
Guidelines may be regarded as the yardstick for their determination of the independence and
impartiality of arbitrators in international arbitrations held in Germany.11
If a member of the arbitral tribunal was not impartial or independent, the award rendered by 6
that tribunal may be set aside pursuant to 1059 (2) No. 1 (d) ZPO by the Higher Regional
5
6
7
8
9
10
11
Lew/Mistelis/Krll (2003), para. 11-7; Lrcher/Lrcher (2001), para. 108.

Berger, International Economic Arbitration, Deventer 1993, pp. 243 et seq.; Bishop/Reed, Practical Guidelines for Interviewing, Selecting and Challenging Party-Appointed Arbitrators in International Commercial Arbitration, Arb.Int. 1998, 395 (398): An impartial arbitrator, by definition, is one who is not
biased in favour of, or prejudiced against, a particular party or its case, while an independent arbitrator is
one who has no close relationship financial, professional or personal with a party or its counsel.; see
also decision of Sir Robert Jennings, Appointing Authority to the Iran-US Claims Tribunal of 07.05.2001,
reprinted in Int.Arb.Rep. (May 2001), B-1, B-3: Independence implies freedom from external control
or authority or finance The question of impartiality is more difficult any judge, though he ought
to begin in an impartial stance, is required as a matter of judicial duty eventually and on the basis of the
presented arguments to become partial to one side or the other. To remain neutral to the end would be a
dereliction of duty.
Holtzmann/Neuhaus (1989), p. 389.
Arbitral award DIS-SV-217/02, BB Beilage 2003, Nr. 8, 24 (25); OLG Mnchen 03.01.2008, SchiedsVZ
2008, 102 (103); Peter Mankowski, Ablehnung von Schiedsrichtern, SchiedsVZ 2004, 304 (307), who
favours a slightly milder standard for arbitrators as compared to state court judges.
See Para. 6 of the Introduction of the IBA Guidelines which provides: These Guidelines are not legal
provisions and do not override any applicable national law or arbitral rules chosen by the parties.
OLG Frankfurt 04.10.2007, SchiedsVZ 2008, 96 (101) where the Court, in deciding on a partys motion
to challenge the chairman in the arbitration under 1036 (2) ZPO, stated that it could not detect a violation of 3.5.2 IBA Guidelines.
636
Court (Oberlandesgericht; 1062 (1) No. 4 ZPO). Enforcement of such award must be refused in Germany pursuant to 1060 (2) ZPO in connection with 1059 (2) No. 1 (d)
ZPO. Recognition and enforcement of such award may be refused in enforcement proceedings abroad under Article V (1)(d) New York Convention 1958.
7 Section 15 DIS Rules also provides that each arbitrator shall exercise his office to the best of his
knowledge and abilities. The purpose of this Section is to appeal to each arbitrator to use his
best efforts in exercising his arbitral duties, both with respect to the conduct of the procedure
and the ultimate decision of the dispute. First and foremost, this entails a moral obligation
related to the personal capabilities of each arbitrator as a human individual. In fact, a party
chooses an arbitrator for the very reason that it expects him to possess and exercise these
capabilities.12 That moral obligation is also a consequence of the legal rule that the arbitrators
mandate involves a personal duty, the performance of which may not be transferred to a third
person.13 Due to the highly personal and generic nature of this obligation, compliance with
it by the arbitrator during the arbitration is impossible to monitor in detail by third parties or
the arbitral institution. This becomes possible only in extreme cases when the outside world
has concrete indications about the arbitrators failure to comply with that personal mandate,
allowing parties and courts to formally intervene. Thus, 1038 (1) ZPO provides that the
arbitrators mandate terminates in cases in which during the proceedings he becomes
de jure or de facto unable to perform his functions or for other reasons fails to act without
undue delay and he withdraws from his office or the parties agree on the termination of his
mandate. If the arbitrator does not withdraw from his office in such a case or if the parties
cannot agree on the termination of his mandate, 1038 (1) ZPO allows any party to request
the competent court, i.e. the Court of Appeal in whose district the seat of the arbitration is
located ( 1062 (1) No. 1 ZPO), to decide on the termination of the arbitrators mandate.
Section 15 implies that the arbitrator should withdraw from his office on his own initiative
rather than leaving the parties in a state of uncertainty if, after a thorough examination of his
personal situation he comes to the conclusion that due to circumstances of a lasting nature,
he is no longer in a position to exercise his office to the best of his knowledge and abilities.
After termination of the proceedings, non-compliance by an arbitrator of the personal best
efforts duty will usually be impossible to detect. Each party is, however, left with its right to
apply for the setting aside of the award to the competent Court of Appeal under the limited
and exhaustive list of grounds for setting aside in 1059 (2) ZPO.

8 Given that the impartiality and independence of the arbitrators is a cornerstone of every arbitration as a process of private adjudication, most modern arbitration rules contain provisions
similar to Section 15 1st sentence DIS Rules. Thus, Section 11 (1) ICC Rules, Article 9 (1)
Swiss Rules and Article 5.2 LCIA Rules all provide, albeit with slightly different wording, that
an arbitrator conducting an arbitration under these Rules shall be and shall remain impartial
and independent. With this wording, these Rules emphasize the fact that the arbitrators duty
of independence and impartiality is one that continues throughout the proceedings. There
is no difference in substance, though, to Section 15 1st sentence DIS Rules or Article 14 (1)
SCC Rules, which contains an identical provision. It follows from the intrinsic purpose of
12
13
These personal capabilities of the arbitrator must not be confused with special qualifications agreed upon
by the parties, see Sections 16.1, 18.1 DIS Rules.
See footnote 4 above.
Section 15 Berger
637
this duty to ensure the legitimacy of the arbitration and from the Sections on the challenge
of arbitrators that the duty of impartiality and independence is one that continues until the
final award is rendered. For those reasons, this duty also exists under those arbitration rules
which, like the UNCITRAL Arbitration Rules, do not contain a provision similar to Section
15 1st sentence DIS Rules.
The second sentence of Section 15 DIS Rules has no counterpart in other arbitration rules. 9
This is certainly due to the moral, rather than legal, quality of that provision. The only provision that comes close to Section 15 2nd sentence DIS Rules is Article 11 (5) ICC Rules, which
provides that by accepting to serve, arbitrators undertake to carry out their responsibilities
in accordance with the Rules. That provision, however, relates more to the performance of
the arbitrators specific duties provided for in the Rules than to an undertaking to use his best
personal efforts in conducting the arbitration as a whole.
Section 16 Acceptance of Mandate as Arbitrator1

16.1 Each person who is nominated as arbitrator shall without undue delay notify the
DIS Secretariat of his acceptance of the office as arbitrator and declare whether
he fulfils the qualifications agreed upon by the parties. Such person shall disclose
all circumstances which are likely to give rise to doubts as to his impartiality or
independence. The DIS Secretariat informs the parties accordingly.
16.2 If circumstances are apparent from an arbitrators declaration, which are likely
to give rise to doubts as to his impartiality or independence or his fulfilment of
agreed qualifications, the DIS Secretariat grants the parties an opportunity to
comment within an appropriate time limit.
16.3 An arbitrator shall disclose to the parties and the DIS Secretariat circumstances
likely to give rise to doubts as to his impartiality or independence also throughout
the arbitral proceedings.
I.
1 Section 16 DIS Rules deals with the technicalities of the appointment process after a nomination has been received pursuant to Section 12.1 DIS Rules (party-appointed arbitrator), or
Section 12.2 DIS Rules (chairman), or Section 13.2 DIS Rules (joint nomination by multiple
respondents), or Section 14 DIS Rules (sole arbitrator) by the DIS Secretariat. Additionally,
Section 16 DIS Rules deals with the arbitrators duty to disclose possible grounds for a challenge throughout the course of the proceedings.
II.
A.
Declaration of Acceptance
2 The nominees declaration of acceptance of the office of arbitrator is a mandatory prerequisite

for the appointment of the nominee as arbitrator by the German Institution of Arbitration
(Deutsche Institution fr Schiedsgerichtsbarkeit DIS) pursuant to Section 17.1 DIS Rules.
To speed up the appointment process, the declaration of acceptance must be sent to the DIS
Secretariat without undue delay, i.e. as quickly as possible under the given circumstances
and taking into account the need to check possible conflicts of interest and the arbitrators
availability.
3 Together with his declaration of acceptance, the arbitrator must declare vis--vis the DIS
Secretariat whether he fulfils the qualifications (nationality, special know-how, practical
experience, etc.) agreed upon by the parties. The reason for that declaration is that the lack of
qualifications agreed upon by the parties may constitute a ground for challenge of the arbitrator under Section 18.1 DIS Rules. It is therefore not recommended that parties agree on a
detailed catalogue of qualifications for the arbitrators. The more details the parties agree on,
the higher the risk is that a nominee does not fulfil these qualifications and may be rejected
by the other side, thereby giving the unwilling party reasons to delay the nomination process.
The fact that under Section 2.2 DIS Rules the chairman of a three-member tribunal as well
as the sole arbitrator must be a lawyer represents a qualification agreed upon by the parties
1
Section 16 Berger
639
through their reference to the DIS Arbitration Rules in their arbitration clause or submission
agreement.
B.
Disclosure
The nominees declaration of acceptance must be accompanied by a disclosure of all circum- 4

stances which are likely to give rise to doubts as to his impartiality or independence. The
standard for disclosure is broader than the standard for challenge under Section 18.1 DIS
Rules. While the latter Section requires justifiable doubts, thereby injecting an objective element, the nominees duty to disclose arises whenever there are doubts as to his impartiality
or independence.2 This means that the nominee must disclose circumstances which may not
necessarily constitute a ground for challenge under Section 18.1 DIS Rules.3
In considering the need to disclose, the nominee should apply the subjective test under Gen- 5
eral Standard 3 (a) of the International Bar Association Guidelines on Conflict of Interest in
International Arbitration (IBA Guidelines) and should disclose any circumstance which, in
the eyes of the parties, may give rise to doubts as to his or her impartiality or independence.4
In determining which facts should be disclosed, the nominee should take into account all circumstances known to him or her, including to the extent known the culture and the customs
of the country in which the parties are domiciled or of which they are nationals.5 Potential
grounds for challenge6 must always be disclosed. If the nominee decides to disclose a particular circumstance but accepts the office as arbitrator, he must submit a qualified statement of
independence, meaning that he sees no ground why this circumstance should prevent him
from acting impartially and independently in exercising his duties as an arbitrator.
It is important to avoid the frequent misunderstanding that disclosure constitutes an admis- 6
sion of a conflict of interest.7 In fact, because the subjective standard for disclosure is broader
than the objective, reasonable third person standard for determining whether justifiable
doubts exist as to the arbitrators impartiality or independence under Section 18.1 DIS
Rules, no presumption regarding disqualification arises from a disclosure:
The purpose of the disclosure is to inform the parties of a situation that they may
wish to explore further in order to determine whether objectively i.e. from a reasonable third persons point of view having knowledge of the relevant facts there is a
justifiable doubt as to the arbitrators impartiality or independence.8
As far as the handling of the disclosure requirement by the nominee is concerned, the rule is 7
In case of doubt, disclose.9 However, this in-doubt-disclose-rule has its limits. While bearing
2
3
4
5
6
7
Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 16 para. 2, p. 179.

See for the relationship between disclosure and challenge infra, para. 6.
IBA (ed.), IBA Guidelines on Conflict of Interest in International Arbitration, 2004, p. 9.
IBA (ed.), IBA Guidelines on Conflict of Interest in International Arbitration, 2004, p. 10, Explanation
(a) to General Standard 3.
See infra, Bredow/Mulder, s. 18 DIS Rules paras 3 et seq.
IBA (ed.), IBA Guidelines on Conflict of Interest in International Arbitration, 2004, Explanation (b) to
General Standard 3, pp. 10 et seq.
IBA (ed.), IBA Guidelines on Conflict of Interest in International Arbitration, 2004, Part II: Practical
Application of the General Standards, para. 4, p. 18.
See IBA (ed.), IBA Guidelines on Conflict of Interest in International Arbitration, 2004, General Standard 3 (c), p. 9, General Standard 3 (c): Any doubt as to whether an arbitrator should disclose certain facts
or circumstances should be resolved in favour of disclosure..
640
in mind the essential purpose of the nominees duty to disclose to establish full transparency
for the parties as to the impartiality and independence of the nominee from the outset of the
proceedings, the performance of this duty should not result in over disclosure. Such over
disclosure is generally regarded as counterproductive because it may trigger endless debates
with a party that merely wants to delay the proceedings while the disclosed circumstances are
of such a nature that they may never, i.e. neither from a reasonable third persons perspective
nor from that of the parties, raise doubts as to his impartiality or independence.10 Admittedly, there is a thin line between the in-doubt-disclose-rule and over-disclosure. Therefore,
in determining whether disclosure is required under Section 16.1 DIS Rules, a nominee
should bear in mind that disclosure is and must remain the rule, but should always ask himself whether a certain circumstance may in fact have relevance for a party with respect to his
independence or impartiality. Only if, after a thorough examination, he is firmly convinced
that it has not, disclosure should not be made. Examples of such circumstances are provided
for in the Green List of the IBA Guidelines.11
8 The nominee is under a duty to make reasonable inquiries to investigate any potential
circumstances that might cause a party to question his independence or impartiality.12 Confronted with a request to disclose pursuant to Section 16.1, he may not simply close his eyes
and ignore that duty when he has reason to assume that further inquiries are required. If he
has reasons to assume that he does not possess full information about the case allowing him
to conduct such inquiry, he is obligated to ask the parties for further information on specific
aspects of the case that might be of relevance for his disclosure statement. For example, a
party may be a subsidiary of a mother company and the full structure of that corporate group
is not known to the arbitrator. In such a case, he will have to request that party to either
provide a list of all affiliates of the group or to complete a list of such affiliates, which has
been provided by that party but as to which he has reason to believe that it might not be
complete in order to be able to determine whether a conflict with respect to one of those
affiliates or a circumstance that warrants a qualified disclosure statement exists. Even absent
a request for more information by the nominee, a party is obliged to take the initiative and
to provide information about a known relationship of the nominee with another member
of its group or other circumstances that the party thinks might be relevant for the nominees
decision to disclose. This obligation is spelled out in General Standard 7(a) IBA Guidelines.
That Standard may be regarded as a general procedural principle that applies even if the IBA
Guidelines are not directly applicable in a given case. Failure to do so can be seen as a waiver
by that party of the right to challenge that arbitrator on the ground of that relationship or fact.
9 If the DIS Secretariat possesses information which the parties do not have and which is not
mentioned in a nominees statement of independence, it will, in principle, not contact the
nominee and bring these circumstances to his attention, even if the Secretariat considers
these circumstances relevant for the nominees disclosure statement. If none of the parties
objects to the nominees declaration, the Secretariat will respect the autonomy of the parties
10
11
12
Mariott, Conflict of Interest A Way Forward?, BB 2003, Supplement No. 8, p. 2 (3).

IBA (ed.), IBA Guidelines on Conflict of Interest in International Arbitration, 2004, pp. 24 seq.
IBA (ed.), IBA Guidelines on Conflict of Interest in International Arbitration, 2004, General Standard 7
(c), p. 16.
Section 16 Berger
641
and the fact that it remains the nominees decision as to what he wants to disclose. This is
different from the practice of the International Court of Arbitration of the ICC.13
Nominees who work in major law firms are typically confronted with a high potential for 10
conflicts of interest. For that reason, they sometimes submit disclosure statements in which
they state that they presently see no grounds that might raise doubts as to their independence
or impartiality. However, they also declare in that statement that they cannot exclude that one
of their partners in the firm might get involved in a case that concerns one of the parties to the
arbitration or one of its affiliates while the arbitration is pending and that if such a scenario
should arise during the arbitration, the nominee will still consider himself as independent
and impartial. If the other party does not object, the nominee will be confirmed. If, however,
the other party objects to the appointment of that arbitrator, the nominee cannot be confirmed pursuant to Section 17.1 DIS Rules. His request for a carte blanche with respect to
future conflict of interests that might arise during the arbitration and the refusal to comply
with his continuing duty to disclose under Section 16.3 that goes along with it14 raises doubts
as to his independence and impartiality. This is in line with standard DIS practice.
C.
Procedure
1036 (1) Code of Civil Procedure (Zivilprozessordnung ZPO) shows that the nominee 11
owes the duty to disclose to the parties with whom he concludes the arbitrators contract
(receptum arbitri). Under the DIS Arbitration Rules, it is the DIS Secretariat that appoints
the arbitrators for the parties. Section 16.1 sentence 3 DIS Rules therefore requires the DIS
Secretariat to inform the parties of the nominees acceptance of his office and his statement
of independence.
1.
Unqualified Statement of Independence
If the nominee submits an unqualified statement of independence, the DIS Secretariat sends 12
a copy of that statement to the parties and even though this is not spelled out specifically
in Section 16.1 DIS Rules routinely asks them whether they intend to submit, within a
deadline of usually five days, any comment in response to the arbitrators statement. The
deadline may be longer in the case of weekends, holidays or other special circumstances. It
is always fixed with respect to a specific end date and not a time span in order to avoid any
uncertainties. The deadline is subject to extension upon reasoned request of one party. If
the parties remain silent, the nominee will be confirmed, i.e. appointed as arbitrator, by the
DIS Secretary General pursuant to Section 17.1 DIS Rules. If, however, a party submits a
reasoned objection to the nominees confirmation, the party who has nominated the candidate, as well as the nominee, will be given an opportunity to comment on that objection.
If the party upholds its objection to the appointment of the nominee, the DIS Appointing
Committee will decide on the nomination pursuant to Section 17.2 DIS Rules.
13
14
See Whitesell, Independence in ICC Arbitration, International Court of Arbitration Bulletin 2007 Special
Supplement: Independence of Arbitrators, p. 13; Fry/Greenberg/Mazza, The Secretariats Guide to ICC
Arbitration: A Practical Commentary on the 2012 ICC Rules of Arbitration from the Secretariat of the
ICC International Court of Arbitration (2012), No. 3-376, 3-393.
See infra, para. 14.
642
2.
Qualified Statement of Independence
13 If the nominee submits a qualified statement of independence, be it with respect to his

impartiality or independence or the fulfilment of qualifications agreed upon by the parties,
Section 16.2 DIS Rules requires the DIS Secretariat to grant the parties an opportunity to
comment within an appropriate time limit. Depending on the circumstances involved, the
deadline for comments by the parties will usually comprise ten days with the possibility to
have that deadline extended upon reasoned request by a party. If a party submits an objection
to the appointment of the nominee, the party who has nominated the candidate, as well as
the nominee, will be given an opportunity to comment on that objection. If in such a scenario a party upholds its objection to the appointment of the nominee, the DIS Appointing
Committee will decide on the nomination pursuant to Section 17.2 DIS Rules.
D.
Continuing Duty to Disclose During the Arbitration
14 Section 16.3 DIS Rules was adopted from 1036 (1) sentence 2 ZPO. It clarifies that the
arbitrators duty to disclose all circumstances which are likely to give rise to doubts as to his
impartiality or independence persists throughout the arbitration, up to the moment when
the final award is rendered. In considering whether or not facts or circumstances exist that
should be disclosed, the arbitrator shall not take into account whether the arbitration proceedings are at an early or later stage.15 Once the arbitrator has been appointed, that duty
must be performed simultaneously vis--vis the parties and the DIS Secretariat. A statement
made at the outset of the proceedings that he cannot exclude that one of his partners in the
firm might get involved in a case that concerns one of the parties to the arbitration or one of
its affiliates as a party while the arbitration is pending and that if such a scenario should arise,
the arbitrator will still consider himself as independent and impartial does not qualify as a
valid disclosure in cases in which such a conflict does in fact occur during the arbitration.16
Disclosure must always be made in light of the particular circumstances that arise or become
known to the arbitrator during the arbitration in order to provide the parties with a chance to
evaluate the specific situation. Disclosure may therefore not be anticipated in abstract form
before the proceedings begin and thus before these circumstances become known to the
arbitrator. Usually, this issue will not arise in practice because a nominee who has submitted
such a statement will not be confirmed if the other party objects.17

15 Due to its significance for safeguarding the legitimacy and transparency of the arbitration,
the arbitrators initial and continuing duty to disclose is the standard under all modern arbitration rules. Under some Rules, such as Article 9 (2) Swiss Rules, the initial disclosure statement has to be made directly to the parties. Other Rules, such as Article 11 (2) ICC Rules,
Article 5 (3) LCIA Rules and Article 14 (2) SCC Rules, require the nominee to submit that
disclosure statement to the institution that will then forward it to the parties together with
a deadline for comments. During the course of the arbitration, a disclosure must be made
either to the institution and the other party (Article 11 (3) ICC Rules), to the institution,
the other members of the arbitral tribunal and the parties (Article 5 (3) LCIA Rules), to
the parties and the other arbitrators (Article 14 (3) SCC Rules, Article 11 UNCITRAL
15
16
17
IBA (ed.) IBA Guidelines on Conflict of Interest, General Standard 3 (d), p. 10.
Fry/Greenberg/Mazza (supra, n. 13), para. 3-403.
See supra, para. 10.
Section 16 Berger
643
Rules) or only to the parties (Article 9 (2) Swiss Rules). In practice and in the interest of full
transparency and an efficient and speedy disclosure process, an arbitrator who realizes that
he has to disclose certain circumstances will always send his statement simultaneously to the
parties, the members of the arbitral tribunal and the institution.
Some arbitration rules (Article 5.3 LCIA Rules, Article 9 (2) Swiss Rules, Article 11 16
UNCITRAL Rules, Article 14 (2) SCC Rules) limit the arbitrators duty to disclose those
circumstances that are relevant for a challenge, i.e. to circumstances likely to give rise to
justified doubts as to his impartiality or independence. The ICC Rules take a more diversified approach and require the nominee (in the case of initial disclosure) or arbitrator (in the
case of the disclosure during the proceedings) to disclose any facts or circumstances which
might be of such a nature as to call into question the arbitrators independence in the eyes of
the parties, as well as any circumstances that could give rise to reasonable doubts as to the
arbitrators impartiality. While the first alternative adopts the subjective test of the disclosure
provisions of the IBA Guidelines, the second emphasizes the need for objective limits to that
subjective standard. The reason for the use of the objective standard is that impartiality, unlike independence, inherently contains a subjective element related to the arbitrators state of
mind for whose determination the subjective standard did not seem appropriate.18 Also, the
use of an objective standard serves to avoid over-disclosure.
18
Fry/Greenberg/Mazza (supra n. 13), para. 3-386.
Section 17 Confirmation of Arbitrators1

17.1 The DIS Secretary General may confirm the nominated arbitrator as soon as the
DIS Secretariat receives the arbitrators declaration of acceptance, and no circumstances likely to give rise to doubts regarding the impartiality or independence
of an arbitrator or his fulfilment of agreed qualifications are apparent from the
declaration, or if within the time limit set by Section16 subsection 2 no party
objects to the confirmation of that arbitrator.
17.2 In all other cases the DIS Appointing Committee decides on the confirmation of
the nominated arbitrator.
17.3 Upon confirmation of all arbitrators, the arbitral tribunal is constituted. The DIS
Secretariat informs the parties of the constitution of the arbitral tribunal.
I.
1 The procedure for confirming arbitrators in office under Section 17 DIS Rules has been
introduced in 1998. It serves primarily two purposes: it creates certainty about the time
when the office of an arbitrator commences, i.e. upon confirmation and it aims to secure the
constitution of an arbitral tribunal that is impartial and independent.
II.
Confirmation of Arbitrators
2 By requiring prospective arbitrators to disclose any grounds that may give rise to doubts as to
his or her impartiality and independence and to declare compliance with any agreed qualifications, already at an early stage the parties have the opportunity to raise justified objections
to an arbitrator. Thus, lengthy challenge procedures obstructing the arbitration at a later stage
are avoided.
A.
Declaration
3 Prior to confirming an arbitrator, the arbitrator must submit a (written) declaration pursuant
to Sections 15 and 16 DIS Rules.
4 There is no prescribed form for submitting the statement. It must be in writing and must
contain a declaration of acceptance and a declaration with regard to his impartiality and
independence as well as, where appropriate, a declaration regarding the fulfilment of any
qualifications agreed upon by the parties. In each case the parties are given an opportunity to
comment within a short time limit prior to confirming the arbitrator in office.
1.
Unqualified Statement of Acceptance
5 If the arbitrator unequivocally states that he accepts the mandate and no circumstances
which are likely to give rise to doubts as to his impartiality or independence or his fulfilment
of the qualifications agreed upon by the parties are disclosed (unqualified statement of acceptance) and no comment of a party was made, the DIS Secretary General confirms the
arbitrator.
1
2.
645
Qualified Statement of Acceptance
If the arbitrator discloses circumstances which may give rise to doubts as to his impartiality 6
or independence,2 but which in his view do not affect in his impartiality or independence,
or if an arbitrator makes reservation, e.g. with regard to future contacts, or regarding former
legal or professional relationships between the parties and the law firm of the arbitrator, the
German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) will
forward the statement to the parties for their comments within a time limit of usually 10 days.
If no objection is transmitted to DIS within the set time limit, the arbitrator is confirmed in
office by the DIS Secretary General.
Only if a party objects to the appointment of an arbitrator, the Appointing Committee de- 7
cides on the appointment of the arbitrator after having given the party who has nominated
the arbitrator as well as the arbitrator an opportunity to comment on the objection.
B.
Decision of the Appointing Committee
In deciding on the confirmation of the arbitrator, the Appointing Committee is bound by 8

the International Bar Association Guidelines on Conflicts of Interest only if the parties have
agreed on them. If there is no such agreement, the IBA Guidelines may be used as one but
not exclusive criterion.
In German arbitral proceedings, the criteria and practice laid down by German courts are 9
decisive. It means that the Appointing Committee considers if a challenge brought before
a German court would be upheld. Thus, the fact that an arbitrator is or has been acting as
a lawyer against one of the parties to the proceedings does not constitute a reason to refuse
confirmation of an arbitrator. However, acting for one of the parties, even if the mandate was
not exercised by the prospective arbitrator himself but by a partner or an associate of his
law firm, constitutes (in principle) a reason to refuse confirmation, unless the mandate was
terminated some time previously.
If the Appointing Committee refuses to confirm an arbitrator in office, the party who has 10
nominated the arbitrator is granted an opportunity to nominate another arbitrator.
C.
Practical Implications
So far, the practice of the Appointing Committee has been not to provide reasons for its 11
decision. There are no means to appeal against the decision of the Appointing Committee
refusing confirmation.
Since the procedure under Section 17 DIS Rules is only a preliminary procedure, the party 12
who has objected unsuccessfully to the nomination of an arbitrator may still challenge the
arbitrator under Section 18 DIS Rules within two weeks of being notified of the constitution
of the arbitral tribunal except on the basis of grounds disclosed to which the party has not
objected within the time limit provided.
Though the confirmation procedure is strictly speaking not a challenge procedure, it serves 13
to expedite and simplify proceedings by obliging parties to address concerns about the
impartiality and independence of arbitrators at an early stage and thus to ensure that the
arbitral award, once rendered, cannot be set aside on grounds which were already known to
the parties.
2
Cf. supra, Berger, s. 15 DIS Rules paras 2 et seq.
646
III. Constitution of the Arbitral Tribunal

14 Subsection 3 defines the moment of the constitution of the arbitral tribunal, i.e. when all
three arbitrators (in the case of a three-member arbitral tribunal) or the sole arbitrator is
confirmed in office. At this moment, the arbitral tribunal assumes charge of the proceedings,
and all communications are made directly between the parties and the arbitral tribunal.

15 Article 13 International Chamber of Commerce Arbitration Rules contains a similar procedure for the confirmation of arbitrators. Like Section 17 DIS Rules, it aims to prevent
obstructive challenge proceedings at a later stage by early disclosure of issues which may give
rise to concerns about an arbitrators impartiality or independence.
Section 18 Challenge of Arbitrator1

18.1 An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality or independence, or if he does not possess qualifications agreed to by the parties. A party may challenge an arbitrator nominated
by him, or in whose nomination he has participated, only for reasons of which he
becomes aware after the nomination has been made.
18.2 The challenge shall be notified and substantiated to the DIS Secretariat within
two weeks of being advised of the constitution of the arbitral tribunal pursuant
to Section17 subsection 3 or of the time at which the party learns of the reason
for challenge. The DIS Secretariat informs the arbitrators and the other party of
the challenge and sets a reasonable time limit for comments from the challenged
arbitrator and the other party. If the challenged arbitrator does not withdraw from
his office or the other party does not agree to the challenge within the time-limit
fixed, the challenging party may within two weeks request the arbitral tribunal to
decide on the challenge unless otherwise agreed by the parties.
18.3 If the other party agrees to the challenge, or if the arbitrator withdraws from his
office after being challenged, or if the application of challenge has been granted, a
substitute arbitrator shall be nominated. Sections12 to 17 apply mutatis mutandis
to the nomination and confirmation of the substitute arbitrator.
I.
The provision reflects Article 12 and 13 of the UNCITRAL Model Law (ML), which in turn 1
were adopted into German arbitration law by 10362 and 1037ZPO.
II.
Detailed Commentary
Subsection 1 lays down exclusively the grounds for challenging an arbitrator, i.e. if justifiable 2
doubts exist as to his or her impartiality or independence, or if he or she does not possess
qualifications agreed to by the parties.
A.
Impartiality/Independence
The notions of impartiality and independence correspond to those of Section 15 DIS Rules, 3
i.e. to the arbitrators obligation to be impartial and independent. However, the basis for challenge is narrower than the obligation of the arbitrator to disclose grounds that are likely to
give rise to doubts as to his or her impartiality or independence. Only justifiable doubts as to
an arbitrators impartiality or independence serve as grounds for challenge. Thus, not every
circumstance disclosed by a prospective arbitrator under Sections 15 and 16 DIS Rules will
give rise to a challenge.
1
2
1036 ZPO unlike s. 18 DIS Rules or Art. 12 ML does not contain the express qualification of
justifiable grounds. This however is understood to be inherent to the notion of the ability to challenge an
arbitrator. The courts have repeatedly held that only justifiable doubts as to impartiality or independence
will suffice to found a challenge.
648
4 Unlike 41 Code of Civil Procedure (Zivilprozessordnung ZPO), there is no statutory

definition of impartiality or independence of an arbitrator. The courts (and arbitral tribunals),
when called upon to decide on a challenge in German domestic proceedings, have applied
41 ZPO in evaluating the impartiality and independence of the arbitrator. The International
Bar Association Guidelines on Conflicts of Interests, while only directly applicable if agreed
on by the parties, may serve as indication whether the particular circumstances at issue give
rise to justifiable doubts.3
5 The limitation of grounds to challenge an arbitrator reflects the high degree of autonomy
parties have in selecting their arbitrators. At the same time, subsection 1 sentence 2 stresses
that once a nomination of an arbitrator is made, it cannot be withdrawn at will. Only grounds
of which the party was not aware at the time of nominating the arbitrator can be raised in
challenge proceedings by that party. Thus, a party having concluded an arbitration agreement
in which the brother of the other party was nominated as arbitrator was precluded from challenging the appointment of the arbitrator on the basis of family connections.4
6 This decision underlines the relevance of the German Institution of Arbitration (Deutsche
Institution fr Schiedsgerichtsbarkeit DIS) confirmation procedure under Section 17 DIS
Rules as a means to preclude a party from raising a challenge against an arbitrator on grounds
that were disclosed to that party in the confirmation procedure and to which that party did
not object in the confirmation procedure.
B.
Procedure
7 Section 18 DIS Rules applies to challenges that are raised after the constitution of the arbitral
tribunal, i.e. to arbitrators who have been confirmed in office. Similarly, if grounds for a challenge are disclosed by an arbitrator after being confirmed in office by the German Institution
of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) under Section 17 DIS
Rules and a party objects to the continued mandate of the arbitrator, the arbitral tribunal (not
the Appointing Committee) has to decide on the challenge.
8 The reasoned challenge must be notified to DIS within two weeks of the constitution of the
arbitral tribunal5 or of becoming aware of the circumstances that give rise to doubts as to
the arbitrators impartiality or independence. DIS notifies the challenged arbitrator and the
other party of the challenge and accords them an opportunity to comment.
9 If the party who has nominated the arbitrator concurs with the challenge, the mandate of the
arbitrator is terminated.
10 Subsection 1 sentence 2 does not prevent the party who has nominated the challenged
arbitrator from concurring with a challenge based on a ground that the party was aware of at
the time of the nomination since the agreement serves only to terminate the mandate of the
arbitrator and therefore to expedite the proceedings in those instances where the challenge
is perceived to be founded.
11 If the challenged arbitrator does not withdraw from the proceedings and the other party does
not concur with the challenge within the set time limit,6 the challenging party is informed
3
4
5
6
E.g. DIS-SV-B 217/02, SchiedsVZ 2003, 94.

Cf. s. 17.3 DIS Rules upon confirmation of all the arbitrators by the DIS.
Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 18 para. 9, criticises that the wording If the challenged arbitrator does not withdraw or the other party does not agree in S. 18.2 sentence 3 DIS Rules is
649
accordingly. To pursue the challenge, it the party must request a decision from the arbitral
tribunal within two weeks of being informed by the DIS that the challenged arbitrator has
not withdrawn and that the other party has not concurred with the objection. The DIS informs the arbitral tribunal and the other party of the date on which the challenging party has
received such information.
Upon such a request, the arbitral tribunal decides on the challenge. Since pursuant to Section 12
18.2 DIS Rules the arbitral tribunal decides on the request, the challenged arbitrator may
also participate in the proceedings. In practice, however, the challenged arbitrator usually
abstains from participating in the decision.7
If the place of arbitration is in Germany, the challenging party may, if the challenge is not suc- 13
cessful, apply to the courts to decide on the challenge within one month of having received
notice of the decision ( 1037 (3) ZPO). If a party fails to have the challenge reviewed by the
state courts, in Germany a request to set aside the award in which the challenged arbitrator
has participated on the ground that the arbitrator lacked impartiality or independence will
not be successful.8
Section 18 DIS Rules does not explicitly deal with the situation where a sole arbitrator or 14
where the entire tribunal is challenged. Under these circumstances, the procedure of Section
18.2 sentence 1 and 2 DIS Rules must be followed through, i.e. the challenging party must
notify DIS, who sets a time limit for comments to the sole arbitrator and the other party.
However, the refusal of the sole arbitrator to withdraw after having been informed by DIS
of the challenge constitutes a dismissal of the challenge and the challenging party may apply
directly to the competent court for a decision on the challenge without having to request
the arbitrator again for a decision on the challenge pursuant to Section 18.2 sentence 3 DIS
Rules.9
C.
Replacement
If the challenge is successful, i.e. if the arbitrator withdraws from office, if the other party 15
concurs to the challenge or if the arbitral tribunal decides in the affirmative on the challenge,
the original nomination right of the party whose arbitrator has been challenged revives and
that party may nominate a substitute arbitrator pursuant to the nomination procedure agreed
upon by the parties or applicable under the DIS Arbitration Rules (Sections 1217 DIS
Rules).10 Under certain circumstances, the time limit for the nomination of an arbitrator may
be abbreviated.
7
8
9
10
misleading because it seems to indicate that the arbitral tribunal would also have to decide on the challenge if, e.g. the arbitrator withdraws from the office though the party who has nominated him does not
concur with the challenge. While this use of the disjunction, which is derived from the wording of Art. 12
(2) UNCITRAL Model Law, may arguably be somewhat loose, any doubts as to the exact meaning of the
phrase, i.e. that the arbitral tribunal only has to decide on the challenge if the arbitrator does not withdraw
and the other party has not concurred with the challenge, are dispelled by S. 18.3 DIS Rules, which makes
clear that no decision by the arbitral tribunal is required on the challenge and that a substitute arbitrator is
to be nominated, if the other party agrees to the challenge or if the arbitrator withdraws.
E.g. DIS-SV-B 217/02, SchiedsVZ 2003, 94 (95).
Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 18 para. 14.
This does not mean that the same procedure by which the challenged arbitrator was nominated must
apply. If the challenged arbitrator was nominated by the Appointing Committee following the respondents failure to nominate an arbitrator, the Appointing Committee will not automatically nominate the
650
16 The nomination of a substitute arbitrator does not affect the appointments of the other
arbitrators. Thus, where an arbitrator nominated by multiple respondents has been removed
from office as a result of a challenge and the multiple respondents fail to nominate jointly
another arbitrator, the arbitrator nominated by the claimant will not also be replaced (as
provided for by Section 13 (2) sentence 4 DIS Rules) if the claimant requests nomination
of the arbitrator for the respondent side. Similarly, if a party-nominated arbitrator is removed
from office, this will not affect the appointment of the chairman of the tribunal in which that
arbitrator has participated.

17 Due to the preliminary screening procedure of Sections 16 and 17 DIS Rules, grounds for
challenging an arbitrator are usually disclosed and dealt with prior to the constitution of the
arbitral tribunal. Therefore, challenges of arbitrators under Section 18 DIS Rules occur only
rarely. Only a few court decisions on a request pursuant to 1037 (3) ZPO are known to
have been issued in DIS proceedings.11
18 The confirmation and challenge procedures of Sections 17 and 18 DIS Rules highlight the
essential advantage of institutional arbitration vis--vis ad hoc arbitration. The procedures
facilitate the early disclosure of and decision on grounds that may give rise to doubts as to an
arbitrators impartiality and independence and therefore strengthen the parties confidence
in the decision-making process of the arbitral tribunal.

19 Though most other institutional arbitration rules also contain detailed provisions on the
challenge of arbitrators, Section 18 DIS Rules is unique in the sense that it provides that the
arbitral tribunal itself (including the challenged arbitrator) decides on the challenge. Under
many other arbitration rules, the institution decides on the challenge.12
11
12
substitute arbitrator. The respondent will be first given another opportunity to nominate an arbitrator.
Only if the respondent again fails to nominate an arbitrator in the set time limit, the Appointing Committee will nominate again, at the request of the claimant, an arbitrator for the respondent.
OLG Frankfurt SchiedsVZ 2008, 96; 2011, 342; OLG Mnchen SchiedsVZ 2013, 291.
Cf. Art. 14 (3) ICC Arbitration Rules; Art. 11 (3) Swiss Arbitration Rules; Art. 20 (3) Vienna Rules; Art.
10 (4) LCIA Arbitration Rules; Art. 15 (4) SCC Arbitration Rules.
Section 19 Default of an Arbitrator1

19.1 If an arbitrator becomes de jure or de facto unable to perform his functions or for
other reasons fails to act, his mandate terminates if he withdraws from his office
or if the parties agree on the termination. If the arbitrator does not withdraw from
his office, or if the parties cannot reach agreement on the termination of his mandate, any party may request the competent court to decide on the termination of
the mandate.
19.2 If the mandate of an arbitrator is terminated, a substitute arbitrator shall be nominated. Sections12 to 17 apply mutatis mutandis to the nomination and confirmation of the substitute arbitrator.
19.3 If, pursuant to subsection 1 of this Section or of Section 18 subsection 2, an
arbitrator withdraws from his office or a party agrees to the termination of the
mandate of an arbitrator, this does not imply acceptance of the validity of any
ground referred to in subsection1 of this Section or Section18 subsection 2.
I.
Section 19 DIS Rules2 reflects the wording of Article 14 and 15 UNCITRAL Model Law 1
and 1038 and 1039 Code of Civil Procedure (Zivilprozessordnung ZPO). It provides a
remedy for those instances where an arbitration cannot proceed because one of the arbitrators is not able to fulfil his functions.
II.
Detailed Commentary
A.
Grounds
The causes for which an arbitrator may be refused (other than for lack of impartiality or 2
independence or lack of agreed qualifications) are:
(i.) A de jure or de facto inability to perform his functions. This covers any factual or legal 3
circumstance which prevents a person from participating in the proceedings, such as a
protracted illness or disability affecting a persons ability to decide the dispute to a more
than temporary extent, or loss of legal capacity.3 Insolvency does not constitute a ground for
terminating the mandate of an arbitrator.4
As a persons obligations terminate automatically upon death, a declaration of termination by 4
the court pursuant to subsection 1, sentence 2 is not required when an arbitrator dies.
(ii.) Secondly, failure of an arbitrator to perform his duties for other reasons than a de jure or 5
de facto inability. This covers cases where an arbitrator for an extended period of time refuses
to participate in the proceeding and therefore causes the procedure to come to a standstill.
The failure to participate must be more than temporary. There are no general criteria by
which the behaviour of the arbitrator can be evaluated. The question if an arbitrators failure
1
2
3
4
Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 19 para. 1.
652
to participate amounts to a default for other reasons can only be assessed in the light of the
specific case.
6 Therefore, a delay caused e.g. by the heavy workload of an arbitrator, does not per se constitute
a ground for refusing an arbitrator since it is up to the parties to ensure that the arbitrators
who have been selected are able to conduct the proceedings in an expeditious manner.
B.
Consequence
7 If an arbitrator refuses to act, in particular by refusing to participate in a vote on a decision

(Section 33.2 DIS Rules), unless the parties have agreed otherwise, the other two arbitrators
may take the decision without the third arbitrator. The decision of the remaining arbitrators
must be unanimous in order to comply with the general rule that decisions of the arbitral
tribunal must be rendered by the majority of the arbitrators.
8 In the case of a decision on an award, the parties must be given sufficient advance notice
of the decision of the remaining arbitrators to vote on the award without the arbitrator in
question, in order to be able to replace the arbitrator pursuant to Section 19 DIS Rules.5
C.
Termination of Mandate and Substitute Appointment
9 Where the parties agree on the termination of the mandate or the arbitrator withdraws
voluntarily, the mandate is terminated. As a result of the termination, the original right to
nominate an arbitrator revives and the party who has nominated the arbitrator whose mandate was terminated is entitled to nominate an arbitrator in the manner agreed upon by the
parties or pursuant to the provisions of the DIS Arbitration Rules.
10 To what extent the proceedings must repeated once the substitute arbitrator is nominated
can only be decided on a case-by-case basis and depends on the stage at which the proceedings were interrupted by the arbitrators default.
11 The parties and the arbitrators may and it is indeed highly recommended to do so agree
on which parts of the proceedings need to be repeated. In German style proceedings, i.e.
proceedings in which great emphasis is placed on presenting arguments in comprehensive
written briefs of the parties rather than in extensive oral hearings, it may often be easier to
continue the proceedings at the stage where they were interrupted without the need to repeat
the proceedings from the beginning for the benefit of the substitute arbitrator.
12 Section 19.3 DIS Rules, like Section 18.3 DIS Rules, serves to clarify that since no full legal
analysis and evaluation of the grounds for refusing an arbitrator is made, the decision of the
parties to terminate the mandate or of the arbitrator to withdraw from the office does not
mean that the grounds advanced for the termination are true.

13 Outside the unfortunate circumstances of an illness unforeseen at the time that a mandate
had been accepted or death of an arbitrator, Section 19 DIS Rules has so far been only of very
limited practical relevance. To date, no application to a court in DIS proceedings to remove
an arbitrator from office pursuant to Section 19.1 DIS Rules is known. This is possibly due
to the fact that in cases where an arbitrators inability or failure to act arises at a late stage in
5
OLG Saarbrcken 29.10.2002, SchiedsVZ 2003, 92.
653
the proceedings, Section 33.4 DIS Rules provides a tool to bring the proceedings to an end
without the inactive arbitrator.
Section 20 Interim Measures of Protection1

20.1 Unless otherwise agreed by the parties, the arbitral tribunal may, at the request
of a party, order any interim measure of protection as the arbitral tribunal may
consider necessary in respect of the subject matter of the dispute. The arbitral
tribunal may require any party to provide appropriate security in connection with
such measure.
20.2 It is not incompatible with an arbitration agreement for a party to request an
interim measure of protection in respect of the subject matter of the dispute from
a court before or during arbitral proceedings.
I.
1 Some disputes are of a nature that they call for interim measures of protection. Although
great limitations existed in the past with regard to the authority of the arbitral tribunal to
issue such interim measures, national laws and institutional rules now provide for such power
of the tribunal.2 In order to remain an attractive means of dispute resolution, arbitration now
also provides such a procedural tool.
2 Nevertheless, it should be mentioned that there are situations in which a party should seriously consider applying for interim measures before a state court and not before an arbitral
tribunal. This is particularly true in cases in which, at the point in time when the application
for interim measures is filed, the arbitral tribunal has not yet been constituted.3 The applicant
may lose valuable time while waiting for the constitution of the arbitral tribunal.
3 In addition, it should be taken into consideration that it is contested whether the arbitral tribunal has the authority to threaten and to enforce means of compulsion.4 Hence, if the party
ordered to carry out or to omit certain measures does not comply with the arbitral tribunals
order, the applicant may be forced to apply for the assistance of a state court anyway. In these
instances, it might be more reasonable to commence the proceedings concerning interim
measures from the very beginning before such state court. This also applies where the interim
measures should bind third parties not bound by the arbitration agreement; in such case, the
arbitral tribunal principally lacks authority to issue orders against such third parties.5
4 Section 20 DIS Rules confirms that in arbitrations under the DIS Arbitration Rules, arbitral
tribunals have unless the parties have agreed otherwise the authority to order any interim
measures they consider necessary, taking into account the subject matter of the dispute.
II.
A.
5 The parties agreements referred to at the beginning of the first sentence are agreements
for the exclusion of the arbitral tribunals authority to order interim measures. In the event
1
2
3
4
5
Born (2009), p. 1944.
Weigand-Hanefeld (2009), Germany, para. 137; Lachmann (2008), para. 2936.
Born (2009), p. 1966.
Section 20 Elsing
655
that such an agreement is concluded, the sole authority to order interim measures lies with
the state courts. Pursuant to 1033, 1041 Code of Civil Procedure (Zivilprozessordnung
ZPO), the German state courts maintain a parallel jurisdiction to order interim measures
that may not be excluded through an agreement between the parties, with the effect that the
arbitral tribunal is solely responsible for interim measures.6 This is reasonable, taking into
account the above mentioned disadvantages of arbitration in this area.
The arbitral tribunal may only order interim measures of protection if they have been re- 6
quested by a party (ne ultra petita). Thus the arbitral tribunal is prevented from acting on its
own initiative. Even if the arbitral tribunal is of the opinion that interim measures of protection would be necessary, it would not be appropriate to notify the parties of its opinion, in
particular if such notification includes the recommendation to one party that it should apply
for an interim measure.
The measures to be ordered by the arbitral tribunal comprise, in particular, interim injunc- 7
tions (also called restraining orders) and arrests in rem.7 In the German legal literature, it
is disputed whether or not the arbitral tribunal may also order the preservation of certain
evidence. On the one hand, it is argued that, after its constitution, the arbitral tribunal would
be solely competent for orders for the preservation of evidence.8 The counter argument is
that the arbitral tribunal may order and actually carry out the taking of evidence, but orders
for the preservation of evidence are not regarded as interim measures for protection. As such,
these belong solely to the jurisdiction of the state courts.9
When dealing with applications for interim measures, arbitral tribunals generally review 8
whether the subject of the application requires urgent attention and whether the applicant
most likely has a claim in connection with the interim measure requested. Regarding the
proceedings, the arbitral tribunal must comply with Section 24 DIS Rules, i.e. it must apply
the mandatory laws at the place of arbitration, the DIS Arbitration Rules and the additional
rules agreed between the parties, and has incidental discretion with regard to organizing the
proceedings concerning the interim measures. Based on Section 26.1 DIS Rules, by which
the parties must be given a full opportunity to present their case at all stages of the proceedings, the arbitral tribunal must provide the party against whom the interim measure would
be directed the opportunity to respond to the application (which automatically leads to a
further delay).
The arbitral tribunal may decide either in the form of an order or by a partial award.10 The 9
arbitral tribunals decision is enforceable by the competent state court. In order to comply
with the interim character of the measure, the arbitral tribunal may not (except under extraordinary circumstances) order measures which lead to a final settlement of the dispute or
certain issues thereof.11
Based on Section 20.1 sentence 2 DIS Rules, the arbitral tribunal may (but is not required to) 10
request the applicant to provide appropriate security in connection with the interim measure
6
7
8
9
10
11
Lachmann (2008), para. 2853; Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 20 para. 9 (p.

194); MnchKommZPO-Mnch (2013), 1041 para. 8; another view is taken by Schtze, Einstweiliger
Rechtsschutz im Schiedsverfahren, BB 1998, 1650.
Schwab/Walter (2005), Chap. 17a para. 4; Lachmann (2008), para. 2890.
Weigand-Hanefeld (2009), Germany, para. 131.
656
ordered. The wording of Section 20.1 sentence 2 DIS Rules is similar to 1041 (1) sentence
2 ZPO. In this context, the arbitral tribunal has discretion as to the kind and amount of the
security requested. In making its determination, the arbitral tribunal will generally take into
account and quantify the damage which could arise from the interim measure to the party
concerned.
11 If the interim measure is to be enforced in Germany, its execution (Vollziehung) must be
recognized by a German state court pursuant to 1041 (2) sentence 1 ZPO. The competent
German state court may have the discretion to admit, deny or modify the interim measure
rendered by the arbitral tribunal.12
B.
12 In Section 20.2 DIS Rules, it is confirmed that a party may also file its application for interim
measures with a state court, i.e. that the fact that an arbitration agreement has been concluded
does not constitute a valid defence in this respect. Pursuant to 1041 (3) ZPO, the state
court may also modify or overrule orders by which the interim order has been admitted.

13 Provisions comparable to Section 20 DIS Rules can be found in Article 28 International
Chamber of Commerce (ICC) Arbitration Rules, Article 26 Swiss Rules, Article 22 Vienna
Rules (VIAC) and Article 21 American Arbitration Association (AAA) International Dispute Resolution Procedures.
14 Article 25 London Court of International Arbitration (LCIA) Arbitration Rules expressly
authorizes the arbitral tribunal to order a party to provide security for all or part of the
amount in dispute and also to preserve, store or sell a thing under the control of such party
and relating to the subject matter of the arbitration. Furthermore, it should be noted that pursuant to Article 25 (3) LCIA Arbitration Rules, after the formation of the arbitral tribunal,
the parties may resort to state courts for interim measures in exceptional circumstances only.
In order to facilitate parties needing urgent interim measures before the constitution of the
arbitral tribunal, Article 29 ICC Arbitration Rules now provides the emergency arbitrator
the power to grant such interim measures.
12
Section 21 Place of Arbitration1

21.1 Failing an agreement by the parties on the place of arbitration, this shall be determined by the arbitral tribunal.
21.2 Notwithstanding subsection 1 of this section, the arbitral tribunal may, unless
otherwise agreed by the parties, meet at any place it considers appropriate for an
oral hearing, for hearing witnesses, experts or the parties, for consultation among
its members or for inspection of property or documents.
I.
This provision is meant to ensure that the situs or place of arbitration is clearly determined, 1
even if the parties failed to reach an explicit agreement in the arbitration clause. Such determination is necessary because the tribunal and the parties must know which national arbitration law governs their arbitration. The governing arbitration law, the so-called lex arbitri, is
the national arbitration law that applies in the city chosen as place of arbitration. The provision also clarifies that the place of arbitration is generally not prescribed by law or through a
binding provision in the arbitration rules. Instead, the parties can freely choose the place of
arbitration, and only in instances where such agreement is missing may the decision of the
arbitral tribunal become necessary to complement the arbitration agreement. Section21.2
DIS Rules has only a clarifying purpose: meetings and hearings can take place without having an impact on the place of arbitration. The decision where to meet is usually made by the
tribunal after consultation with the parties
II.
Detailed Commentary
The place of arbitration is the home or domicile of the arbitration proceeding2 and not neces- 2
sarily the place where either the arbitral tribunal meets or where hearings take place. That is
the almost undisputed understanding of arbitration practitioners and legal scholars. In this
respect, the place of arbitration, sometimes referred to as situs or the domicile of arbitration,
determines which national arbitration law governs the arbitral proceedings ( 1025 (1)
Code of Civil Procedure (Zivilprozessordnung ZPO). Explicitly, the place of arbitration
must be a city in a certain country, e.g. the place of arbitration may not be Germany, but it
may be Cologne. This is relevant because the place of arbitration indirectly determines the
local jurisdiction for state courts3 (e.g. 1059, 1062 (1) No. 4 ZPO). In addition, the place
of arbitration defines the nationality of an award, which is relevant for subsequent enforcement proceedings.4 Whereas German enforcement proceedings of domestic awards (i.e. any
award delivered with the place of arbitration in Germany, 1054 (3) ZPO) are based on the
provisions contained in the ZPO, the enforcement of a foreign award in Germany (i.e. any
award delivered with the place of arbitration outside Germany) is subject to the provisions of
the New York Convention of 1958 (see 1061 (1) ZPO).
1
2
3
4
Raeschke-Kessler/Berger (1999), para. 136; Barth, in: Nedden/Herzberg (2014), 21 DIS-SchiedsO,
para. 4.
Lew/Mistelis/Krll (2003), para. 8-24; Barth, in: Nedden/Herzberg (2014), 21 DIS-SchiedsO, para. 6.
658
3 It follows that determining the place of arbitration is of minor importance in purely national
arbitrations where only German parties are involved, without any connection to a foreign
country. It is extremely rare that German parties in a purely national arbitration opt for a
foreign place of arbitration and thus for a foreign lex arbitri. In almost all national arbitrations between German parties, the place of arbitration will be in Germany, and thus German
arbitration law will apply (namely, 1025 et seq. ZPO). In these instances, the chosen place
of arbitration only determines which German Higher Regional Court (Oberlandesgericht) is
competent to decide on motions with respect to the arbitration (1062 (1) ZPO).
4 In an international arbitration, i.e. an arbitration with parties from different countries, the
place of arbitration is of paramount importance. In particular, the chosen place of arbitration
determines which court under which national arbitration rules is competent to hear motions to set aside the award if the award is later challenged by one party.5 The parties are well
advised to choose a place of arbitration where neutral and experienced courts will render a
decision under a firmly established arbitration law.
5 Section 21.1 DIS Rules makes clear that the parties can freely choose the place of arbitration
by way of agreement. The location of German Institution of Arbitration (Deutsche Institution
fr Schiedsgerichtsbarkeit DIS) offices in Cologne, Berlin and Munich are without any
influence for the parties choice, as it is possible to choose a place outside of Germany.6
6 In most cases, the place of arbitration is stipulated in the arbitration clause; the sample clause
suggested by the DIS recommends a respective provision. The claimant is invited to indicate
the place of arbitration in its request for arbitration (Section 6.3 DIS Rules). If the parties
have not determined the place of arbitration in the arbitration clause, they may do so after
the arbitration has started; this is often done on the tribunals suggestion. However, if no
specific agreement is reached, the arbitral tribunal must step in and determine the place of
arbitration. The arbitral tribunal is not permitted to leave that question unanswered, neither
in domestic nor in international arbitrations. Prior to deciding this issue, the arbitral tribunal
must grant the parties an opportunity to present their views on this question since the respective decision of the arbitral tribunal is not a purely formalistic one.
7 Section21.1 DIS Rules does not provide any guidance for the arbitral tribunal as to which
aspects it may consider when determining the place of arbitration. That does not mean that
the arbitral tribunal is free in this respect. Instead, the tribunal will consider the following aspects: neutrality of the place, access to competent courts where well established and internationally recognized arbitration laws are in place (most often those copying the UNCITRAL
Model Law) and the hypothetical agreement of the parties if they had discussed the place of
arbitration prior to the emergence of the dispute.
8 Section21.1 DIS Rules does not stipulate in which form the arbitral tribunal must decide
on the place of arbitration (interim award/award/procedural order). At the very latest, the
decision must be made in the final award. However, since the assistance of state courts may
already be needed during the arbitration, an earlier decision is advisable to avoid quarrels
about which court is competent (cf. 1025 (3) ZPO). Consequently, experienced tribunals
will decide this issue by way of a procedural order at an early stage of the proceedings. If both
the parties and the tribunal have forgotten to determine the place of arbitration, the effective
5
6
Raeschke-Kessler/Berger (1999), para. 137.

However, the choice of a foreign place for a DIS arbitration is rare; Denmark as an example is mentioned
by Wirth, SchiedsVZ 2005, 66 et seq.
Section 21 Risse
659
place of arbitration shall be decisive, i.e. the place where the hearing took place.7 In DIS proceedings, this is unlikely to happen since according to Section34.3 DIS Rules, the place of
arbitration is a mandatory element of an award and the DIS Secretariat checks whether that
requirement is met before it sends the final award to the parties (cf. Section 36.1 DIS Rules).
Section 21.1 DIS Rules allows the parties to change the place of arbitration after it has been 9
determined.8 Possible reasons for parties to change the place of arbitration might be a change
of domicile of one or both or the parties, or even more important current (hostile)
changes in state court jurisprudence concerning the recognition and enforcement of awards.
In order to change the place of arbitration, a party agreement is necessary. However, parties
are well advised not to agree on a change of the place of arbitration without prior consultation
with the arbitral tribunal. A change in the place of arbitration may have an effect on multiple
issues in the proceedings, e.g. the applicable lex arbitri or it could give an arbitrator a right of
termination for cause.9 Important to notice, there is no legal basis for the arbitral tribunal to
change the place of arbitration on its own. A party agreement is a mandatory requirement.
Section21.2 DIS Rules clarifies that the parties can decide by way of an agreement where to 10
meet. In most cases, the parties do not exercise this right and leave the decision to the arbitral
tribunal. Again, the arbitral tribunal enters into a discretionary decision. In the majority of
cases, this decision will be governed by purely practical reasons, especially whether the place
is easy to reach for everybody and whether suitable rooms for conducting the hearings are
available (cf. 1043 (2) ZPO). It is noteworthy that, for DIS arbitrations, the DIS provides
suitable rooms free of charge at its Secretariats premises in Cologne. In rare cases, the tribunal must also consider other issues, e.g. if a party or a witness is subject to restrictive visa
regulations when travelling to the place of the hearing. The tribunal will issue its decision by
way of a procedural order.
The determination of the place of arbitration is not an interim measure of protection within 11
the meaning of No. 14 of the Appendix to section 40 (5) DIS Rules. Hence, it does not
increase the arbitrators fee.
III. DIS Practice

The DIS model clause contains a provision inviting the parties to determine the place of 12
arbitration in the arbitration clause. Thus, the DIS encourages the parties to decide on the
place of arbitration as early as possible. This policy is also followed by most DIS arbitral tribunals if the arbitration agreement is silent with respect to the place of arbitration. The DIS
arbitral tribunals will then, at the outset of the arbitration, encourage the parties to enter into
a respective written agreement. Seasoned counsels often do not need such encouragement
but find a respective neutral place agreeable to both parties.10
Only in rare cases is no agreement reached and the DIS arbitral tribunal must decide. In a 13
domestic arbitration where the place of arbitration is of lesser importance, the decision might
be made only in the final award. The respective decision must be an explicit one accompanied
7
8
9
10
OLG Mnchen 22.06.2005, SchiedsVZ 2005, 309; OLG Dsseldorf, 23.03.2000, EWiR 2000, 796 with
note by Krll; Schtze-Theune (2011), p. 195.
Schtze-Theune (2013), Institutional Arbitration, Chap. III, para. 184.
Statistically, a respective agreement is reached in more than 85 per cent of all cases, cf. Schtze-Reiner/
Jahnel (2011), p. 74; Bhler/Webster (2008), para. 14-10.
660
by some reasons. The so-determined place of arbitration must not be confused with the place
where the final award is signed by the arbitrators. In international arbitrations, DIS arbitral
tribunals usually decide on the place of arbitration as early as possible because the so-defined
place of arbitration may be relevant during the arbitration when determining the competent
court to hear motions of the parties, e.g. for challenging an arbitrator (cf. 1037 (3) ZPO).
Procedurally, the typical DIS arbitral tribunal will provide both parties the opportunity to
present their view on the place of arbitration11 and then decide by way of a procedural order,
briefly outlining the reasons why the arbitral tribunal has chosen that place of arbitration.
14 As stated, each award must contain a determination of the place of arbitration (Section
34.4 DIS Rules). The DIS Secretariat will review whether an award contains such determination before it sends the award to the parties (cf. Section 36.1 DIS Rules). If a respective
determination is missing, the DIS Secretariat will invite the arbitrators to amend their award
respectively.
15 As to the place of a hearing or any other meeting (Section 21.2 DIS Rules), most DIS arbitral
tribunals prefer an informal approach. This issue is addressed in a preparatory telephone
conference with the parties counsels or in an organizational meeting. The arbitral tribunals
respective suggestion is rarely objected to. If it is, many tribunals will have a tendency to meet
at the place of arbitration chosen by the parties in order to avoid any further discussions.12

16 Section 21 DIS Rules is substantively identical to 1043 ZPO and Article18 UNCITRAL
Arbitration Rules. Article 18 International Chamber of Commerce (ICC) Arbitration Rules
differs in that the ICC Court of Arbitration and not the arbitral tribunal determines the
place of arbitration if the parties have not reached an agreement. The same applies regarding
Article 16 (1) of the London Court of International Arbitration (LCIA) Arbitration Rules.
11
12
Schtze-Theune (2011), p. 195.

Bhler/Webster (2008), paras 14-39.
Section 22 Language of Proceedings1

22.1 The parties are free to agree on the language or languages to be used in the arbitral
proceedings. Failing such agreement, the arbitral tribunal shall determine the language or languages to be used in the proceedings. This agreement or determination, unless otherwise specified therein, shall apply to any written statement by a
party, any hearing and any award, decision or other communication by the arbitral
tribunal.
22.2 The arbitral tribunal may order that expert reports and other documentary evidence shall be accompanied by a translation into the language or languages agreed
upon by the parties or determined by the arbitral tribunal.
I.
Purpose of the Provision/Background
A main advantage of (international) arbitration is the parties freedom to choose the lan- 1
guage in which the arbitration will be conducted. Section 22.1 DIS Rules clarifies that this
generally accepted principle also applies for German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) arbitrations; an official mandatory court language
does not exist in DIS arbitrations. Instead, the parties can choose the ruling language of the
arbitration and only in absence of such agreement will the tribunal decide. While national
courts conduct the proceedings in their home language, arbitrations can be conducted in
any language the parties choose. This is important because it enables the parties and their
legal department or in-house counsel to monitor the proceedings closely and even more
important it enables the parties to choose an (outside) attorney they know and trust. This
would not be possible if the proceedings were to be conducted in an unfamiliar language not
spoken by the parties in-house counsel or their trusted attorneys.
II.
Detailed Commentary
Language issues are rarely a point of discussion in arbitrations. In purely domestic arbitra- 2
tions, the respective language is obvious. In international arbitrations, the parties frequently
determine the applicable language in the arbitration clause; as is also suggested in the DIS
sample arbitration clause. The respective choice is almost always identical with the one used
in the main contract. English as the lingua franca of international trade is the predominant
choice.
Section 22.1 DIS Rules stipulates that the tribunal must determine the language of the pro- 3
ceedings if the applicable language has not been agreed upon by the parties. The respective
determination must be made as early as possible because the parties need clarity as to the
language in which they have to submit their arguments. That is why the claimant is invited
to address this issue in his request for arbitration (Section 6.3 DIS Rules). Section 22.1 DIS
Rules provides no guidelines for the arbitrators concerning which aspects they may consider
for this ruling. In most cases, the language of the underlying contract and/or the arbitration
clause will be decisive.2 Other factors are the native language of the parties, the language
1
2
Schtze-Theune (2011), p. 196; Lew/Mistelis/Krll (2003), para. 8-34; Barth, in: Nedden/Herzberg
(2014), 22 DIS-SchiedsO, para. 12.
662
spoken at the place of arbitration or the ability of all involved parties and the arbitrators to
communicate fluently in one language, e.g. English. Prior to making a decision, the tribunal
must grant the parties an opportunity to present their arguments as to the applicable language. The decision is then made by way of a procedural order. In determining the applicable
language, the tribunal must use the utmost care in order to avoid a later complaint by a party,
e.g. at the awards enforcement stage, stating that it could not participate effectively in the arbitration due to language problems and thus its procedural rights of due process were violated.3
No party should gain a one-sided advantage from the arbitrators decision.4 However, once
the language of arbitration has been determined, each party that is not sufficiently fluent in
that language is responsible to make the necessary arrangements, e.g. by employing/organizing an interpreter.5
4 Section 22.1 DIS Rules clarifies that the parties can also opt for two or even more languages
to be used in the proceedings. A respective determination is rare and not advisable since the
permitted use of multiple languages will often delay the proceedings and entail significant
translation costs. It can make sense that one language is chosen as the governing language
(e.g. German) but that any attachments or exhibits a party wants to refer to can be presented
in a stipulated different language spoken by everybody (e.g. English) without a need for
translations.6
5 Section 22.1 DIS Rules permits the parties to modify the language of the arbitration, i.e. to
change the language as agreed upon in the arbitration clause or determined by the arbitral
tribunal.7 A modification of the stipulated language in the arbitration clause should be dealt
with as early as possible in order to reach clarity. A later change of language during the arbitral
proceedings is also possible by party agreement. Reasons to change the language might be
that the parties realize during the proceedings that every person involved is more comfortable with a different language. However, parties should be advised to be reluctant to change
the language during the arbitration. Problems such as an arbitrator`s ability to comprehend
a language or the question of how to deal with documents still in the former language may
arise and should be taken into consideration. In practice, such an agreement rarely happens.
What does happen in practice though are temporary language changes regarding individual
aspects of the proceedings, e.g. the parties agree on a different language for a conference call.
These temporary language changes also need to be authorized by a party agreement, for
which an oral agreement is sufficient. Seasoned tribunals, however, will record such an oral
agreement in order to avoid later discussions and thus diminish the risk that an award may be
reversed under 1059 (2) No. 1 (d) ZPO.
6 Section 22.2 DIS Rules holds that documentary evidence need not necessarily be translated
into the chosen arbitration language. The tribunal has the right, but not the duty, to request
translations for presented documents. The tribunal will order a translation if either an arbitrator or the opposing party is not able to understand the documents original language
4
5
6
7
Kreindler, Impending Revision of the ICC Arbitration Rules Opportunities and Hazards for Experienced and Inexperienced Users Alike (1992) 15(2) J.Int.Arb. 45 (102).
OLG Kln 16.12.1992, RIW 1993, 499 (501).
OLG Celle 02.10.2001.
Section 22 Risse
663
properly. The respective translation costs are considered costs of the proceeding and must in
principal be borne by the losing party.8
III. DIS Practice

The DIS model arbitration clause invites the parties to determine the language of arbitration 7
as an integral part of their arbitration agreement. Section 6.3 DIS Rules recommends that
the request for arbitration contains a statement as to the applicable language. It is apparent
that the DIS Rules invite the parties to agree as early as possible on the language applicable
in the proceedings.
This approach is also followed by most DIS arbitral tribunals if the arbitration agreement 8
does not solve the language issue. The tribunal will encourage the parties to find a mutually
acceptable language and might even make a respective proposal.9 In those rare cases where
the proposal is not accepted, the tribunal will invite the parties to comment on the applicable
language and then quickly decide by way of a procedural order.
A quite common occurrence in DIS proceedings are temporary language changes for indi- 9
vidual aspects of the proceedings, such as a conference call. The approval of all the persons
involved should be recorded for documentary reasons.
The DIS Secretariat itself is able to administer arbitration proceedings conducted in six 10
languages: German, English, French, Italian, Spanish and Russian. In the case that the parties
provide a claim, counterclaim or other written statement in another language, the Secretariat
is entitled to order a translation and to charge the costs to the parties (No. 19 appendix to
section 40 (5) (Schedule of Costs)).

Section 22 DIS Rules is identical with 1045 ZPO, which itself is based upon the UNCI- 11
TRAL Model Law. That might already show that Section 22 DIS Rules mirrors the standard
rules contained in most leading arbitration rules, e.g. Article 20 International Chamber of
Commerce (ICC) Arbitration Rules. However, the London Court of International Arbitration (LCIA) Arbitration Rules include an additional provision concerning the initial
language of the arbitration pursuant to which the request for arbitration has to be made in the
language of the arbitration agreement (Article17 (1) LCIA Rules).10
8
9
10

Schtze-Reiner/Jahnel (2011), p. 80.
Glossner/Bredow, ICC, LCIA und DIS-Schiedsgerichtsordnung, Unterschiede und Gemeinsamkeiten,
in: Briner et al. (eds), FS-Bckstiegel, 2001, p. 219 (227).
Section 23 Applicable Law1

23.1 The arbitral tribunal shall decide the dispute in accordance with such rules of
law as are chosen by the parties as applicable to the substance of the dispute. Any
designation of the law or legal system of a given state shall be construed, unless
otherwise expressed, as directly referring to the substantive law of that state and
not to its conflict of laws rules.
23.2 Failing any designation by the parties, the arbitral tribunal shall apply the law of the
State with which the subject matter of the proceedings is most closely connected.
23.3 The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if
the parties have expressly authorized it to do so. The parties may so authorize the
arbitral tribunal up to the time of its decision.
23.4 In all cases the arbitral tribunal shall decide in accordance with the terms of
the contract and shall take into account the usages of trade applicable to the
transaction.
I.
1 The arbitral tribunal is bound by the parties decision on the applicable substantive law. If
the parties have not stipulated such law, the provision provides an easy-to-follow rule for the
arbitral tribunal on how to determine the applicable law. The provision also clarifies that the
arbitral tribunal must decide the dispute on the basis of the applicable law and that it is not
permitted to act as amiable compositeur unless explicitly authorised to do so by the parties.
II.
Detailed Commentary
2 Section 23.1 DIS Rules makes it clear that the tribunal is bound to decide the dispute in
accordance with the law chosen by the parties. If the tribunal does not respect the parties decision, the award may later be set aside under 1059 (2) No.1(d)) Code of Civil Procedure
(Zivilprozessordnung ZPO). In most international contracts, the parties explicitly agree on
the applicable law in a choice of law clause. However, the parties are also free to agree on the
applicable law only after the dispute comes to light. Such agreement may even deviate from
the applicable law originally chosen in the contract.
3 In theory, the choice of law clause as well as a later agreement may lead to a dpeage, i.e. to
different legal regimes governing different parts of the dispute.2 In particular, the parties are
able to split their choice of law and limit each choice to individual parts of their contract
pursuant to Section 23 DIS Rules.3 However, such dpeage is rarely encountered in practice
and thus more of academic interest.
4 Section 23.1 sentence 2 DIS Rules states that any choice of law clause must be interpreted
as a choice of the respective substantive law, excluding any conflict of laws rules.4 This not
1
2
3
4
Schmidt-Ahrendts/Httler, SchiedsVZ 2011, 267 (270).
Schmidt-Ahrens, in: Nedden/Herzberg (2014), 23 DIS-SchiedsO, para. 20; Lew/Mistelis/Krll (2003),
para. 17-17.
Section 23 Risse
665
only reflects the parties typical intent when entering into the choice of law clause, but it is
also important for practical reasons as it avoids lengthy and complicated discussions on how
the applicable law is finally to be determined. While the parties can theoretically agree that
conflict of laws rules shall be applied, they will do so only in exceptional cases. The German
version of the DIS Arbitration Rules respectively requires an explicit agreement between the
parties and thus makes it even clearer than the English version, which states that the arbitrators must not use conflict of laws rules as a loophole to arrive at a governing law considered
more suitable for the dispute than the one determined by the parties.
An open question is whether the parties choice of an applicable law merely refers to the law 5
as it is codified in statutes or if the choice of an applicable law includes the jurisprudence
of the respective (national) courts, in particular the leading case law of the highest courts.
Put differently, the question is whether the arbitral tribunal is bound by existing court decisions in a legal regime or whether the arbitral tribunal is free to develop its own legal opinion
regarding certain issues. It can well be argued that the parties, when choosing the applicable
law, meant to have the law applied as state courts do and that state courts at least ultimately,
after having escalated the dispute to the highest court decide cases according to existing
jurisprudence and leading cases. With this background, parties might consider it a surprise
decision if the arbitral tribunal deviates from the prevailing case law. However, the ultimate
answer to the question raised should be that the arbitral tribunal, while applying the law
chosen by the parties, retains the power to develop its own legal opinion concerning certain
issues, be it to share a minority view or be it, in rare cases, to develop a new legal theory
or interpretation of a statutory rule. This is especially true in countries from the civil law
word, where traditionally no stare decisis rule exists and where even state court judges are not
(completely) bound by jurisprudence and thus limited in their ability to develop their own
legal opinion. Furthermore, a different approach would create legal uncertainty. The arbitral
tribunal would need to determine the parties intention in the case of a (likely) change in
jurisprudence. It would be unclear in most cases, if the agreement of the parties of the applicable law referred to the law (including the jurisprudence) at the time of the conclusion of
the agreement or at any later point in time, i.e. when the dispute between the parties arises.
Therefore, it makes more sense to understand the parties choice of law as a choice of legal
statutes retaining the arbitral tribunals right to develop its own legal opinion concerning
certain issues. If the arbitral tribunal does develop its own legal opinion, it should discuss the
existing views as to the legal issue and explain why it adopts a different approach. Such careful
reasoning decreases the danger that the arbitral tribunal is later accused of having ignored
the parties choice of law or has confused its role of a body applying the law with that of a
law-making body. A clear limit to the arbitral tribunals power is section 23.3 DIS Rules. The
tribunal may not use its rights to indirectly decide as amiable compositeur.
Section 23.2 DIS Rules imposes a duty on the tribunal to determine the applicable law if 6
the parties have not reached a respective agreement.5 As it was the case with the place and
language of arbitration (cf. Sections 21 and 22 DIS Rules), the tribunal must not leave the
question unanswered. As the wording suggests, the tribunal must choose one specific law of
a state and must not rely on principles of international law or a comparative law approach
between numerous legal systems. Section 23.2 DIS Rules prescribes a straightforward approach for determining the applicable law which the tribunal must observe: decisive is the
5
For a detailed analysis of the determination of the applicable law by the tribunal, see Blessing (1997) 14
(2) J.Int.Arb. 39 (48 et seq.).
666
closest connection test, namely to which legal system the subject matter of the dispute has
the closest connection.6 No other conflict of laws rules apply, however elaborate the conflict
of laws rules in a given state, e.g. those at the place of arbitration, may be. For arbitral proceedings with the place of arbitration in Germany, the EU-Rome Regulations are not applicable,
because those regulations are to be qualified as conflict of laws rules. This should be the
standard rule, despite scholarly opinion arguing for a consideration of these Regulations by
arbitral tribunals as guidelines.7 Rather, the tribunal has full discretion as to which aspects
it considers for defining the closest connection. Relevant aspects might be the place of the
contracts performance, place of contract negotiations or its conclusion, nationality of the
parties involved and the language of the contract. As a tiebreaker, many legal systems in cases
of doubt determine the applicable law from the domicile of that party who performs the
services characteristic for the contract in question. Arbitrators may but need not follow
this approach.
7 Section 23.3 DIS Rules strictly limits the tribunals authority as to the basis of the future
award. While arbitration once started off as a more informal way of resolving disputes
(compared to state court litigation), nowadays it is clear that the arbitrators must not act
as wise-men who know what is just and fair. Instead, they need to do the same job a state
court judge fulfils: strictly applying the rules of law to a given dispute. Section 23.3 DIS Rules
makes it very clear that the arbitrators must not assume the authority to render any decision
which is not soundly grounded in the law. While the parties have the right to request the
arbitrators to simply decide what the arbitrators consider fair and equitable (ex aequo et bono
and amiable compositeur), nowadays this is rare. Any such agreement must be explicit,8 but
need not satisfy a form requirement.9 However, it is strongly recommended to document
such an agreement as it constitutes a deviation from the original party agreement. Especially
in this context, an unambiguous documentation reduces the danger that the award might
be reversed under 1059 (2) No. 1 (d) ZPO. The agreement can be reached until the final
award is rendered.10 A valid agreement makes the question of the applicable law moot. The
arbitral tribunal is merely bound by international standards of public policy.11
8 Section23.4 DIS Rules is just a reminder for the arbitrators that a partys contractual agreement is part of the applicable law and must be taken into consideration when deciding the
dispute. By the same token, the tribunal might consider accepted usages of trade applicable
to the transaction. However, this reminder does not mean that the arbitrators are permitted
to disregard the applicable mandatory law simply because of a partys contractual agreement
or because of trade customs.
III. DIS Practice

9 DIS arbitral tribunals will attempt to clarify the applicable law at the outset of the arbitration. In most cases, the applicable law has been clearly stipulated in the contract and is not a
point of discussion. If the respective stipulation is missing, the arbitral tribunal will invite the
6
7
8
9
10
11

Schmidt-Ahrendts/Httler, SchiedsVZ 2011, 267 (271).
OLG Mnchen 22.06.2005, SchiedsVZ 2005, 308; Raeschke-Kessler/Berger (1999), para. 762.
In case the lex arbitri is the ZPO: Schmidt-Ahrendts/Httler, SchiedsVZ 2011, 267 (272).
Schmidt-Ahrens, in: Nedden/Herzberg (2014), 23 DIS-SchiedsO, para. 44; Schtze-Theune (2013),
Institutional Arbitration, Chap. III, para. 198.
Zller-Geimer (2014), 1051, para. 9.
Section 23 Risse
667
parties to comment on the question of applicable law. If a respective agreement of the parties
is possible, the arbitral tribunal might suggest that the parties enter into an explicit agreement
in order to avoid later discussions. If the parties do not reach a decision, the tribunal might
leave that question open until the final award. In most cases, however, the tribunal will clarify
that issue earlier, e.g. by indicating the applicable law in the context of a procedural order.

Section 23 DIS Rules is identical to 1051 ZPO. Most modern arbitration rules are identi- 10
cal to the discussed DIS Rule, stipulating the parties freedom of choice as to the applicable
law and excluding the right of the arbitrators to act as amiable compositeur unless explicitly
authorized to do so by the parties. However, Section 23 DIS Rules limits the arbitrators
discretion in determining the applicable law by prescribing the closest connection criteria,
while other rules grant the tribunal in accordance with Article 28 (2) UNCITRAL Model
Law a wider or even complete discretion (cf. Article 21 (1) International Chamber of
Commerce (ICC) Arbitration Rules). Only in the latter case is the arbitral tribunal entitled
to also consider common law principles or the UNIDROIT Principles. In a DIS arbitration,
the consideration of such principles requires the consent of the parties.12
12
Glossner/Bredow, ICC, LCIA und DIS-Schiedsgerichtsordnung, Unterschiede und Gemeinsamkeiten,

in: Briner et al. (eds), FS-Bckstiegel, 2001, p. 219 (229).
Section 24 Rules of Procedure1

24.1 Statutory provisions of arbitral procedure in force at the place of arbitration from
which the parties may not derogate, the Arbitration Rules set forth herein, and, if
any, additional rules agreed upon by the parties shall apply to the arbitral proceedings. Otherwise, the arbitral tribunal shall have complete discretion to determine
the procedure.
24.2 The arbitral tribunal shall undertake to obtain from the parties comprehensive
statements regarding all relevant facts and the proper applications for relief.
24.3 The chairman of the arbitral tribunal presides over the proceedings.
24.4 Individual questions of procedure may be decided by the chairman of the arbitral
tribunal alone if so authorized by the other members of the arbitral tribunal.
I.
1 Section 24 DIS Rules stipulates a general principle of arbitration: the arbitral tribunal should
have a wide discretion on how to run the proceedings. While Section 23 DIS Rules addresses
the question of which substantive law governs the dispute and the tribunals final decision on
the merits, Section24 DIS Rules addresses the question of applicable procedural law.
II.
Detailed Commentary
2 Section24.1 DIS Rules clarifies which procedural rules apply to the arbitration proceedings.
The mandatory statutory law at the place of arbitration, i.e. the lex arbitri, must be observed
at all times. If the place of arbitration is in Germany, the 10th Book of the German Code
of Civil Procedure (Zivilprozessordnung ZPO) (1025 et seq. ZPO) is the referred-to
statutory arbitration law. It is noteworthy that the other provisions of the German Code of
Civil Procedure, namely those applicable to state court proceedings, are not applicable at
all,2 not even by analogy. As to its arbitration law, Germany has adopted the UNCITRAL
Model Law. Thus, very few statutory provisions are binding and cannot be derogated from
by the parties. Examples include the equal treatment of the parties or their right to be heard
(1042 (1) ZPO). Concerning all other issues, the parties autonomy prevails and they can
freely determine the rules of the proceedings. By choosing the German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) Arbitration Rules, the parties
have already made a respective decision which they can now amend or modify by additional
agreements.
3 To the extent that mandatory statutory law or a party agreement does not cover a procedural
issue, the arbitral tribunal has complete discretion on how to proceed in the arbitration (Section 24.1 sentence 2 DIS Rules). Complete discretion does not mean that the tribunal can
do whatever it likes3; the tribunal is bound by the principles set forth in the DIS Arbitration
Rules (e.g. equal treatment of parties, right to be heard, cf. Section26 DIS Rules). The right
to be heard also implies that the tribunal must communicate to the parties how it intends to
1
2
3
Kreindler/Schfer/Wolff (2006), para. 701; Lachmann (2008), para. 1277.
Schtze, SchiedsVZ 2006, 1.
Section 24 Risse
669
proceed and which procedural rules are to be followed in addition to the DIS Rules or other
rules agreed upon by the parties. The arbitral tribunal may therefore issue Special Procedural
Rules supplementing the DIS Rules. To this end, the tribunal will issue a separate procedural
order requesting the parties to comply with the Special Procedural Rules attached to the
order. Special Procedural Rules can, for example, contain the following provisions:
service of written submissions;
treatment of unsolicited submissions;
compliance with a time schedule;
form and structure of written submissions;
specific evidentiary rules on witnesses, experts or documents; and/or
rules for the oral pleadings.
Special Procedural Rules must be distinguished from party agreements. Party agreements are 4
characterised by the element of negotiation, whereas Special Procedural Rules are stipulated
by the arbitral tribunal. A violation of a party agreement has the consequence that an arbitral
award may be set aside under 1059 (2) No.1 (d) ZPO, whereas Special Procedural Rules
can be modified at the discretion of the arbitral tribunal.4
An (in)famous judgement of the Higher Regional Court in Frankfurt/Main (Oberlandesge- 5
richt OLG, later confirmed by the Federal Court of Justice BGH 02.10.2012,III ZB 8/11)
had to address this situation and should now be considered by parties and arbitrators alike.5
The court in the Flex -n- Gate v. GEA judgement decided to set aside the arbitral award because a party agreement as to the procedure was considered violated. However, what the
court interpreted to be a party agreement was intended by the tribunal to be a procedural
order. In particular, the arbitral tribunal had introduced its procedural order by referring to
an agreement between the parties regarding the content of further written submissions.
This scenario where a procedural order is classified as a party agreement is nowadays
known as the Frankfurt trap.6 In order to avoid this issue, pursuant to Section 24 DIS Rules
the arbitral tribunal should make it clear that it reserves control over the arbitral proceedings
as well as that it expects a party agreement on procedural issues to be explicit and in writing.7
Some arbitrators determine by way of a procedural order that a pre-determined set of rules 6
such as the IBA Rules on the Taking of Evidence in International Arbitration (IBA-Rules)
shall apply and be adhered to. On first sight, that appears to be a wise decision because the
IBA-Rules have been drafted with utmost care and diligence by a group of leading arbitrators. That appears to guarantee a balanced and workable approach as to evidence taking in
arbitration proceedings. However, the IBA-Rules are a compromise between procedural
concepts existing in civil and common law jurisdictions and do allow, for example, document production basically unknown in many civil law jurisdictions. Accordingly, arbitrators
should reconsider the application of the IBA-Rules if the case in question bears no link to
common law jurisdictions, and parties should not hastily accept a respective proposal for the
simple reason that the IBA-Rules have become the international standard. However, since the
4
5
6
7
Wagner/Blau, SchiedsVZ 2013, 6 (7).

OLG Frankfurt am Main 17.02.2011, SchiedsVZ 2013, 49.
670
IBA-Rules are nowadays so widely used, an application of the IBA-Rules is certainly not an
abuse of discretion by the arbitrators.
7 Section24.2 DIS Rules empowers and requests the arbitrators to handle the arbitration as
active case managers instead of completely passive adjudicators who only listen to the parties
and then render a final decision. The arbitrators may therefore indicate to the parties what
facts they consider (ir)relevant, in which area they would like to see further substantiation of
facts and whether the relief sought might not be accurately phrased. The wording of Section
24.2 DIS Rules (shall undertake) indicates that the described active case management is
the tribunals duty. However, it is difficult to assess how far such duty reaches. The German
Federal Court of Justice (Bundesgerichtshof BGH) has held that a violation of those duties
(e.g. to give certain indications for structuring the proceedings) does not amount to a violation of fundamental procedural rights such as due process and is therefore not sufficient to
challenge an award.8 Those rights certainly reflect a more inquisitorial approach then in a
typical US-style arbitration. However, this approach is quite typical for continental European
court proceedings and is also reflected in other provisions of the DIS Arbitration Rules. If an
arbitrator gives the indications mentioned above, that alone cannot be a basis for challenging
the impartiality of the arbitrator. Arbitrators must nevertheless be sensitive not to cross the
sometimes thin line between being an active case manager and losing impartiality in the eyes
of the parties by giving one-sided indications.
8 Section 24.3 DIS Rules states the obvious, namely that the chairman presides over the proceedings.9 This right is limited to the organizational administration of the proceedings and
does not include any special voting rights or the like.
9 Section 24.4 DIS Rules helps to administer the proceedings efficiently. If simple procedural
issues must be decided, e.g. requests for time extension, the chairman can do this on behalf
of the tribunal; however, he must have been authorized by the other members in advance.
III. DIS Practice

10 Experienced DIS arbitral tribunals will clarify at the outset of the arbitration which procedural rules apply. In some cases, the DIS Arbitration Rules chosen by the parties will provide
sufficient guidance for a smooth and effective proceeding. In more complicated cases or
international arbitrations, the DIS tribunal might supplement the DIS Arbitration Rules by
so-called Special Procedural Rules which, for example, stipulate in detail how e-mail communication is to be conducted, how future briefs of the parties shall be formatted and how
evidence shall be presented.
11 It is more or less common practice that the arbitral tribunal sends a draft of the Special
Procedural Rules, which the arbitral tribunal considers adequate for the proceedings, to the
parties. The tribunal then discusses these draft rules with the parties either in a conference
call or a procedural hearing. This is because, after all, it is the parties arbitration. Therefore,
the tribunal will be reluctant to confront the parties with procedural rules with which the
parties do not feel comfortable. However, a seasoned arbitral tribunal will opt against an
incorporation of those Special Procedural Rules by way of party agreement, e.g. by way of
signed Terms of Reference common in ICC-arbitrations, because such party agreement
can later not be changed or disregarded by the arbitral tribunal. Hence, the far better choice
8
9
BGH 11.11.1982, BGHZ 85, 288 (292) with further references.

For a detailed analysis of the chairmans role, cf. Schlosser, SchiedsVZ 2003, 1.
Section 24 Risse
671
is to issue a procedural order to the parties requiring the parties from now on to comply
with those procedural rules. Seasoned arbitral tribunals will make that explicit, i.e. by stating
that the Special Procedural Rules are declared applicable after consultation with the parties
but explicitly without regard to any agreement with the parties to those Special Procedural
Rules.
In international arbitrations, it also becomes common practice that the tribunal refers to the 12
IBA-Rules on Taking of Evidence for structuring the taking of evidence. In all of these cases,
the tribunal will suggest the application of those rules and invite comments. Unless the parties reach an agreement to the contrary, the tribunal will declare those rules applicable by way
of a procedural order, sometimes with a qualifier such as that the arbitral tribunal will take
guidance by the IBA-Rules.
Despite Section 24.2 DIS Rules, many DIS arbitral tribunals will be more reluctant than a 13
German state court judge to actively investigate a claim and to issue orders asking the parties for additional clarifications. This is especially true if the parties are represented by legal
counsel.
As to Section 24.4 DIS Rules, most tribunals will agree (in an introductory telephone confer- 14
ence) that the chairman can decide procedural questions alone. The chairman will confirm
this agreement in writing. The chairman will then sign most procedural orders alone. However, in almost all cases the chairman will still seek the consent of his/her co-arbitrators to
procedural orders in order to maintain a good working climate within the tribunal.10
The chairman will exercise this right only in rare cases, e.g. if the question to decide is either 15
not a controversial one or if the other members of the arbitral tribunal cannot be reached
prior to a needed decision.

Compared to other arbitration rules, the DIS Arbitration Rules provide a detailed framework 16
concerning the applicable procedural law. The UNCITRAL Arbitration Rules, for example,
do not contain an equivalent to Section 24 DIS Rules and Article 17 UNCITRAL Arbitration Rules simply states that subject to these rules, the arbitral tribunal may conduct the
arbitration in such manner as it considers appropriate. On the one hand, Article 19 International Chamber of Commerce (ICC) Arbitration Rules is silent on some issues covered in
Section24 DIS Rules. It does not include the clarification/instruction that mandatory rules
of procedure at the place of arbitration are always applying, and that the chairman can be
empowered to decide individual questions of procedure alone.
10
Section 25 Advance on Costs of Arbitral Tribunal1

The arbitral tribunal may make continuation of the arbitral proceedings contingent on
payment of advances on the anticipated costs of the arbitral tribunal. It should request
each party to pay one half of the advance. In fixing the advance, the arbitrators total fees
and the anticipated reimbursements as well as any applicable value added tax may be
taken into consideration. The provisional advance paid by the claimant to DIS pursuant
to Section7 subsection 1 shall be credited to the claimants share of the advance on costs.
I.
1 This provision clarifies that the arbitral tribunal is responsible for collecting its arbitrators
fees, not the DIS. The provision encourages the arbitral tribunal to ask for cost advances
because a discussion with the parties about that issue at a later stage of the proceeding is
almost always unpleasant. It is also preferable if the parties have clarity on costs at the outset
of the proceeding. By the same token, Section25 DIS Rules provides the arbitrators with an
enforcement mechanism, namely by entitling them to stop the proceedings until fees have
been paid.
II.
Detailed Commentary
2 Section 25 DIS Rules is clearly phrased. The arbitral tribunal can but need not ask for an
advance on costs at the outset of the proceeding. The advance on costs may cover the total
fees of the arbitrators, including expenses.2 Under German tax laws, arbitrators fees may be
subject to value added tax3 and thus the requested advance on costs may also cover those
taxes.
3 Section 25 DIS Rules also clarifies the consequence if the advance on costs is not paid: the
arbitral tribunal may stop the proceedings. Section 25 DIS Rules does not clarify what happens if only one party generally the claimant pays its share of the advance on costs while
the other party (typically the respondent) refuses. The tribunal then has discretion either to
stop or to continue the proceedings, but the typical (and permissible4) standard practice is
the following: the tribunal will invite the party which has already paid its share to also pay the
other half. The so-addressed party then has various options. It can terminate the arbitration
agreement since the other partys non-payment of the advance constitutes a breach of the
arbitration agreement.5 Also, it can sue the other party in state courts for payment of the
advance on costs; in that respect, quick documentary proceedings are admissible under German law.6 Or the party can also pay the other half, in which case the arbitration will continue
immediately. It is an open question whether that party can then request the tribunal for an
immediate interim award to reimburse the paid half of the cost advance or whether the cost
issues can only be addressed in the final award.7
1
2
3
4
5
6
7
Manner, in: Nedden/Herzberg (2014), 25 DIS-SchiedsO, para. 5.
Risse/Meyer-Burow, SchiedsVZ 2009, 326 et seq.
BGH 07.03.1985, BGHZ 94, 92.
Cf. Lachmann (2008), paras 1268 et seq., 4248.
Cf. Lachmann (2008), paras 1268 et seq., 4248.
Section 25 Risse
673
In exceptional cases, it happens that neither party pays the requested advance on costs, e.g. be- 4
cause claimant had underestimated the costs of the proceedings. The DIS Arbitration Rules
do not provide specific guidance for such instances. However, it is clear that the proceedings
cannot remain stayed forever. The arbitral tribunal can then terminate the proceedings by
issuing a respective termination resolution under Section 39.2 (3) DIS Rules because the
parties are evidently not conducting the arbitration any longer.8
Under German tax laws, arbitrators fees may be subject to value added tax,9 and thus the 5
requested advance on costs may also cover those taxes. A fairly recent change in the German
and European tax laws10 has complicated the situation for arbitrators. While it used to be
the case that the service of a German arbitrator was always subject to value added tax, an
arbitrator is obligated to fulfil certain investigative duties in the business to business (B2B)
context under the revised tax laws.11 Most importantly, non-German parties if they satisfy
the business requirement no longer need to pay value added tax in Germany for the service
of an arbitrator.12
It is currently unclear whether paying an advance on a (future) value added tax part of the 6
arbitrators fee triggers an immediate obligation vis--vis the German tax authority to forward
the advance value added tax part to the tax authority. In order to avoid this uncertainty, two
options exist. First, the arbitral tribunal asks the parties to pay the advance on costs to an
escrow account under the name of the parties. In this scenario, the advance payment is clearly
not in the sphere of the arbitral tribunal and thus the value added tax obligations do not yet
emerge. Second, the arbitral tribunal asks the parties to pay a security on costs rather than
asking the parties for an advance on costs under Section 25 DIS Rules. The security on costs
should be transferred to different escrow accounts in the name of the arbitrators or to one
account in the name of the tribunal or the chairman. Valued added tax obligations do not
emerge because a security on costs is not subject to VAT.
Establishing an escrow account sometimes raises the question of whether special require- 7
ments under the Money Laundering Act (Geldwschegesetz GwG) must be complied
with, especially if one or more of the arbitrators are practicing attorneys who are subject to
special duties under the GwG. However, acting as an arbitrator must not be confused with a
persons different profession. Hence, the GwG does not apply.13
III. DIS Practice

Seasoned arbitrators almost always ask for an advance or security on costs covering the 8
estimated total of the arbitrators fees plus an estimated amount of expenses plus value added
tax. For calculating the advance, the arbitrators can use the DIS internet fee calculator.14 Most
often the chairman of the tribunal opens a trust account on which the advance on costs is
8
9
10
11
12
13
14

For a detailed analysis see Lachmann (2008), paras 1934 et seq.
Jahressteuergesetz 2009, BGBl I, 2008, S. 2794, 24.12.2008.
For a detailed analysis: Risse/Meyer-Burow, SchiedsVZ 2009, 326.
They might still be subject to value added tax under the laws of the country at their seat. For businesses seated within the European Union, a special Reverse Charge Rule applies; cf. Risse/Meyer-Burow,
Risse, SchiedsVZ 2013, 158.
See <www.dis-arb.de> DIS Cost Calculator 2005.
674
paid. The chairman will also ask the DIS Secretariat to transfer the provisional advance paid
by the claimant to that trust account, which is always done immediately.
9 If payment is not effected by one party, the arbitral tribunal usually sends a second notice to
that party inviting payment. If payment is not received or if one party openly refuses to pay
the advance on costs, the arbitral tribunal will in a next step invite the other party to pay the
advance on costs in full. If no payment is received, the arbitration will rarely continue.

10 The DIS Arbitration Rules regarding advances on costs differ significantly from most Arbitration Rules. In the International Chamber of Commerce (ICC) Arbitration Rules, all cost
issues, including the request for an advance on costs, are handled by the ICC (cf. Article36
ICC Arbitration Rules). The idea behind the ICC Arbitration Rules is that the arbitral tribunal should not be competent to render decisions on its own costs (since the arbitral tribunal
would obviously be biased in that respect) and to ease the arbitral tribunals task because
discussing cost issues with the parties is not at all pleasant. Other Institutional Arbitration
Rules that deal with the advance on costs of the arbitral tribunal in the same or a similar way
are e.g. the Stockholm Chamber of Commerce (SCC) Arbitration Rules (Art. 45) and the
Rules of Arbitration of the Vienna International Arbitral Centre (Vienna Rules Art. 42).
Article 43 (1) UNCITRAL Arbitration Rules provides the arbitral tribunal at least a limited
power to decide on the advance on costs.15
15
Article 43 (1) UNCITRAL Arbitration Rules is limited to costs listed in Article 40 (2) (a) (c) UNCITRAL Arbitration Rules.
Section 26 Due Process1

26.1 The parties shall be treated with equality. Each party shall be given a full opportunity to present his case at all stages of the proceedings. The parties shall be
given sufficient advance notice of any hearing and of any meeting of the arbitral
tribunal for the purpose of taking evidence. The parties are entitled to be legally
represented.
26.2 All written pleadings, documents or other communications supplied to the
arbitral tribunal by one party shall be communicated to the other party. Likewise,
expert reports and other evidentiary documents on which the arbitral tribunal
may rely in making its decision are to be communicated to both parties.
I.
Two of the cornerstones of arbitration are the principles of equal treatment of the parties 1
and the right to be heard. The purpose of the provision is only a clarifying one if the seat of
arbitration is in Germany. Both principles are mandatory statutory law under the German
arbitration law as they are in most jurisdictions.
II.
Detailed Commentary
Section 26.1 DIS Rules starts with the determination that parties must be treated equally in 2
arbitration. The principle of equal treatment is not to be applied blindly. For example, it does
not obligate the arbitrators to grant the parties exactly the same number of days to submit
their briefs or the same time to present their witnesses. Rather, a general balance has to be
maintained and each party must have the same level of information and, moreover, an equal
opportunity to present its case.2
Section 26.1 sentence 2 DIS Rules sets forth the right to be heard principle. Each party must 3
have the right to present its case in full. The tribunal must observe this right at least to the
same extent as it is applied by German civil courts3; the parties are not even permitted to limit
this right by way of agreement. On the tribunals side, this principle implies the tribunals
duty to read the parties briefs and to listen to their arguments. Respectively, the DIS Arbitration Rules go even further than the German Code of Civil Procedure (Zivilprozessordnung
ZPO) because Section 26.1 DIS Rules stipulates that the right to be heard is applicable
at all stages of the proceedings. This implies that the parties must be heard prior to deciding
purely procedural issues.4 However, the parties remain responsible to make use of the right
to be heard.5 The broadly phrased principle gains practical relevance if one looks to some of
the rather exemplary court decisions discussing this principle.
For example, the Higher Regional Court (Oberlandesgericht OLG) Stuttgart once as- 4
sumed a violation of the right to be heard principle because an arbitral tribunal had misled
1
2
3
4
5
Haller, in: Nedden/Herzberg (2014), 26 DIS-SchiedsO, paras 6 et seq.; Fouchard/Gaillard/Goldman
(1999), para. 1654.
BGH 08.10.1959, BGHZ 31, 43 (46).
OLG Hamburg 30.07.1998, RPS 1/1999, 13(14).
676
the parties by requesting extensive evidence concerning a legal question that it finally considered completely irrelevant.6 In another case, the OLG Hamburg considered the right to
be heard principle violated because the tribunals award completely failed to address the
respondents argumentation.7 However, a tribunal does not need to discuss each argument in
its final award, and thus a state court must not use the missing discussion as a pretext for its
own evaluation of evidence actually leading to a non-permissible revision au fond.8 The OLG
Celle as well as the OLG Kln have clarified that a violation of the right to be heard principle
can only be assumed if the award is (possibly) based on the ignorance of one partys submission.9 In a similar manner, the OLG Mnchen decided that the unsubstantiated dismissal of
a partys application on admission of evidence does not constitute a violation of the right
to be heard, provided that the arbitrators did not simply ignore the application, but, at least
briefly, considered the evidence issue in question.10 Moreover, again the OLG Mnchen
recently denied that a violation of the right to be heard principle had occurred because an
arbitral tribunal does not have a duty to issue directions.11 An arbitral tribunal is not bound
to give advanced knowledge of its interpretation of the law to the parties. A tribunal must
issue directions only under exceptional circumstances if the affected partys factual pleadings
were restricted.
5 The remaining part of Section 26.1 DIS Rules is more concrete by stipulating two elements
of the right to be heard principle. First, the parties must have a reasonable opportunity to attend and to prepare for the meetings. For that reason, a sufficient advance notice is required.
Secondly, because the right to be heard is meaningless if a party is unable to articulate its
positions adequately, the party may be legally presented in the proceedings, be that by an
in-house or external legal counsel or by any other third party. That clarification implies that
a representation by an external counsel is not mandatory in DIS arbitrations, although it
certainly is the rule.
6 Section 26.2 DIS Rules implements other elements of the equal treatment and the right to
be heard principles. For example, there must not be a confidential communication between
the tribunal and one party. This applies to any kind of communication, be it personally, by
telephone or in writing. Mere communication regarding strictly organisational matters may
be unobjectionable.12 Nevertheless, any seasoned tribunal will still notify the other party
of this communication. By the same token, a single arbitrator who is approached by one
party will typically refuse any one sided communication or at least if the communication is
merely of organisational matter inform his co-arbitrators and the other party. Furthermore,
every document which the tribunal obtains directly from other sources (e.g. from experts)
must be communicated to both parties in order to permit comments. Any violations can
impair the enforceability of the award.
7 A subject to some discussions is the relationship between Section 26.2 DIS Rules and Section
32 DIS Rules. On the one hand, Section 32 DIS Rules requires the arbitral tribunal to facilitate settlements. On the other hand, Section 26.2 DIS Rules basically prohibits confidential
6
7
8
9
10
11
12

OLG Celle 19.02.2004; OLGKln 23.04.2004, SchiedsVZ 2005, 163.
Section 26 Risse
677
in camera proceedings or separate discussions with the parties to encourage a settlement.

Of course, an arbitral tribunal is capable of facilitating settlements without separate discussions with the parties. Nevertheless, those caucuses which are a key element of mediation
proceedings are increasingly used by arbitrators who act as settlement facilitators.13 While
there is only some authority arguing in favour of a more lenient use of settlement facilitations
in arbitral proceedings,14 the majority still seems to be of the opinion that caucuses should
not be used in arbitral proceedings.15 This approach is also reflected in Section 8 IBA Rules
of Ethics for International Arbitrators.16 It goes without saying that such caucuses are only an
option if both parties explicitly agree in advance. However, it is still questionable whether the
parties can agree on changing Section 26.2 DIS Rules to permit caucusing. While changing
the DIS Arbitration Rules is generally no problem the DIS Arbitration Rules form part of
the parties arbitration agreement and thus can be modified like the agreement the difference here is that the fundamental right to be heard principle is touched and that principle
might not be a permissible subject for modification by the parties.17 At the end of the day,
arbitrators other than mediators need to make an uninfluenced and impartial decision.18
Until this question has been clarified by a court decision or an amendment to the German 8
arbitration law, the parties run a risk that an award might later be vacated because in camera
meetings took place during the arbitration.
III. DIS Practice

DIS arbitral tribunals are aware of the fact that equal treatment of the parties and the parties 9
right to be heard must be guaranteed throughout the entire arbitration. The most important
issue in that respect is to define proper communication channels which ensure that each
party receives all information in time. Most DIS arbitral tribunals will therefore clarify at
the outset of the arbitration what means of communication the parties and the tribunal may
use and how communication takes place effectively. The respective rules are then set forth
in a procedural order. For example, today it is customary that communication may be sent
by e-mail, but if this is agreed a non-automatic response by the receiver of such e-mail is
necessary to confirm proper receipt.
DIS arbitral tribunals are generally very sensitive if the right to be heard principle could 10
become an issue. They will endeavour to avoid even the slightest risk that the award may later
be challenged on that ground. For example, if a party attempts to contact its party-appointed
arbitrator separately and be that only on a procedural question that arbitrator will refuse
any communication or at least prepare a written summary of that communication and circulate that summary to his co-arbitrators and to the opposing parties.
Seasoned DIS arbitral tribunals will also aim at structuring and running the proceedings in 11
a manner that later challenges on grounds of the right to be heard or equal treatment are
limited. One technique to achieve this is to ask the parties at various procedural stages, i.e.
at the beginning and end of a hearing, whether they have any objections with regard to the
13
14
15
16
17
18
For a detailed analysis of the arbitrator as dispute settlement facilitator see Petsche/Platte, in: Klausegger
et al. (eds), Austrian Arbitration Yearbook 2007, Vienna 2007, p. 87.
Cf. Elsing, SchiedsVZ 2011, 114 (118).
Cf. Dendorfer, SchiedsVZ 2009, 276 (282).
Rules of Ethics for International Arbitrators, 18.09.2008, available at <www.ibanet.org.>
Cf. BayObLG 28.02.2000, RPS 1/2000, 15.
Dendorfer, SchiedsVZ 2009, 276 (282).
678
proceedings or equal treatment so far. If the answer is as usual to the negative, such statement is properly recorded. This makes it much more difficult for parties, later dissatisfied
with an award, to challenge the award on grounds of unfair treatment or violation of the right
to be heard. For the same reasons, a seasoned arbitral tribunal will use utmost care in drafting
the final award. In particular, it will clarify that all statements and submissions of the parties
have been taken into considerations, even if the content of the submissions is not recorded
in the award.

12 Section 26 DIS Rules is similar to Article 22 (4) International Chamber of Commerce (ICC)
Arbitration Rules and Article 28 (1) UNCITRAL Arbitration Rules.
13 Article 22 (4) ICC Arbitration Rules does not go as far as Section 26 DIS Rules, as it only
requires a reasonable opportunity to present the case.19 The advantage of Section26 DIS
Rules is that the standard of full opportunity equals the standard of the UNCITRAL
Model Law (as implemented in 1042 (1) ZPO) and therefore ensures the finality of the
award. As mentioned above, it is very risky to touch the right to be heard principle because
the violation of mandatory procedural provisions is a ground for challenging the award.20
19
20
Bhler/Webster (2008), para. 15-10 (Article 22 (4) ICC Arbitration Rules corresponds to the former
Article 15 (2)).
Cf. Article 34 (2)(a)(ii) UNCITRAL Model Law.
Section 27 Establishing the Facts1

27.1 The arbitral tribunal shall establish the facts underlying the dispute. To this end
it has the discretion to give directions and, in particular, to hear witnesses and experts and order the production of documents. The arbitral tribunal is not bound
by the parties applications for the admission of evidence.
27.2 Unless otherwise agreed by the parties, the arbitral tribunal may appoint one or
more experts to report to it on specific issues to be determined by the arbitral
tribunal. It may also require a party to give the expert any relevant information
or to produce, or to provide access to, any relevant documents or property for his
inspection.
27.3 Unless otherwise agreed by the parties, if a party so requests or if the arbitral
tribunal considers it necessary, the expert shall, after delivery of his written or oral
report, participate in an oral hearing where the parties have the opportunity to put
questions to him and to present expert witnesses in order to testify on the points
at issue.
I.
The provision clarifies that the arbitral tribunal can, but need not, act in a quasi-inquisitorial 1
manner. While the Anglo-American way of handling proceedings is more or less to review
and evaluate the parties written and oral arguments, an arbitrator may also investigate the
matter in dispute. Section27.2 DIS Rules makes clear that this is permissible in a German
Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) arbitration
as well. Section27.1 sentence3 DIS Rules clarifies that the tribunal is not even bound by
the parties offer of evidence, but may on its own initiative appoint an expert or summon a
witness to testify. Section27.3 DIS Rules ensures that a party can ask questions to an expert,
and thus has an opportunity to challenge the rendered expertise.
II.
Detailed Commentary
Section 27.1 DIS Rules defines the general approach arbitrators must pursue in DIS arbi- 2
trations: that of an active case manager and not one of a passive judge who only listens to
the parties without giving any directions (the so-called good morning good night arbitrator). While the latter approach is more akin to the role judges fulfil in Anglo-American
courtrooms, the more inquisitorial approach is typical for court proceedings in continental
Europe.2 Section 27.1 DIS Rules emphasizes the more active role of the arbitrators by first
stating the overall purpose, namely the duty to establish the facts of the dispute, and then
setting forth the two main elements of the inquisitorial style: the right to give directions e.g.
by a preliminary assessment of the case and the request for specific information and the
tribunals own right to collect evidence, i.e. independent from any respective motions by the
parties.3 It follows from Section 27.1 DIS Rules that an arbitrator who actively exercises those
rights cannot be challenged on these grounds for lacking impartiality.
1
2
3
Cf. Sachs, SchiedsVZ 2003, 193.
Cf. for the advantages of the inquisitorial approach Redfern/Hunter (2009), para. 6.201.
680
3 However, Section 27.1 DIS Rules does not mean that an arbitral tribunal must act in such
an investigative manner as it is, for example, typical in German state courts. In particular, the
arbitral tribunal is not required to give directions to the parties such as a German state court
judge would under 139 ZPO.4 This is even true if a party explicitly requests the arbitral
tribunal to give such directions. Accordingly, failure to give any directions typically provides
no reason to challenge the award. Especially, a party must substantiate its case sufficiently
on its own. It cannot rely on the expectation that the arbitral tribunal will request further
substantiation before dismissing a claim for lack of substantiation.
4 Section 27.2 DIS Rules demonstrates that the arbitral tribunals role of an active case manager
extends to the appointment of experts. The arbitral tribunal can do so on its own initiative
and it can request the parties to cooperate with that expert by providing the information
needed by the expert. The statute mirrors the continental European approach for experts in
proceedings.5 However, it does not limit the principle of party autonomy (unless otherwise
agreed by the parties).
5 Section 27.3 DIS Rules clarifies that the expert must be present in a hearing if one party
requests such presence or if the tribunal considers that helpful. It is very rare that parties
have agreed or agree not to hear an expert in person who has rendered a written expertise.
Furthermore, Section 27.3 DIS Rules allows the parties to present their own experts in order
to counter or support the examination.6
III. DIS Practice

6 While Section 27 DIS Rules empowers the arbitral tribunal to act in a rather investigative, active manner, the actual handling of the case depends on the persons appointed as arbitrators.
In practice, most DIS arbitral tribunals will be reluctant to run the proceedings too proactively and to investigate without a corresponding request by at least one party. In general, the
DIS arbitral tribunal will consider the parties responsible for presenting their case and for
offering relevant evidence/filing respective petitions to produce evidence. Some tribunals
provide clear directions to the parties to focus the parties attention on the relevant areas of
the dispute and to avoid wasting time by discussing irrelevant facts.
7 In order to avoid surprises, most DIS arbitral tribunals will clarify in advance, by way of a
procedural order, how they intend to run the proceedings. This applies particularly to the
questioning of witnesses in a hearing. The typical civil law approach is that the tribunal questions the witnesses and that the parties counsels may ask additional questions. The common
law approach is that the witness testimonies are prepared by written witness statements,
and then the parties counsels question the witnesses in a hearing (direct examination, cross
examination, re-direct examination).7 In national arbitrations, the civil law approach will be
dominant. In international arbitrations, the tribunal will discuss this issue with the parties
and then clarify its view by a procedural order.8
4
5
6
7
8
Lachmann (2008), paras 1301, 1303; OLG Mnchen 14.03.2011, SchiedsVZ 2011, 159.
This is explicitly stipulated in Art. 20 LCIA Arbitration Rules, Blessing, SchiedsVZ 2003, 198 (203).
Cf. for the tendency to apply procedural rules, which originate from the Anglo-American legal system
even in civil law arbitrations, see Wirth, SchiedsVZ 2003, 9.
Section 27 Risse
681

Article 25 International Chamber of Commerce (ICC) Arbitration Rules and Articles 27 8
and 28 UNCITRAL Arbitration Rules are similar provisions to Section 27 DIS Rules.
Section 28 Oral Hearing1

Subject to agreement by the parties, the arbitral tribunal shall decide whether to hold
oral hearings or whether the proceedings shall be conducted on the basis of documents
and other materials. Unless the parties have agreed that no hearings shall be held, the
arbitral tribunal shall hold such hearings at an appropriate stage of the proceedings, if so
requested by a party.
I.
1 As a general rule, oral hearings take place in arbitral proceedings. Section28 DIS Rules clarifies this rule. It also clarifies that the parties may agree otherwise.
II.
Detailed Commentary
2 This provision is of little practical relevance. Having an oral hearing is absolute standard procedure.2 As a rule, each party wants or is even longing for its day in court and is thus entitled
to a hearing. It is rare that this issue is even discussed between the parties and the tribunal. In
the majority of cases, the tribunal will almost automatically hold a hearing after one or two
rounds of briefs.
3 The practical relevance of this provision is mainly restricted to cases where one party does
not participate at all in the arbitration or is otherwise in default. In these cases the active
party, who is typically the claimant, anticipates prevailing anyhow and thus has little interest
in a time-consuming and costly hearing. In hoping for a quick award, that party will request
the tribunal to proceed without a hearing. Nevertheless, Section28 DIS Rules clarifies that
the tribunal has discretion to hold a hearing. And in the rare cases where the arbitration
clause provides for a compulsory hearing, Section28 sentence 1 DIS Rules clarifies that a
hearing must take place, even with only one party participating.3
4 Sometimes the parties agree to waive their right to a hearing if the dispute is too small to
justify travelling expenses or if the outcome of the dispute is determined by one single legal
question. Section 28 DIS Rules clarifies that a hearing is not compulsory if the parties choose
not to have one.
5 In the extremely rare cases where the parties do disagree whether or not to have an oral
hearing, Section 28 DIS Rules requires careful reading to arrive at the proper solution. The
tribunal must first look into the arbitration clause and/or later procedural agreements between the parties, e.g. some kind of terms of reference. If the parties have therein excluded a
hearing, the tribunal is bound by that decision even if one party now requests a hearing. If
the arbitration clause remains silent in that respect, which is commonly the case, the request
of one party compels the tribunal to hold a hearing. Only in the remaining cases in which the
arbitration clause remains silent and neither party expresses a wish to have hearing does the
tribunal have respective discretion; however, this last category of cases is almost non-existent.
1
2
3
Stumpe/Haller, in: Nedden/Herzberg (2014), 28 DIS-SchiedsO, para. 9.
Section 28 Risse
683
III. DIS Practice

DIS arbitral tribunals almost automatically hold an oral hearing. The place of the hearing must 6
not be confused with (and is not necessarily) the place of arbitration. Instead, the arbitral
tribunal often after consultation with the parties determines a suitable place. Attention is
to be paid to the costs of an oral hearing, which can be significant if the hearing is held in hotel
conference rooms. However, since arbitration hearings tend to be intense (often lasting for
eight hours or more) to save expenses on conference rooms can be disastrous for everyone
involved. The arbitral tribunal will check whether it will book the conference rooms itself (it
double checks whether the costs associated are covered by the security on costs) or whether
the rooms are to be directly booked and paid by the parties. In the alternative, arbitrators
sometimes offer the conference rooms in their respective law firms if they are practicing
attorneys to the parties. They do so often for no additional fee or a fee significantly lower
than comparable costs in other conference locations. The fact that frequently many persons
participate in a hearing requires that rather large conference facilities are available. These
include a room for the actual hearing, at least two additional breakout rooms for the parties
(maybe one for the arbitral tribunal), plus (depending on the case) a waiting room for witnesses and a translator booth. Nothing is worse than conference rooms that are too small for
a long lasting hearing. Accordingly, seasoned arbitral tribunals discuss with the parties which
place is most suitable.
At the hearing, the parties have full opportunity to present their case and to discuss factual 7
and legal questions. It is rare that an arbitral tribunal, on its own initiative, suggests having
only a written proceeding. If the tribunal wants to pursue that option, it will announce that
intention to the parties and invite comments. Clarity is then brought by the parties responses.
If one party wants a hearing, there will be a hearing.
Parties that are not familiar with arbitrations are often surprised about the length of the hear- 8
ings. While a hearing in a German court seldom takes longer than one or two hours, arbitral
hearings tend to be significantly longer. A full day hearing is almost standard and if witnesses
are to be heard, the hearing can easily take days.

Section 28 DIS Rules is an exact copy of 1047 (1) Code of Civil Procedure (Zivilprozes- 9
sordnung ZPO). Whereas, according to Section 28 DIS Rules, a hearing will take place
unless the parties agreed to the contrary, Article 25 (6) International Chamber of Commerce
(ICC) Arbitration Rules and Article17 (3) UNCITRAL Arbitration Rules provide for a
hearing only if a hearing is requested by one party or if the tribunal decides to have one. If no
party requests a hearing, the tribunal is entitled to make a decision based only on the written
statements.
Section 29 Records of Oral Proceedings1

A record shall be made of all oral hearings. The record shall be signed by the chairman.
The parties shall each receive a copy of the record.
I.
1 The aim of Section 29 DIS Rules is to create a proper documentation of the course of the
hearing. Experience shows that a record of the hearing is often useful when an award or its
enforcement is later contested because of alleged procedural shortcomings.
II.
Detailed Commentary
2 The wording of Section29 DIS Rules is clear. There must be a record of the oral hearing. It is
the chairmans task to authorize the record by his signature. The record is not only for the files
of the arbitrators, but must be sent to the parties.
3 Section 29 DIS Rules does not clarify what the consequence of a forgotten or missing record
is. Since none of the fundamental procedural rights of the parties is touched simply by a missing record, it is at the outset correct to assume only an administrative function of Section 29
DIS Rules. However, if a party later argues that its right to be heard was violated because it
could not effectively comment on the hearings contents because of a missing record, Section
29 DIS Rules shows its practical relevance.
4 Section 29 DIS Rules does not provide the mandatory or recommended contents of the
record. Consequently, the tribunal has a wide discretion spanning from a skeleton record
indicating only the date, place and length of the hearing, the participating persons and the
key procedural occurrences2 to a full verbatim record of every word mentioned during the
hearing. The tribunals discretion is limited by a possible parties agreement. In most cases,
the tribunal will discuss the desired content of the record with the parties in order to find a
mutual agreement.
5 The way the record is produced is not determined, and thus the arbitral tribunal has again
respective discretion. Some arbitrators will simply record the key facts of the hearing by
dictating those facts, following the widely practiced custom in German civil courts. In rare
cases, tape recorders are used to record every single word spoken in a hearing. This record
is later written down by a secretary. Verbatim protocols by professional court reporters are
increasingly common in Germany. Parties and arbitrators alike should be aware though that
the number of professional court reporters in Germany is limited. Especially if the language
of the arbitral proceedings is not English but rather German there might be organizational as well as financial issues. Professional court reporters should always be booked well
in advance.
1
2
Cf. Stumpe/Haller, in: Nedden/Herzberg (2014), 29 DIS-SchiedsO, para. 8; Schtze-Theune (2011),
p.210.
Section 29 Risse
685
III. DIS Practice

Many German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit 6
DIS) arbitral tribunals will openly address the question of how the record shall be produced
and what level of detail is desired by the parties. In most cases, an agreement can be easily
found. The agreement is then recorded either in some kind of terms of reference or in a short
procedural order. As always, such explicit stipulations help to avoid misunderstandings.
Also, DIS arbitral tribunals tend to be strict when it comes to the preparation of the record.
Many tribunals decide to produce the record as a verbatim protocol even without an explicit
approval of the parties. The experience of intense hearings in arbitral proceedings shows
that records simply consisting of key facts dictated by the tribunal are prone to error and
impractical. It is important to also note that if a professional court reporter keeps a verbatim
protocol of the hearing, Section 29 sentence 2 DIS Rules makes it clear that the record must
be produced by the tribunal and signed by the chairman. A practical way to do this is by
way of a procedural order which fully refers to and incorporates the verbatim protocol as an
attachment to the procedural order.

Neither the International Chamber of Commerce (ICC) Arbitration Rules nor the UN- 7
CITRAL Arbitration Rules as revised in the 2010 comments on the necessity of a record.
Article25 (3) UNCITRAL Arbitration Rules (1976) stated that the proceedings shall be
recorded if the tribunal finds it necessary or if the parties agreed thereon. Art. 30 (2) sentence
2 Vienna Rules 2013 requires minutes of the hearing, which shall contain at a minimum a
summary of the hearing and its results.
Section 30 Default of a Party1

30.1 If the respondent fails to communicate his statement of defence within the timelimit set in accordance with Section 9, the arbitral tribunal may continue the
proceedings without treating such failure in itself as an admission of the claimants
allegations.
30.2 If any party fails to appear at an oral hearing after having been duly summoned,
or to produce documentary evidence within a set time limit, the arbitral tribunal
may continue the proceedings and make the award on the evidence before it.
30.3 Any default which has been justified to the tribunals satisfaction will be disregarded. Apart from that, the parties may agree otherwise on the consequences of
default.
I.
1 The purpose of the provision is to clarify the consequences if one party chooses not to participate actively in the proceedings. The principle is clear: a partys inactivity cannot stop
the arbitration from going forward. But unlike in civil court proceedings, there are no quasiautomatic consequences effectively penalizing the non-participating party (e.g. dismissal of
claim, assumption that presented facts are true). Instead, the tribunal has discretion regarding the evaluation of the missing participation.
II.
Detailed Commentary
2 Section 30.1 DIS Rules deals with cases in which the respondent remains silent after the
request for arbitration has been served. The inactive respondent cannot hope to stop the
arbitration. The tribunal has discretion regarding the evaluation of the missing participation
when it makes its decision on the merits of the case. By stating that the failure in itself is not
an admission of the claimants allegations, Section30.1 DIS Rules does not prohibit the tribunal to take the failure into consideration when evaluating the case. Section 30.1 DIS Rules
only wants to exclude the automatism no show = admission of facts, which is the general rule
in German civil court proceedings.2 Thus, the tribunal may, but need not, take other factors
into consideration, e.g. the (im)plausibility of the presented facts and the existence/absence
of any contradictions in the claimants presentation. Within the limits set by Section27 DIS
Rules, the tribunal may even investigate on its own initiative if it has doubts as to the accuracy
of the facts presented by the claimant but that will be very rare.
3 Section 30.2 DIS Rules deals with the relatively rare case that a party fails to appear at an oral
hearing or what happens more frequently that a party refuses to produce documentary
evidence. Again, the tribunal can proceed with the arbitration and generally will do so. The
concluding sentence that the tribunal may make the award on the evidence before it must
not be misunderstood in the sense that the inactive or non-compliant party need not fear
any consequences; the tribunal is perfectly permitted to draw its conclusions from the no
1
2
Cf. 330, 331 Code of Civil Procedure (Zivilprozessordnung ZPO).
Section 30 Risse
687
show or the failure to produce documents, e.g. by inferring that the content of the withheld
documents is the one argued by the other side.3 There is only no respective automatism.
Section 30.3 DIS Rules clarifies that a validly excused default must not have any negative 4
consequences. What constitutes a valid excuse depends on the circumstances and is thus not
determined in the DIS Arbitration Rules. A general guideline might be that the defaulting
party must raise that excuse as soon as it is feasible and must show that the default was not
caused by the partys negligent behaviour. If, for example, a defaulting party has presented a
doctors confirmation that that party is too sick to work, the tribunal is normally not permitted to conduct an oral hearing in the absence of the so-excused party.4
III. DIS Practice

If German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) 5
arbitral tribunals are confronted with an apparent default situation, they will start by checking and verifying whether the situation at hand really constitutes a default. In particular, the
tribunal will check whether the request for arbitration or the disregarded procedural order
was validly served upon the defaulting party.5 If the default is inexplicable e.g. because a
party does not appear at a hearing although it has so far actively participated and had not announced its non-participation most tribunals will seek further clarification before drawing
any consequences from the default. This rather sensitive approach underlines the tribunals
concern that the erroneous assumption of a default situation can easily violate the defaulting
partys procedural rights.6
If a default situation is determined by a DIS tribunal, the defaulting party is ill-advised to 6
hope for avoiding any disadvantages because the DIS Arbitration Rules do not prescribe
automatic sanctions for defaults. For example, most DIS arbitral tribunals will consider the
respondents default in answering the request for arbitration as a very strong clue that the
claimants factual allegations are true if these allegations are otherwise plausible and not
themselves contradictory.

Section 30.1 and 30.2 DIS Rules equal Article 30 UNCITRAL Arbitration Rules. Pursuant 7
to Article 6 (8) International Chamber of Commerce (ICC) Arbitration Rules, the proceedings go forward even if a party is not willing to participate.
4
5
6
Bassiri, in: Nedden/Herzberg (2014), 30 DIS-SchiedsO, para. 26; Schtze-Theune (2013), Institutional
Arbitration, Chap. III, para. 250.
OLG Celle 19.02.2004.
Lachmann (2008), paras 1660; 3445.
Section 31 Closing of Proceedings1

The arbitral tribunal may, when satisfied that the parties have had sufficient opportunity
to present their case, set a time limit. Upon the expiry of the time limit, the arbitral tribunal may reject further pleadings by the parties as to the facts of the case.
I.
1 This provision provides a levelling tool to the tribunal. It gives the tribunal the opportunity
to properly conclude an arbitration proceeding without running the risk that a partys right
to be heard is unduly abridged.
II.
Detailed Commentary
2 On the one hand, the parties to an arbitration justly request a swift proceeding. On the other
hand, each party wants and is entitled to present its case in full. If the tribunal violates the parties fundamental right to be heard, the award may later be vacated or declared unenforceable.
In this context of conflicting interests, Section 31 DIS Rules offers a fair and elegant solution:
the tribunal sets a time limit and thus offers a party a last chance to present any (remaining)
arguments. If the party does not seize this chance, it is estopped from arguing that it was not
granted the right to be heard. The tribunal has a clear guideline as to when it can reject new
presentations of facts as delayed without risking that this rejection later forms the basis for a
challenge of the award.
3 The wording of Section 31 DIS Rules clarifies that the tribunal is only entitled to set a time
limit after the parties have already had sufficient opportunity to present their case. Thus,
the set time limit is not meant to create a first opportunity for presenting the case. Instead,
tribunals may use Section 31 DIS Rules to create a safe haven against later challenges of the
award. Furthermore, Section 31 DIS Rules does not compel the tribunal to disregard facts
that a party presents after an elapsed time limit, but only gives the tribunal discretion to do so
(may reject). The flexibility so provided is important if a party can present good reasons as
to why it was prevented from meeting the set time limit.
4 Setting a time limit according to Section 31 DIS Rules may sometimes entail the danger that
a party basically reopens the proceedings by arguing facts for the first time and presenting
evidence that could have and should have been offered at a much earlier stage. The following
argument is easy to make and rather difficult to counter: If Section 31 allows the rejection
of further pleadings only upon the expiry of the time limit, any pleading made before must
be fully admissible. If the arbitral tribunal, on these grounds, permits the presentation
of new facts and evidence from one party, the other partys right to be heard requires the
arbitral tribunal to continue the proceedings by allowing additional submissions. Hence,
Section 31 DIS Rules, which is meant to ease the closing of proceedings, actually works as a
door-opener for additional rounds of submissions. In order to avoid that danger, an arbitral
tribunal might clearly determine in its Special Procedural Rules that all factual allegations
must be presented as early as possible and that facts and evidence belatedly presented might
be dismissed. However, the aforementioned danger remains and thus it is often advisable not
to make use of Section 31 DIS Rules.
1
Section 31 Risse
689
III. DIS Practice

Some German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit 5
DIS) arbitral tribunals will, at the outset of the arbitration, try to establish a procedural
calendar with the consent of the parties. To become binding, the procedural calendar is then
included in a formal procedural order. With such binding procedural calendar in place, there
is no necessity to make additional use of Section 31 DIS Rules. If no procedural calendar
was established, DIS arbitral tribunals will regularly use Section 31 DIS Rules to orderly
conclude the arbitration.

While Section 31 DIS Rules provides for an additional time limit prior to closure of proceed- 6
ings, Article 27 International Chamber of Commerce (ICC) Arbitration Rules empowers
the tribunal to close the proceedings without a final time limit. The same is true for Article31
(1) UNCITRAL Arbitration Rules. The tribunal is free to close the proceeding at any time as
long as it complies with the principle of due process (Article17 (1) UNCITRAL Arbitration
Rules).
Section 32 Settlement1
32.1 At every stage of the proceedings, the arbitral tribunal should seek to encourage
an amicable settlement of the dispute or of individual issues in dispute.
32.2 If during arbitral proceedings the parties settle the dispute, the arbitral tribunal
shall terminate the proceedings. If requested by the parties, the arbitral tribunal
shall record the settlement in the form of an arbitral award on agreed terms, unless
the contents of the settlement are in violation of public policy (ordre public).
32.3 An award on agreed terms shall be made in accordance with Section34 and shall
state that it is an award. Such an award has the same effect as any other award on
the merits of the case.
I.
1 The practice in arbitral proceedings as it has developed over the last decades permits the
arguments as pleaded by the parties to be handled with care so that the parties have the impression that their arguments are taken into consideration in their entirety. Furthermore, due
to the lack of an appeals procedure after the award is rendered, some parties may be keener
to reach a compromise rather than risk a completely unfavourable decision by the arbitral
tribunal.2 Obviously, these circumstances assist in terminating the arbitral proceedings by
way of settlement. In addition, there are situations in which parties even expect the arbitral
tribunal to suggest a reasonable settlement. This is particularly true with ongoing business
relationships in which a dispute must be resolved without putting the whole relationship in
jeopardy. Section32 DIS Rules sets forth rules that apply in the event that the dispute can be
settled amicably.
II.
A.
Section32.1 DIS Rules
2 The wording of Section 32.1 DIS Rules [being similar to 278 code of Civil Procedure
(Zivilprozessordnung ZPO), which applies to German state court proceedings] should not
be interpreted to mean that it is the main task of the arbitral tribunal to cause the parties to
settle the dispute amicably. The arbitrators are primarily appointed to make a final decision
resolving the dispute and, in the course of the arbitral proceedings, they should never give
the impression to the parties that they are more interested in the parties entering into a settlement agreement than they are to decide the dispute through a final award.
3 Nevertheless, the arbitral tribunal should take into consideration that a settlement might be
in the interest of both parties and it should address the issue once it has the impression that
it is the right time to do so. However, before presenting a proposal for the settlement of the
dispute, the arbitral tribunal should obtain the approval of the parties. Otherwise, the arbitral
tribunal runs the risk that the manner of presentation of the settlement proposal or the settlement proposal itself will be regarded as a sign of partiality and lead to the challenge of an
1
2
Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 32, para. 1 (p. 213).
Section 32 Elsing
691
arbitrator or of the whole arbitral tribunal.3 By obliging the arbitrators to seek to encourage a
settlement at every stage of the proceedings, Section 32.1 DIS Rules protects the arbitrators
against the accusation of partiality in the event that they propose a settlement.4
B.
In the event that the parties settle the dispute with or without the assistance of the arbitral 4
tribunal, Section32.2 DIS Rules requests the arbitral tribunal to terminate the proceedings.
The wording of Section 32.2 DIS Rules is similar to 1053 (1) ZPO.
Further steps are available to the parties. The parties may request that the arbitral tribunal 5
records the settlement in the form of an arbitral award on agreed terms in order to create an
enforceable award, which incorporates the terms of the settlement.5 Under this scenario, the
arbitral tribunal would be required to render an award on agreed terms unless the content of
the settlement is in violation of public policy of the applicable lex arbitri.6
The request for an arbitral award on agreed terms must come from both parties.7 In practice, 6
the parties either jointly make such request to the arbitral tribunal in one document or one of
the parties files a respective request and the other party/parties declare their approval.
The alternative would be that the claimant and respondent consent to withdraw the claim so 7
that the arbitral tribunal has to issue an order pursuant to which the arbitral proceedings are
terminated (see Section 39.2 (1) DIS Rules and also 1056 (2) No. 1 (b) ZPO).
C.
When preparing the arbitral award on agreed terms, the arbitral tribunal must take into 8
account the requirements set forth in Section34 DIS Rules, i.e. the award must (i.) be in writing, (ii.) be signed by all or the majority of the arbitrators, (iii.) contain the full identification
of the parties, the legal representative and the names of the arbitrators, (iv.) state the date on
which it was rendered and (v.) state the place of arbitration as determined in accordance with
Section21 DIS Rules. In 1053, 1054 ZPO, similar provisions are contained.

In the international context, the wording of Section 32 DIS Rules is regarded as rather unu- 9
sual.8 Its content might have been inspired by 278 ZPO, under which German state courts
are under a similar obligation.
While the International Chamber of Commerce (ICC) Arbitration Rules also provide for 10
the obligation of the arbitral tribunal to render an award on agreed terms if so requested by
the parties (Article 32 ICC Arbitration Rules), they do not contain an express obligation
of the arbitral tribunal to seek to encourage an amicable settlement at every stage of the
3
4
5
6

Kreindler/Schfer/Wolff (2006), para. 296.
Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 32 para. 4 (p. 214); different view by Bredow,
Schiedsspruch mit vereinbartem Wortlaut Form und Inhalt, SchiedsVZ 2010, 295 (298), who takes
into consideration also the public policy of the state of recognition and enforcement.
See further Bredow, Schiedsspruch mit vereinbartem Wortlaut Form und Inhalt, SchiedsVZ 2010, 295
(296).
Lachmann (2008), para. 3455; Kreindler/Schfer/Wolff (2006), para. 295.
692
proceedings. The same approach as incorporated in the ICC Arbitration Rules is followed by
Article 26 (8) London Court of International Arbitration (LCIA) Arbitration Rules, Article
34 Swiss Rules and Article 29 American Arbitration Association (AAA) International Dispute Resolution Procedures.
Section 33 Rendering of the Arbitral Award1

33.1 The arbitral tribunal shall conduct the proceedings expeditiously and shall render
an award within a reasonable period of time.
33.2 In rendering the award, the arbitral tribunal is bound by the requests for relief
made by the parties.
33.3 In arbitral proceedings with more than one arbitrator, any decision of the arbitral
tribunal shall be made, unless otherwise agreed by the parties, by a majority of all
its members.
33.4 If an arbitrator refuses to take part in the vote on a decision, the remaining arbitrators may take the decision without him, unless otherwise agreed by the parties.
The remaining arbitrators shall decide by majority vote. The parties shall be given
advance notice of the intention to make an award without the arbitrator who refuses to participate in the vote. In the case of other decisions, the parties shall be
informed subsequent to the decision of the refusal to participate in the vote.
I.
The provisions set forth in Section33 DIS Rules are mainly addressed to the arbitral tribunal 1
as they provide details with respect to the rendering of an arbitral award. However, they are
of assistance to the parties, particularly regarding the arbitral tribunals express obligation to
carry out the arbitration expeditiously.
II.
A.
Section33.1 DIS Rules ensures that the proceedings are conducted expeditiously so that the 2
dispute between the parties is resolved as soon as possible.
However, Section 33.1 DIS Rules does not provide for the remedies available to a party or 3
to the parties if the proceedings are not conducted expeditiously. Indeed, there are differing
views with regard to this issue. As far as German law is applicable, the Federal Court of Justice
(Bundesgerichtshof BGH) has held that the arbitrators agreement may be terminated.2
Another approach would be to proceed in accordance with Section 19.1 DIS Rules, i.e. to
request the competent court to decide on the termination of the mandate.3
As far as the award must be rendered within a reasonable period of time, the term reasonable 4
depends on the individual case, the respective facts, on the complexity of the case and the
number of the parties.4 Sometimes parties have already agreed in the arbitration agreement
that the final award shall be rendered within a certain time period. While stipulations of this
kind may be validly concluded5 and may assist in expediting the proceedings, they might
1
2
3
4
5
BGH 19.11.1964, BGHZ 42, 313 (315); see also 1038 (1) Code of Civil Procedure (Zivilprozessordnung ZPO).
694
have adverse consequences in the event that the agreed time limit cannot be met. In such
situations, the arbitral tribunal should approach the parties concerning an extension of the
time limit as soon as there are indications that the time limit originally agreed upon cannot
be complied with.6
B.
5 The principle ne ultra petita is incorporated into Section33.2 DIS Rules, i.e. the arbitral tribunal must decide within the limits set by the requests for relief made by the parties.
6 When reviewing whether the content of the award stays within such limits, the arbitral
tribunal must apply the substantive law applicable to the arbitration. The arbitral tribunal is
required to consider certain issues or claims required by law within the award even without a
respective request for relief by one of the parties.
C.
7 Based on Section 33.3 DIS Rules, the members of the arbitral tribunal have equal rights
regardless of their position within the tribunal. In particular, the chairman has no additional
voting rights as compared to the party-nominated arbitrators.
8 The wording of Section33.3 DIS Rules provides the parties with the opportunity to agree to
different terms, for example, that decisions of the arbitral tribunal must be made unanimously.
The parties are, however, well advised to make use of such opportunity only in very limited
instances. The requirement that decisions of the arbitral tribunal must be made unanimously
may lead to the fact that the arbitral tribunal becomes unable to act, particularly if one of the
arbitrators finally refuses to participate in the decision making.
D.
9 In the event that an arbitrator refuses to take part in the vote on a decision, Section33.4 DIS
Rules (which is similar to 1052 (1) Code of Civil Procedure (Zivilprozessordnung ZPO)
enables the remaining arbitrators to take the decision without him/her. The rationale of the
provision is to prevent dissenting and/or obstructive arbitrators from successfully frustrating the arbitral proceedings.7 However, in the case of the rendering of the award, the parties
must be given advance notice by the remaining arbitrators about their intention to proceed
without the arbitrator refusing to participate in the vote. The parties must be notified in good
time in order to be able to respond and consider their options.8 These include, for example,
the mutual termination of the arbitrators mandate or the application for a decision by a state
court to terminate the arbitrators office.9
10 The parties have the opportunity to enter into a different agreement but generally should
not change the legal consequences arising from Section33.4 DIS Rules. Even though the
remaining arbitrators have the opportunity to make the decision, it should be noted that an
arbitrator intending to obstruct the proceedings has, nevertheless, sufficient opportunities
to do so. This is particularly due to the fact that even though the intention of an arbitrator to
6
7
8
See also Lachmann, Klippen fr die Schiedsvereinbarung, SchiedsVZ 2003, 28 (43).

Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 33 para. 12 (p. 219); see also BeckOKZPO/
Vorwerk/Wolf (2013), 1052 para. 24.
See e.g. 1038, 1039 ZPO.
Section 33 Elsing
695
obstruct may be obvious, the remaining arbitrators must contact him before each decision to
be made and must give him the opportunity to participate.

Article 30 International Chamber of Commerce (ICC) Arbitration Rules states a fixed time 11
limit of six months following the date of the last signature of the Terms of Reference for the
rendering of the final award. In practice, however, such a time limit can only be met in a very
limited number of cases; subsequently, the ICC International Court of Arbitration regularly
grants extensions pursuant to Article 30 (2) ICC Arbitration Rules.
The London Court of International Arbitration (LCIA) Arbitration Rules, the Swiss Rules 12
and the American Arbitration Association (AAA) International Dispute Resolution Procedures do not provide for a time limit in which the final award must be rendered. However,
Article 42 Swiss Rules foresees an expedited procedure which applies either upon agreement
of the parties or when the aggregate of the claim and the counterclaim does not exceed CHF
1,000,000. During the expedited procedure, the award shall be made within six months of
the files transmission from the Secretariat to the arbitral tribunal. Furthermore, in Article 27
AAA International Dispute Resolution Procedures, it is stated only that the awards shall be
made promptly.
Section 34 Arbitral Award1

34.1 The award shall be made in writing and shall be signed by the arbitrator or arbitrators. In arbitral proceedings with more than one arbitrator, the signatures of
the majority of all members of the arbitral tribunal shall suffice, provided that the
reason for any omitted signature is stated.
34.2 The award shall contain full identification of the parties to the arbitral proceedings
and their legal representatives and the names of the arbitrators who have rendered
the award.
34.3 The award shall state the reasons upon which it is based, unless the parties have
agreed that no reasons are to be given or the award is an award on agreed terms
under Section32 subsection 2.
34.4 The award shall state the date on which it was rendered and the place of arbitration
as determined in accordance with Section21. The award shall be deemed to have
been made on that date and at that place.
I.
1 Section34 DIS Rules contains details as to the form in which an award must be rendered and
details concerning its mandatory and facultative content. It is therefore mainly a checklist for
the arbitral tribunal for ensuring that its award is valid. It would, however, not be appropriate
for the arbitral tribunal to restrict its efforts in order to solely comply with the requirements
of Section 34 DIS Rules. The process of arbitration is a service rendered to the parties. A
substantial part of such service is that each of their arguments is considered and dealt with.
This should also be reflected in the award. Thus, an arbitral tribunal should even though
not a necessity for the validity of the award2 deal with each of the parties arguments in the
award, even if some of the arguments might not be relevant for the actual decision made.
This would also distinguish arbitral awards from decisions of state courts. For example, in
Germany the state courts generally focus on the decisive arguments in their decisions, i.e.
do not address arguments which are irrelevant to the decision. However, dealing with all the
parties arguments makes parties feel that their respective positions have been heard. In the
end, this might also contribute to the success of arbitration as a preferred dispute resolution
mechanism.
II.
A.
2 The requirements set forth in Section34.1 DIS Rules apply to all kinds of arbitral awards,
i.e. partial awards, interim awards, final awards and also awards on agreed terms pursuant to
Section32.3 DIS Rules.3
1
2
3
Schtze-Theune (2011), 34 para. 2 (p. 220); Lachmann (2008), paras 1706 et seq.; Section 34.1 DIS
Rules has the same wording as 1054 (1) Code of Civil Procedure (Zivilprozessordnung ZPO).
Section 34 Elsing
697
The requirements that the award be made in writing and signed by the arbitrator or the 3
arbitrators have to be met in order for the respective award to be valid. In this context, there
are different views on whether it is sufficient that the members of the arbitral tribunal set
their respective signature on different counterparts of the award. While a German court
has held that this should suffice,4 it is argued that in order to comply with Section 34.1 DIS
Rules the arbitrators must sign on one and the same document.5 In a recent decision, the
OLG Mnchen6 left this question open, but ruled that the arbitral tribunal complied with the
formal requirement, even though the signatures were on different sheets of paper (but within
one copy of the award). However, since the discussion is ongoing, it would be advisable for
the members of the arbitral tribunal to sign the same document in order to avoid the risk of
an award being invalid on this ground.
The second sentence of Section34.1 DIS Rules is of importance in situations in which an 4
arbitrator in arbitral proceedings with more than one arbitrator refuses to sign the award,
e.g. for reasons of obstruction or because the respective arbitrator does not agree with the
conclusion of the other arbitrators. For these situations, the majority of the members of the
arbitral tribunal are given the opportunity to render a valid award through signing (without the arbitrator who refuses to sign), provided that they state the reason for the omitted
signature.
The admissibility of a dissenting opinion is neither addressed in Section 34.1 DIS Rules nor 5
in any other provision of the DIS Arbitration Rules. It is thus subject to the applicable arbitration law.7
B.
For the subsequent enforcement proceedings, it is required that the award identifies the 6
parties to the arbitral proceedings, their legal representatives and the arbitrators who have
rendered the award. This refers to the entire arbitral tribunal and not only to the arbitrators
who have signed the award.
C.
The arbitrators should render an enforceable award. Thus, when Section 34.3 DIS Rules 7
obliges them to state the reasons upon which they have based the award, the arbitrators
should respect this and draft their reasons for the award in a way that (i.) convinces the parties and (ii.) does not lead to the award being set aside. In particular, the reasons for the award
shall not be in contradiction to the dispositive section of the award, devoid of content or
obviously incoherent.
With regard to the layout and format of the award, different arbitrators follow different styles. 8
In general, it can be observed that German arbitrators tend to state the undisputed and
disputed facts first, followed by the prayers for relief, the procedural history, the conclusions
and the dispositive section which follows the style of judgments rendered by German state
courts. Arbitrators from other jurisdictions might prefer to structure the award in a way that
4
5
6
7
OLG Frankfurt 06.09.2001, OLGR Frankfurt 2001, 302.

Lachmann(2008), para. 1750; Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 34 para. 3 (p.
220).
OLG Mnchen SchiedsVZ 2013, 230, 235 with commentary by Mnch.
Schtze, SchiedsVZ 2003, 178 (180).
698
deals with the matter argument by argument. There is certainly no preferable style, as long as
the award is convincing and binding.
D.
9 In order to be valid, the award must also state the date on which it was rendered, i.e. the date
on which the last arbitrator has signed it and the place of arbitration as determined in accordance with Section21 DIS Rules. The statement of the place of arbitration is required for the
determination of the state court which would be competent for recognizing or setting aside
the award. Furthermore, the place of arbitration usually determines whether an award is a
domestic or a foreign one.8

10 Provisions comparable to Section34 DIS Rules are contained in Article31 International
Chamber of Commerce (ICC) Arbitration Rules, Articles31 and32 Swiss Rules, Article26
London Court of International Arbitration (LCIA) Arbitration Rules and in Article 27
American Arbitration Association (AAA) International Dispute Resolution Procedures.
Section 35 Decision on Costs 1

35.1 Unless otherwise agreed by the parties, the arbitral tribunal shall also decide in
the arbitral award which party is to bear the costs of the arbitral proceedings,
including those costs incurred by the parties and which were necessary for the
proper pursuit of their claim or defence.
35.2 In principle, the unsuccessful party shall bear the costs of the arbitral proceedings.
The arbitral tribunal may, taking into consideration the circumstances of the case,
and in particular where each party is partly successful and partly unsuccessful,
order each party to bear his own costs or apportion the costs between the parties.
35.3 To the extent that the costs of the arbitral proceedings have been fixed, the arbitral
tribunal shall also decide on the amount to be borne by each party. If the costs
have not been fixed or if they can be fixed only once the arbitral proceedings are
terminated, the decision shall be taken by means of a separate award.
35.4 Subsections 1, 2 and 3 of this section apply mutatis mutandis where the proceedings have been terminated without an arbitral award, provided the parties have
not reached an agreement on the costs.
I.
Unlike the UNCITRAL Model Law, the German arbitration law contains a provision on 1
the costs of the proceedings ( 1057 Code of Civil Procedure (Zivilprozessordnung ZPO)
which is reflected in this provision, in particular subsections 13. These provisions contain a
general principle of German procedural law, i.e. that the costs of invoking a judicial procedure
are part of the procedure and that the judicial body or in the case of an arbitration, the
arbitral tribunal must therefore also render a decision on the costs. The cost decision is
based on the principle that the costs must be borne by the unsuccessful party.
II.
Detailed Commentary
A.
Purpose of the Cost Decision
Subsection 1 makes clear that it is an integral part of the arbitral tribunals function to render 2
a decision on the costs of the proceedings.
As the advances on the costs are borne at the outset by both parties, the decision on the costs 3
often entails an obligation on one party to reimburse the costs of the other party. In order to
obtain reimbursement in those cases where it is not made voluntarily, the party entitled to
reimbursement requires an executable title. This title can only be rendered in the form of an
arbitral award, specifying the exact amount to be reimbursed.
Thus, the arbitral tribunal and not the German Institution of Arbitration (Deutsche Institu- 4
tion fr Schiedsgerichtsbarkeit DIS) must determine in the final instance the costs of the
proceedings and, in particular, calculate the reimbursement of costs due between the parties.
This is done, inter alia, by determining the amount in dispute (Section 40.2 DIS Rules) as
700
basis for the calculation of the arbitrators fees, the DIS administrative fee and where applicable, the attorneys fees.
B.
Determination of the Cost of the Proceedings
1.
Arbitrators Costs
5 According to Section 40.1 DIS Rules, the costs of the arbitrators consist of the arbitrators
fees as calculated by reference to appendix to Section 40.5 DIS Rules No. 115 and the
arbitrators expenses.2
6 To the extent that the parties have not concluded an agreement on how the costs of the
proceedings are to be allocated between them, the arbitral tribunal must render a decision
on which party is to bear the costs of the arbitral proceedings.
7 Since the arbitrators costs are usually covered by advances paid by both parties to the arbitral
tribunal, at the end of the proceedings the arbitral tribunal will render a final statement of
account of its fees and expenses to the parties and, where applicable, include a ruling in the
award that specifies the amount that one party must reimburse to the other party. Advances
in excess of the account are returned to the parties.
8 If the advances paid by the parties do not cover the costs of the tribunal, the arbitral tribunal
must issue invoices to the party liable for the outstanding amounts. It may not order by
arbitral award any party to make payments to the arbitrators.
9 In order to obtain outstanding fees and costs, the arbitral tribunal may request the party in
whose favour the cost award was made to make the outstanding payment, as the parties are
jointly and severally liable to the arbitrators for their costs. If that party pays the outstanding
amount, the arbitral tribunal must also issue a supplementary award on these costs to enable
the party to recover its costs.
2.
DIS Administrative Fee
10 The arbitral tribunals decision on the costs must also include a decision on the DIS administrative fee.3 Since the advance on the DIS administrative fee is usually paid only by the claimant (in respect of the statement of claim) or by the respondent (in respect of the statement of
counterclaim), the decision on costs must also cover any reimbursements to be made with
regard to the DIS administrative fee.
3.
Parties Costs
11 The arbitral tribunal must also render a decision on the parties costs of the proceedings
necessary for their pursuit of the claim or defence. These costs are in essence the costs of
retaining legal representation.
12 In view of the arbitral award being a final and binding decision, retaining an attorney is a
recognized necessary cost. The remuneration of attorneys in Germany is governed by the
For details on the calculation of the arbitrators fees, see infra, Bredow/Mulder, S. 40 DIS Rules paras 13 et
seq.
For details on the calculation of the administrative fee, see infra, Bredow/Mulder, p. 40 DIS Rules paras 32
et seq.
701
Lawyers Fees Act (Rechtsanwaltsvergtungsgesetz RVG). The provisions on the remuneration of attorneys in civil law matters also apply to arbitral proceedings.4
In German court proceedings, parties are entitled to reimbursement of their German at- 13
torneys fees only on the basis of the cost schedule of the RVG. However, these rules do not
apply per se to the reimbursement of parties costs in arbitral proceedings, and in particular
not if the parties involved (and, respectively, their counsel) are not German.
In arbitral proceedings where both parties are represented by German lawyers, the reim- 14
bursement of attorneys costs will often, but not necessarily, follow the system applied by
German courts, which is to grant reimbursement of attorneys costs on the basis of the fee
schedule of the RVG applicable to a lawyer acting in first instance.
However, since there are no statutory rules on the reimbursement of costs and the deter- 15
mination of the costs to be reimbursed is in the discretion of the arbitral tribunal, in view of
the fact that arbitral proceedings are limited to one instance, arbitral tribunals have at times
granted reimbursement of the costs of an attorney in appeal proceedings (i.e. the basic fee
plus a premium of 20 per cent) or, where the party and its counsel have concluded a fee
agreement, the costs on the basis of the fee agreement.
In proceedings where both parties are represented by non-German lawyers, the system of 16
reimbursement of attorneys fees according to the RVG obviously does not apply. However,
if in the country of origin of the parties or attorneys a fee schedule for attorneys costs exists,
such a schedule may be taken into consideration.
In deciding on the costs, the arbitral tribunal assesses whether the costs specified by each 17
party were necessary for the proper pursuit of their claim or defence. In practice, prior to
deciding on the reimbursement of the attorneys costs, the arbitral tribunal will request the
parties to submit their cost applications and calculations and give each party an opportunity
to comment on the other partys request for costs. If no objection is raised against the request
or the calculation of the costs, the arbitral tribunal will grant the costs as detailed by the
parties.5
4.
Other Costs
In-house costs: In complex arbitrations, in-house counsel are also often involved in preparing 18
and accompanying the proceedings. Depending on the corporate structure, the involvement
of in-house counsel may generate separate expenses which the party has to bear. Such costs
have so far not been recoverable in proceedings before German state courts. In international
arbitration practice, however, increasingly such costs are also included among the recoverable costs.
Since the assessment of which costs are necessary is in the arbitral tribunals discretion, the 19
arbitral tribunal may award such costs where the need for them is alleged substantively by the
parties. In practice, the tribunal will submit the request for reimbursement of in-house costs
to the other party. In the absence of an objection, the arbitral tribunal will award the costs.
In principle, the arbitral tribunal also has the power to grant such costs even if an objection
4
36 (1) RVG. The RVG provides that attorneys receive a remuneration based on the amount in dispute.
However, attorneys and parties are entitled to agree on a remuneration higher than the statutory fee
schedule e.g. a fee calculated on the basis of an hourly rate, 4 RVG.
The refusal of an arbitral tribunal to allow a party to revise its costs (on the basis of the costs submitted by
the other party) does not constitute a violation of the ordre public, see OLG Naumburg 26.11.2004.
702
is raised, if the arbitral tribunal considers the costs to be necessary. In practice, however, this
will only rarely occur.
20 Costs for transcripts of proceedings: Section 29 DIS Rules provides that a record shall be made
of all oral hearings. The costs for preparing a record are therefore part of the necessary costs of
the proceedings. Since Section 29 DIS Rules does not require the arbitral tribunal to prepare
a (verbatim) written record of the proceedings, the costs of the transcript may vary substantially depending on the type of record that the arbitral tribunal have elected to prepare.
21 Verbatim written transcripts prepared by court reporters using a computer-based stenography programme have become common occurrence in international proceedings and parties
readily agree to them despite the often substantial costs involved. The costs for a verbatim
transcript form part of the costs of the proceedings and must be included in the tribunals
decision on the costs. In domestic cases or for hearings that do not involve the questioning
of witnesses, parties often agree on a summary record of the proceeding, which is usually
prepared by the chairman of the tribunal or the sole arbitrator and submitted to the parties
for comments.
22 As a rule, the parties and the arbitral tribunal agree beforehand on the method of recording
the hearing, and the requisite advances will be paid by the parties, so as to avoid later questions regarding the extent to which these costs are to be borne by the parties.
23 If the arbitral tribunal employs clerical staff in the exercise of its functions, such costs also
form part of the costs of the proceedings. In order to avoid any misunderstanding, it is
common practice to agree beforehand expressly on the employment and conditions of such
clerical services.
C.
Allocation of Costs
24 Subsection 2 states a general principle underlying the decision on costs, i.e. that the costs
follow the outcome of the proceedings. Where a party is not entirely successful, e.g. if a claim
though granted is not proven to the full extent alleged, the arbitral tribunal may allocate the
costs according to the degree/percentage to which a party was successful.
25 Unlike in German state court proceedings, the rule of costs following the outcome is not a
mandatory principle and the arbitral tribunal is free to deviate from this rule if it considers it
appropriate. In deciding on the allocation of costs, the outcome of the proceedings is an important but by no means exclusive or overriding criterion for the arbitral tribunal to consider.
The arbitral tribunal may decide to apportion the costs without regard to the outcome and
instead take into consideration the manner in which a party has conducted the proceedings.
If the conduct of the proceedings by a party, though ultimately victorious, has caused unnecessary delays or additional and unwarranted procedural measures and expenses, these
circumstances may be taken into consideration in the cost decision of the arbitral tribunal.
26 If the proceedings are terminated by a settlement between the parties or an award on agreed
terms, parties usually also agree on the allocation of the costs of the arbitral proceedings,
including the costs incurred by each party. If the parties have not concluded a comprehensive
agreement on the costs (including any claims for reimbursement), the arbitral tribunal has to
issue a decision on the costs.6
6
In cases where the dispute is solved by settlement between the parties, the obligation to render an award
on the costs exists irrespective of whether the parties have agreed to request the arbitral tribunal to issue
703
Such an award on costs can be combined with a termination order pursuant to Section 39.2 27
DIS Rules if the parties have not requested the arbitral tribunal to render an award on agreed
terms.
D.
Form of the Cost Decision
The decision on the costs can be rendered either by separate award or be included in the final 28
award on the merits if the costs (in particular the costs of the parties) have already been fixed
at the time when the award is ready to be rendered. Often, the costs of the parties are not
specified yet at that stage and the award contains only the basis of the cost decision, i.e. the
rate of allocation of the costs between the parties.
Since there is no institutional procedure to fix the costs (unlike in state court proceedings), 29
the arbitral tribunal must also, where appropriate, determine by award the exact amount
which must be reimbursed by one party to the other, since only an award can be declared
enforceable.7 If these costs can only be fixed after the award on the merits is issued, a separate
award on the costs, detailing the obligation to reimburse, must be rendered. The mandate of
the arbitral tribunal ends only when that separate award has been rendered.8
If neither party is entitled to recover costs from the other party, e.g. where each party is to bear 30
its own costs, the arbitral tribunal does not need to fix the costs by a separate award and may
render an account of the advances on its fees and expenses in a procedural order only.
an award on agreed terms or not.

This means that the operative part of the award (on costs) must specify the amount to be reimbursed, e.g.
Party A has to pay the amount of [amount] to Party B as costs in the proceedings.
See also S. 39.1 DIS Rules.
Section 36 Delivery of the Arbitral Award1

36.1 The arbitral tribunal shall provide a sufficient number of originals of the arbitral
award. Without undue delay, the DIS Secretariat shall be supplied with one original of the award to keep on file as well as a sufficient number for delivery to the
parties.
36.2 The DIS Secretariat delivers one original of the award to each party.
36.3 Delivery of the award to the parties may be withheld until the costs of the arbitral
proceedings have been paid in full to the arbitral tribunal and to the DIS.
I.
1 Section 36 DIS Rules has no parallel in the UNCITRAL Model Law or German arbitration
law, since in ad hoc arbitration the obligation to deliver the award to the parties rests with the
arbitral tribunal.
II.
Detailed Commentary
2 This provision was newly introduced in the DIS Arbitration Rules by the review in 1998. By
assuming the task to deliver the award to the parties, the German Institution of Arbitration
(Deutsche Institution fr Schiedsgerichtsbarkeit DIS) can provide a record of the delivery to
the parties, which may be relevant for the purpose of enforcement.2 The parties may, however,
also agree on direct delivery of the award by the arbitral tribunal, which occurs frequently if
the proceedings end with a settlement and the parties have requested the arbitral tribunal to
render an award by consent.
3 Section 36 DIS Rules also applies mutatis mutandis to the delivery of other decisions of
the tribunal affecting the proceedings, in particular a decision by the arbitral tribunal on its
competence if it is rendered in a separate preliminary ruling, a decision on the challenge of
an arbitrator pursuant to Section 18 DIS Rules or a termination order pursuant to Section
39.2 DIS Rules.3
A.
4 The arbitral tribunal must submit to DIS a number of originals of the award corresponding to
the number of parties participating in the proceedings, as well as one original for the DIS. If
the parties are represented by counsel, the arbitral tribunal sometimes also submits a simple
courtesy copy for counsel.
5 In deviation of Section 4 DIS Rules, originals of the award need not be submitted for the
arbitrators, although in practice (each of) the arbitrators will keep a signed original of award
on record.
6 Upon receipt of the award or other decision, the DIS ensures that the award is submitted in
the appropriate number of duly signed copies. In principle, no scrutiny of the award is made.
1
2
3
See e.g. 1059 (3) sentence 2 ZPO.
Bredow, Part O, in: Kronke/Melis/Schnyder (eds), Handbuch Internationales Wirtschaftsrecht, 2005,
para.595.
705
Nonetheless, even without a specific obligation the DIS Secretariat will review the arbitral 7
award to see if the essential formal requirements pursuant to Section 34 DIS Rules have been
complied with, in particular if the necessary signatures have been affixed, the date of rendering the award and the place of arbitration have been specified.
If the formal requirements for an award are complied with, the DIS attaches a cover sheet to 8
the award which designates the award as an award made under the DIS Arbitration Rules.
B.
According to subsection 2, each party receives one original of the award. Sometimes it is the 9
case that the originals are numbered so that no party receives more than one original of the
award.4 This is done to avoid the possibility of abuse. Increasingly, though it is not specifically
provided for, arbitrators wish to have a copy of the award including cover sheet issued by the
DIS in order to have the final document on record and therefore request the DIS to deliver
a copy of the award furnished with a cover sheet to them as well. Such a request should be
stated explicitly by the arbitral tribunal when transmitting additional copies to the DIS in
order to avoid confusion as to the number of awards to be delivered to the parties.
Similarly, if the arbitral tribunal wishes to give special directions to the DIS regarding the 10
delivery of the award to the parties,5 these should be stated explicitly by the arbitral tribunal
when submitting the copies of the arbitral award to the DIS for delivery.
The award is delivered to the parties by courier service, or if the parties are represented by 11
counsel, by delivery to counsel with return of a confirmation of receipt form requested.
The DIS informs the parties and the arbitral tribunal of the date of receipt of the arbitral 12
award.
C.
The DIS may withhold delivery of the award at the request of the arbitral tribunal if the costs 13
of the arbitral tribunal or if the DIS administrative fee is not yet fully paid, e.g. when it is apparent from the award that the amount in dispute has increased and that accordingly payment of
the increased DIS administrative fee has been requested from the parties.
If the arbitral tribunal informs the DIS that it has not yet received its costs in full and requests 14
the DIS to refrain from delivering the award to the parties until these costs have been paid,
the DIS will withhold delivery of the arbitral award to the parties until it is notified that the
requested payments have been made. If only the DIS administrative fee is outstanding, the
DIS will decide on whether to withhold the award on a case-by-case basis.
The Regional Court (Landgericht LG) Kln ruled in a recent judgment that a party was not compelled
to return an original of a (foreign) arbitral award if the claims have become extinct, LG Kln 07.12.2006.
E.g. regarding the number of awards to be delivered to each party or instructions as to the withholding of
the award if the arbitrators costs have not been fully paid up.
Section 37 Interpretation and Correction of Arbitral Award1

37.1 Any party may request the arbitral tribunal
to correct in the award any errors in computation, any clerical or typographical errors or any errors of similar nature,
to give an interpretation of specific parts of the award,
to make an additional award as to claims presented in the arbitral proceedings

but omitted from the award.
37.2 Unless otherwise agreed by the parties, the request shall be made within 30 days
after receipt of the award. A copy of the request shall be delivered to the DIS
Secretariat.
37.3 The arbitral tribunal should make the correction or give the interpretation within
30 days and make an additional award within 60 days.
37.4 The arbitral tribunal may also make a correction to the award on its own initiative.
37.5 Sections 33, 34 and 36 apply to correction or interpretation of the award or to an
additional award.
I.
1 Even in applying utmost care, it is sometimes unavoidable that awards contain errors in
computation, clerical or typographical errors or other errors of a similar nature occur. Furthermore, the parties sometimes might request that certain parts of the award be interpreted
by the arbitral tribunal. It is also possible that certain claims presented in the course of the
arbitral proceedings have been omitted from the award. Section37 DIS Rules contains provisions dealing with these events.
II.
A.
2 The errors in computation, clerical or typographical errors must be obvious. The parties are
prevented from utilizing the procedure set forth in Section37 DIS Rules for the purpose of
having the substance of the decision changed or amended.
3 The same is true for the interpretation of specific parts of the award. It is not uncommon that
arbitrators prepare the award in a language which is not their native language, thus possibly
leading to the need for interpretation, in particular, if the award is presented to a foreign court
for recognition, etc.
4 When reviewing whether the award must be amended, since claims presented in the arbitral
proceedings have been omitted, the arbitral tribunal must consider whether the parties have
included sufficient information in their submissions in order to decide the omitted claim.
If not, the arbitral tribunal must open the proceedings again and request the parties to file
pleadings (solely) in this respect.
1
Section 37 Elsing
B.
707
Section37.2 DIS Rules requires that a request under Section37.1 DIS Rules shall be filed 5
within 30 days after receipt of the award. After expiration of the 30 day period, the parties are
precluded from filing a request under Section37.1 DIS Rules.
C.
This subsection motivates arbitral tribunals to render a decision under Section37 DIS Rules 6
as soon as possible. If, however, the time limits mentioned in Section37.3 DIS Rules expire
without the arbitral tribunal yet having made a decision, no legal consequences arise.2
D.
This subsection refers to obvious clerical errors, typographical errors or errors in computation 7
which may be corrected by the arbitral tribunal on its own initiative, i.e. without a respective
request filed by one party or by both parties. It shall be noted that the scope of the provision
is narrower than that of Section 37.1 DIS Rules. Arbitrators are namely not authorized to give
ex officio an interpretation of specific parts of the award or to include additional awards with
regard to claims that have been omitted from the award.
E.
When preparing its decision under Section37 DIS Rules, the arbitral tribunal must comply 8
with Sections33, 34 and 36 DIS Rules. The decision under Section37 DIS Rules does not
contain a cost decision. The rationale behind this is that the arbitral tribunal might have
made a mistake and the parties should not be required to bear any of the costs associated
therewith.3 For situations in which the request filed under Section37 DIS Rules is obviously
without foundation, it would be preferable if the arbitral tribunal were to have the opportunity to order the requesting party to bear the costs. However, under the current wording of
Section37.5 DIS Rules this is not possible.

Provisions comparable to Section37 DIS Rules are contained in 35 International Chamber 9
of Commerce (ICC) Arbitration Rules, Article 27 London Court of International Arbitration (LCIA) Arbitration Rules, Articles 35 and 36 Swiss Rules and Article 30 American
Arbitration Association (AAA) International Dispute Resolution Procedures. However,
as far as the bearing of any additional costs is concerned, Article 35 (4) ICC Arbitration
Rules allows the ICC Court to fix an advance to cover any additional fees and expenses of the
tribunals or any additional ICC administrative expenses in the event a court remits an award
to the arbitral tribunal.
2
3

Section 38 Effect of Arbitral Award1

The award is final and has the same effect between the parties as a final and binding court
judgment.
I.
1 Even though arbitration is a proceeding that is organized by and takes place between private
individuals, its result, i.e. the award and the implications following therefrom, are sanctioned
by the state by declaring that the award shall have the same effect as a final and binding judgment of a state court (in Germany set forth in 1055 Code of Civil Procedure (Zivilprozessordnung ZPO). Without a state declaration that at least a part of its judicial power can be
exercised by privately constituted arbitral tribunals, arbitration would not be very attractive
as a means for resolving disputes since it would not lead to enforceable decisions.
2 Thus, in this respect Section 38 DIS Rules only has declaratory character, as the German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) does not have
the legislative authority to equate arbitral awards with judgments of state courts. However,
the provision serves further purposes (as set out below) so that its existence is justified.
II.
3 By declaring that the award is final, Section 38 DIS Rules expresses that there is no court
or tribunal that may review the substance of the award, i.e. whether the arbitral tribunal has
correctly decided on the merits.
4 Should a party apply for the recognition and enforcement of the final award (e.g. under the
New York Convention), the competent state court will in most jurisdictions not review the
award on the merits. It will rather review the award only with respect to its compliance with
certain minimum requirements (e.g. no violation of public policy, arbitrability of the subject
matter). The same applies in case a party seeks to set aside or suspend the award.
5 With regard to the finality of the award, one should distinguish between the formal finality
and the res judicata effect.2 The formal finality of the award takes effect as soon as an award
which complies with Section 34 DIS Rules has been served on the parties pursuant to Section 36.2 DIS Rules.3 Following service, the award and its effects can only be overridden
through an application to set it aside before a state court.
6 The res judicata effect refers to the binding effect of the content of the award between the
parties.4 It may also lead to third parties being bound by the award as far as they are parties to
the arbitration agreement based on which the final award was made.5
1
2
3
4
5
See MnchKommZPO-Mnch (2013), 1055 para. 4; Lachmann (2008), para. 1783.
Schwab/Walter (2008), Chap. 21 paras 5 et seq.
Section 38 Elsing
709

Article 34 (6) of the International Chamber of Commerce (ICC) Arbitration Rules is com- 7
parable to Section 38 DIS Rules, even though it is more detailed due to the statement that by
submitting the dispute to arbitration under the ICC Arbitration Rules, the parties undertake
to carry out any award without delay and shall be deemed to have waived their right to any
form of recourse insofar as such waiver can validly be made. Provisions similar to Article 34
(6) ICC Arbitration Rules can be found under Article 26 (9) London Court of International
Arbitration (LCIA) Arbitration Rules, Article 32 (2) Swiss Rules and Article 27 American
Arbitration Association (AAA) International Dispute Resolution Procedures.
Section 39 Termination of Arbitral Proceedings1

39.1 The arbitral proceedings are terminated by the final award, by an order of the
arbitral tribunal pursuant to subsection2 of this Section or by the DIS Secretariat
pursuant to subsection3 of this Section.
39.2 The arbitral tribunal shall issue an order for the termination of the arbitral proceedings when
(1) the claimant withdraws his claim, unless the respondent objects thereto and
the arbitral tribunal recognizes a legitimate interest on his part in obtaining a
final settlement of the dispute; or
(2) the parties agree on the termination of the arbitral proceedings; or
(3) the parties fail to pursue the arbitral proceedings in spite of being so requested
by the arbitral tribunal or when the continuation of the proceedings has for
any other reason become impossible.
39.3 If nomination of an arbitrator or substitute arbitrator does not occur within the set
time limit and nomination by the DIS Appointing Committee is not requested by
a party, the DIS Secretariat may terminate the proceedings after having consulted
the parties.
I.
1 The provisions of Section39 DIS Rules determine the way in which arbitrations under the
DIS Arbitration Rules may be terminated. The rendering of the award is the typical, but not
only, scenario for the termination of the arbitral proceedings. There are also further options,
e.g. when a decision on the merits is no longer necessary. Even though Section 39 DIS Rules
is silent on the potential consequences of the termination of the proceedings, the provision
is nevertheless very helpful as it provides clarity on how and when the arbitral proceedings
may be terminated.
II.
A.
2 Pursuant to Section39.1 DIS Rules, the arbitral proceedings under the DIS Arbitration Rules
are either terminated by (i.) a final award, (ii.) by an order of the arbitral tribunal pursuant to
Section39.2 DIS Rules or (iii.) by declaration of the DIS Secretariat pursuant to Section39.3
DIS Rules.
3 As far as Section39.1 DIS Rules refers to the termination due to a final award, this refers to
either a final award with a decision on the merits or to an award on agreed terms.2
4 The termination of the arbitral proceedings also principally leads to the termination of the
arbitrators appointment.3 The only remaining authority they have is to make decisions
1
2
3
See e.g. 1056 (3) Code of Civil Procedure (Zivilprozessordnung ZPO); Musielak-Voit (2013),
1035 para. 28.
Section 39 Elsing
711
under Section 35.3 or 37 DIS Rules. If the arbitration has its seat in Germany, it should also
be noted that the German state court which has to deal with an application to set aside the
award pursuant to 1059(4)Code of Civil Procedure (Zivilprozessordnung ZPO) may
remit the dispute back to the arbitral tribunal.4
B.
Section39.2 DIS Rules contains three scenarios under which the arbitral tribunal shall termi- 5
nate the arbitral proceedings through an order.
The first scenario is the withdrawal of the claim by the claimant. However, the termination is 6
not possible if the respondent objects to the withdrawal and the arbitral tribunal recognizes
a legitimate interest on the respondents part in obtaining a final settlement of the dispute.
In order to assess whether a legitimate interest of the respondent exists, the tribunal should
take all aspects of the specific case into consideration. A legitimate interest may especially
be assumed if the claimant could pursue the withdrawn claim in the future.5 Accordingly, a
legitimate interest should be denied if the claimant expressly waives its right or declares that
it will not thereafter pursue the claim.6
In that respect, 269 (1) ZPO, which applies to state court proceedings, takes a similar ap- 7
proach even though it also permits the plaintiff to withdraw the claim with the consent of the
defendant prior to the first hearing. However, in 269 (3) sentence 2 ZPO it is also provided
that as a mandatory consequence of the withdrawal of the claim, the plaintiff must bear the
costs of the defendant (within the statutory limits of the Lawyers Fees Act (Rechtsanwaltsvergtungsgesetz RVG). Section 39.2 DIS Rules does not expressly state such a consequence.
However, claimants should be aware that if they wholly or partially withdraw a claim made
within the arbitration, arbitral tribunals generally tend to decide that the claimant has to bear
the respective costs. These might even be the actual costs incurred by the respondent, i.e. the
statutory tariff as contained in the RVG might not be applied so as to limit the costs.
The second scenario involves an agreement between the parties to terminate the arbitral pro- 8
ceedings. This becomes mostly relevant if the parties enter into a settlement agreement and
do not request an award on agreed terms. Termination orders under this scenario generally
do not address the issue of costs.
The third scenario covers instances when proceedings cannot be continued because the par- 9
ties failed to pursue them in spite of being requested to do so by the arbitral tribunal or the
continuation of the proceeding has become impossible for other reasons. This might be the
case if the parties have agreed that the arbitral tribunal shall decide unanimously, but one of
the arbitrators has finally refused to grant his consent.
C.
Section39.3 DIS Rules covers the event that the nomination of an arbitrator or substitute 10
arbitrator does not occur within the set time limit and nomination by the DIS Appointing
Committee is not requested by a party. In this case, the DIS Secretariat may terminate the
proceedings after having consulted with the parties.
4
5
6
Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 39 para.3 (p. 231).

Weigand-Hanefeld (2009), Germany, para. 84,
712

11 The International Chamber of Commerce (ICC) Arbitration Rules, London Court of
International Arbitration (LCIA) Arbitration Rules and the Swiss Rules do not contain a
provision similar to Section 39 DIS Rules. However, Article 37 (6) ICC Arbitration Rules
provides for the consequences of such withdrawal on the costs of the arbitration. In addition,
Article 29.2 American Arbitration Association (AAA) International Dispute Resolution
Procedures deals with situations where continuation of the arbitration has become unnecessary or impossible for reasons other than a settlement between the parties. In such cases, the
provision authorizes the arbitral tribunal to issue a termination order after it has informed the
parties of its respective intention.
Section 40 Costs of Arbitral Proceedings1

40.1 The arbitrators are entitled to fees and reimbursement of expenses as well as to
value added tax levied on the fees or expenses. The parties are jointly and severally
liable to the arbitral tribunal for payment of the costs of the arbitral proceedings,
notwithstanding any claim for reimbursement by one party against the other.
40.2 The fees shall be fixed by reference to the amount in dispute, which is to be assessed by the arbitral tribunal at its due discretion.
40.3 If proceedings are terminated prematurely, the arbitral tribunal may at its equitable discretion reduce the fees in accordance with the progress of the proceedings.
40.4 The DIS is entitled to an administrative fee as well as to any value added tax levied
thereon. The parties are jointly and severally liable to the DIS for payment of the
administrative fee, notwithstanding any claim for reimbursement by one party
against the other.
40.5 The amount of fees and expenses shall be calculated in accordance with the schedule which forms part of the present Arbitration Rules.
40.6 If the amount in dispute is not specified in a statement of claim or counterclaim,
the DIS or the arbitral tribunal, as the case may be, may assess the provisional
administrative fees and advances at its due discretion.
I.
German arbitration law does not regulate the details of the remuneration of arbitrators. One 1
of the advantages of administered arbitration is that the institutional arbitration rules provide
a schedule of fees which applies to calculate the remuneration and expenses of the arbitral
tribunal, as well as the arbitration institution, and thus makes the costs of an arbitration more
transparent for the parties.
II.
Detailed Commentary
A.
Costs of the Arbitral Tribunal
1.
Subsection 1 only serves to clarify that the arbitrators are entitled to remuneration for their 2
work and that they are also entitled to recover any applicable value added tax (VAT) on their
fees from the parties. Furthermore, it is made clear that the parties are jointly and severally
liable for the costs, regardless of any claims for reimbursement that have been determined
in the arbitral award. The parties are able to recover reimbursement from the other party by
enforcing the arbitral award in which the arbitral tribunal has fixed the costs for reimbursement between the parties.
714
2.
3 Subsection 2 provides that since the costs of the arbitral proceedings are determined by
reference to the amount in dispute, the arbitral tribunal has to assess the amount in dispute
in its own discretion. The arbitral tribunal will usually assess the amount by reference to
the specific relief requested or in consultation with the parties. If the arbitral tribunal and
the parties do not reach agreement on the assessment, the arbitral tribunal determines the
amount in its own discretion. If the parties consider the assessment to be grossly unreasonable, they may, at least to the extent that German law applies to the proceedings, have the
assessment reviewed pursuant to 319 Civil Code (Brgerliches Gesetzbuch BGB).
4 Even though by assessing the amount in dispute the arbitral tribunal is deciding on the
basis of its own fees, this is not a violation of the principle that nobody may be the judge
in his own case since the decision on the amount in dispute does not result in the parties
being ordered to make payments to the arbitral tribunal. It only forms the basis for a decision on which the costs are allocated between the parties. Case law also recognizes that by
paying the advances the parties consent to the determination of the amount in dispute by
the arbitral tribunal.2
5 If claims or counterclaims are specified in other currencies than Euro, the German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) assesses the
amount in dispute provisionally at the equivalent in Euro based on the foreign exchange
rate published by the European Central Bank3 on the day of filing the statement of claim,
subject to the final determination of the amount in dispute by the arbitral tribunal.
3.
6 Subsection 3 contains an exception to the rule that the costs of the proceedings are determined by reference to the amount in dispute.4 Since the DIS schedule of costs provides
only for a single fee for the entire proceedings and since this fee falls due in principle upon
termination of the mandate, the arbitrators must decide whether the fee should be reduced
if the proceedings terminate without having run their full course, e.g. if the proceedings are
terminated by settlement or by withdrawal of the claim.
7 Reductions can be calculated by reference to the time spent by the arbitrators on the case,
including the time spent e.g. on perusing briefs or preparing the oral hearings. Often, a
reduction is made in percentages relating to the stage of the proceedings, having regard
to whether an oral hearing took place or not, or if an award (on agreed terms) needs to be
rendered or not. The DIS does not provide a guideline for the reduction as the circumstances of termination may vary considerably from case to case and the arbitrators are in
a better position to evaluate the extent to which an early termination of the proceedings
has resulted in an actual reduction of workload and accordingly of costs for the arbitrators.
8 In practice, in the case of a termination of the proceedings shortly after delivery of the
statement of claim to the respondent, a reduction of the fees to 2530 per cent of the full
fee is fairly common, though this is not a binding rate but merely a guideline subject to
appraisal in the light of the individual case. On the other hand, if the arbitral proceedings
2
3
4
OLG Dresden 13.11.2006; id. 29.06.2005; BGH 28. 3. 2012, SchiedsVZ 2012, 154.
See <www.ecb.de>.
para.602.
715
are terminated after several exchanges of written briefs and one or more oral hearings, a
reduction of the fees is not always granted. The primary factor in the arbitral tribunals deciding on a reduction of the fees is the amount of time spent by the arbitrators on the case.
Subsection 3 also applies mutatis mutandis to the termination of the proceedings prior to 9
the constitution of the arbitral tribunal but after confirmation of one or both co-arbitrators.
In these instances, it is up to the individual arbitrators to determine the amount by which
they are willing to reduce their fees.
B.
Costs of DIS
Subsection 4 states that the DIS is also entitled to remuneration for its services. The DIS 10
administrative fee, like the arbitrators fees, is calculated by reference to the amount in
dispute. The minimum DIS administrative fee for a claim or counterclaim amounts to
EUR 350. Though not explicitly stated, the DIS may in appropriate cases also consider
reducing its administrative fee if the proceedings terminate at an early stage, i.e. prior to the
constitution of the arbitral tribunal, and if the early termination has resulted in a significant
reduction of the administrative activities of the DIS. No reduction will be considered once
the arbitral tribunal is constituted, since the main thrust of DIS functions takes place prior
to the constitution of the arbitral tribunal. Thus, there is no room for a reduction of the DIS
costs after that stage.
In reducing the administrative fee, there are no set rates since this decision is taken on a case 11
by case basis, having regard to the input the DIS has delivered in each specific case.
C.
Schedule of Costs
The appendix to Section 40.5 DIS Rules, which forms part of the DIS Arbitration Rules, 12
sets out in detail the scale according to which the fees of the arbitrators (Nos 117) and the
DIS administrative fee (Nos 1819) are calculated.
1.
Arbitrators Fees
The Schedule of Costs was revised in 2004, with the current schedule being in force since 13
1 January 2005.
The revision of the schedule of costs has moderately increased the fees of the arbitrators 14
(which had been until that date largely unchanged since 1992) and has introduced mechanisms to create a more flexible system of remuneration.
Since 2005, the Schedule of Costs has not changed.
15
a. Standard Arbitrators Fee: The minimum fee for a sole arbitrator or chairman of an arbitral 16
tribunal amounts to EUR 1,365 and EUR 1,050 for a co-arbitrator for amounts in dispute
of up to EUR 5,000. There is no cap on the fee of the arbitrators, though the increase beyond EUR 100,000,000 is moderate at 0.05 per cent of the amount by which the amount in
dispute exceeds EUR 100,000,000 (No. 10).
If a counterclaim is filed, the arbitrators fees are calculated and subject to No. 12 on the 17
basis of the compound amount in dispute of claim and counterclaim.
If more than two parties are involved in the proceedings, the arbitrators fees are increased 18
by 20 per cent per additional party, up to a maximum of 50 per cent of the standard fee
according to Nos. 110.
716
19 The fee of the chairman of the arbitral tribunal (or the sole arbitrator) amounts to the
standard fee for a co-arbitrator, plus an increase of 30 per cent (No. 15).
20 If the parties request interim relief from the arbitral tribunal pursuant to section 20.1 DIS
Rules, an additional fee of 30 per cent of the arbitrators fee at the time of the request for
interim relief becomes due. At the time means that the uplift of 30 per cent is calculated
on the basis of the amount in dispute pending at the time of the request for interim relief.
21 b. Increase of the Standard Fee: Nos. 12 and 13 were introduced by the revision of the schedule of costs in 2005. No. 12 permits the DIS Appointing Committee to determine that in
cases where a counterclaim is filed, the fees of the arbitrators may also be calculated on the
basis of the separate amounts in dispute of claim and counterclaim instead of the combined
amount in dispute. In view of the digressive structure of the schedule of fees, the increase of
the fees of the arbitrators resulting from a calculation on the basis of the combined amount
in dispute sometimes does not accurately reflect the additional amount of work caused for
the arbitrators.
22 Under these circumstances, the arbitral tribunal and the parties may agree pursuant to No.
12 to increase the arbitrators remuneration by calculating their fees not on the basis of the
combined amount on dispute, but on the basis of the separate amounts in dispute of the
claim and the counterclaim.
23 Similarly, pursuant to No. 13, if the high factual or legal complexity increases the workload
of the arbitral tribunal without such additional workload being adequately reflected by the
standard fee as calculated by reference to Nos. 110, the arbitral tribunal may seek the consent of the parties to increase their fees by an uplift of up to 50 per cent of the standard fee.
24 If the parties and the arbitral tribunal do not reach agreement on the increase, the arbitral
tribunal may apply to the Appointing Committee for a decision on whether the arbitrators
fees are to be calculated on the basis of the separate amounts in dispute pursuant to No. 12
or on an increase of the arbitrators fees of up to 50 per cent of the standard fee pursuant
to No. 13.
25 While the request should be made early, in order to enable the arbitral tribunal and the parties to assess and make the corresponding advances, the request may also be made at a later
stage, i.e. when it becomes clear that the additional workload of the counterclaim will not
be adequately remunerated by the increase of the fee on the basis of the combined amount
in dispute or if the complexity of the dispute increases in the course of the proceedings.
26 The request of the arbitral tribunal must be reasoned and should indicate why the additional work of the tribunal will not be adequately remunerated by the standard fees, e.g. by
stating the time the arbitral tribunal has already spent or still expects to spend on the case.
27 Prior to a decision of the Appointing Committee, the parties will be given an opportunity
to comment on the arbitral tribunals request. In practice, this consultation process often
serves to establish an agreement between the parties and the arbitral tribunal on the increase of the arbitrators fees. If no agreement can be reached, the Appointing Committee
will decide, having due regard in particular to the hours spent or still to be spend by the
arbitral tribunal.
2.
717
Expenses of the Arbitral Tribunal
In 2005, DIS has issued guidelines for the reimbursement of expenses of the arbitral tri- 28
bunal. Pursuant to these guidelines, which apply save where the parties have agreed otherwise, arbitrators are entitled to reimbursement of travel expenses as follows: train journeys
are reimbursed at the cost of a first class ticket and air travels are reimbursed at the cost of a
business class ticket. If arbitrators travel by car, a car allowance of EUR 0.40 per kilometre
is reimbursed. Other forms of transport, e.g. taxi fares, are reimbursed against presentation
of the relevant receipts.
A flat fee of EUR 200 per night per arbitrator falls due for accommodation expenses in- 29
curred in connection with an oral hearing. Against receipt the costs of accommodation of
up to EUR 350 per night per arbitrator can be claimed.
Expenses other than travel or accommodation incurred by arbitrators in connection with 30
an oral hearing are reimbursed by a per diem allowance of EUR 150 per day per arbitrator.
Other expenses such as costs for a hearing, mailing and courier costs, telecommunications 31
services, photocopies, etc. can be charged at cost.
3.
DIS Administrative Fee
The DIS administrative fee is calculated also by reference to the amount in dispute. The 32
minimum DIS administrative fee amounts to EUR 350 due for amounts in dispute of up to
EUR 17,500. The maximum fee of EUR 25,000 falls due at the amount in dispute of EUR
3,900,000. In multi-party proceedings, an increase of 20 per cent of the administrative fee
per additional party is charged up to a maximum amount of EUR 37,500.5
If a counterclaim is filed or a subsidiary set-off (Hilfsaufrechnung) is declared, the DIS 33
administrative fee is calculated on the basis of the combined amount in dispute of claim
and counterclaim or set-off. As the subsidiary set-off effectively increases the amount in
dispute only when the arbitral tribunal is actually called upon to decide on the set-off, the
arbitral tribunal may elect not to request an advance for the prospective increase of its fees
at the time when the set-off is filed, but only when it becomes clear that it will have to
decide on the set-off. Under these circumstances, DIS will usually follow the course taken
by the arbitral tribunal and request the advance for the prospective increase of the DIS
administrative fee also at a later stage.6
The maximum combined DIS administrative fee for a claim and counterclaim amounts to 34
EUR 37,500.
A minimum fee of EUR 350 falls due irrespective of the amount in dispute of the coun- 35
terclaim, save where the all over maximum of amount of EUR 37,500 has already been
attained in multi-party proceedings. In such cases, the arbitral tribunal must bear in mind
when allocating the costs of the proceedings that the counterclaim has not occasioned an
increase of the DIS administrative fee.
This amount is attained when three additional parties are involved on claimant or respondent side and
the amount in dispute exceeds EUR 3,900,000.
See supra, Bredow/Mulder, Section 11 DIS Rules para. 5.
718
4.
Cost Examples
Amount in Dispute
Administrative
Fee
Fee of Chairman/
Sole Arbitrator
Fee of
Co-Arbitrator
Total Costs (net)

3 Member Tribunal
17,500
350
2,925
2,250
7,775
50,000
1,000
4,485
3,450
12,385
500,000
5,500
16,185
12,450
46,585
1,000,000
10,500
25,285
19,450
74,685
3,900,000
25,000
50,635
38,950
153,535
50,000,000
25,000
129,285
99,450
353,185
100,000,000
25,000
168,286
129,450
427,185
36 An online cost calculator is available on the DIS website,7 enabling parties to calculate the
prospective costs of an arbitral proceeding under the DIS Arbitration Rules.
D.
Provisional Assessment of the Amount in Dispute
37 Since the cost structure of DIS arbitral proceedings is dependent on the amount in dispute,
the DIS as well as the arbitral tribunal must assess the amount in dispute in order to be able to
calculate the prospective costs and request the parties to pay the respective advances.
38 If the claimant does not specify the amount in dispute in the statement of claim8 and the
amount is not assessable on the basis of the facts submitted in the statement of claim,
subsection 6 provides that the DIS as well as the arbitral tribunal are authorized to make a
provisional assessment of the amount in dispute in order to be able to request the necessary
advances.
39 The assessment is provisional and subject to a final determination by the arbitral tribunal at
the end of the proceedings, pursuant to subsection 2.
40 If the claimant or respondent (in the case of a counterclaim) does not provide any indication
as to the value of the claim, the DIS routinely sets the provisional amount in dispute at EUR
50,000. In cases where this amount does not correspond with the actual amount in dispute,
the DIS will adapt its assessment and correspondingly the amount of its administrative fee
if the parties submit information on the actual amount in dispute or if the arbitral tribunal
finally determines the amount in dispute.
7
8
See S. 6.3 (1) DIS Rules.
Section 41 Loss of Right to Object1

A party who knows that any provision of these Arbitration Rules or any other agreed
requirement under the arbitral procedure has not been complied with and yet proceeds
with the arbitration without stating his objection to such non-compliance without undue delay, may not raise that objection later.
I.
Section 41 DIS Rules is modelled on Article 4 UNCITRAL Model Law and 1027 Code of 1
Civil Procedure (Zivilprozessordnung ZPO), respectively.
A major advantage of arbitral proceedings in comparison to state court proceedings is the 2
greater flexibility of the procedure and the autonomy of the parties. In order to safeguard this
flexibility, Section 41 DIS Rules provides that where a party or an arbitral tribunal deviates
from the Arbitration Rules or any agreed procedure, the other party must raise an objection
without undue delay, or else it will be precluded from raising such an objection.
II.
Detailed Commentary
Section 41 DIS Rules does not give a specific time limit within which a party must raise an 3
objection to the deviation from the agreed procedure. The objection must be raised without
undue delay after the objecting party became aware of the deviation. The term without
undue delay2 is understood to mean without an intentional delay. This means that a party
after becoming aware of the deviation has an appropriate period of time to give the matter
consideration and respond to it. It depends on the circumstances of the case, in particular the
gravity and complexity of the deviation, to establish how much time is appropriate.
Section 18.2 DIS Rules is an example of a specific time limit for raising an objection, for 4
instance if an arbitrator does not fulfil any agreed qualifications.
In DIS arbitrations, when filing a counterclaim the respondents often deliver the counter- 5
claim directly to the party and the arbitral tribunal (in derogation of Section 11 DIS Rules).
If the claimant does not object to receiving the statement of counterclaim directly from the
respondent, it is deemed that the claimant has accepted the delivery of the statement of counterclaim as proper delivery and cannot raise an objection at a later stage that the counterclaim
was not properly delivered to him.
Arbitral tribunals or parties who intend to deviate from the agreed procedure without ex- 6
press approval of the other party are well advised to ensure that the other party is properly
informed of such a deviation in order to avoid that an objection is raised at a later stage.
Where the matter is contained in a written document (e.g. a procedural order), a party or the
arbitral tribunal should make sure that a proper record of delivery is provided to prevent the
excuse that the document was not properly received.
1
2
This corresponds to the German term unverzglich.
720

7 In practice, successful objections against procedural deviations are very rare, as arbitral
tribunals usually seek to obtain beforehand the consent from the parties to deviate from a
particular previously agreed procedure.
8 Since the arbitration rules contain very few mandatory norms and leave the procedure to be
established by the arbitral tribunal usually at the outset of the proceeding and in consultation with the parties there is under normal circumstances very little need for a deviation
from the agreed procedure by one of the parties

9 Similar provisions on the waiver of the right to object to procedural defects, inspired by Article 32 UNCITRAL Arbitration Rules, are found e.g. in Article 39 International Chamber of
Commerce (ICC) Arbitration Rules, Article 30 Swiss Rules, Article 31 Stockholm Chamber
of Commerce (SCC) Arbitration Rules and Article 31 Vienna Rules.
Section 42 Publication of the Arbitral Award1

The arbitral award may be published only with written permission of the parties and the
DIS. Under no circumstances may the publication include the names of the parties, their
legal representatives or the arbitrators or any other information specific to the arbitral
proceedings.
I.
Background
Neither the German arbitration law nor the UNCITRAL Model Law contains a provision 1
on the publication of awards.
II.
Detailed Commentary
The prohibition on publishing awards without the consent of the parties and the German 2
Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) is a corollary
of the duty of confidentiality (Section 43 DIS Rules).
To increase the willingness of the parties to consent to publication, Section 42 DIS Rules 3
provides that the names of the parties, their legal representatives and the arbitrators may not
be published. In exceptional circumstances, the parties may agree specifically to publish the
names of the parties, for instance if publishing the award is specific restitution ordered by
the arbitral tribunal, e.g. to rectify information previously published incorrectly by one of
the parties. Similarly, the names of arbitrators may be published in an award if the arbitrators
have consented to, or even specifically requested, publication of their names.2
Since most awards are factual decisions relating to a specific set of circumstances, the DIS 4
rarely publishes awards on the merits of a case since they are usually not of a wider interest
outside the specific case. Most awards published by the DIS relate to procedural aspects or
arbitration-related issues, e.g. decisions on the competence of the arbitral tribunal, the scope
or validity of an arbitration agreement or the challenge of an arbitrator.
The DIS publishes awards in the German Arbitration Journal (SchiedsVZ) and on its website. 5
1
2
No specific consent of the parties to publish the names of the arbitrators is required.
Section 43 Confidentiality1
43.1 The parties, the arbitrators and the persons at the DIS Secretariat involved in the
administration of the arbitral proceedings shall maintain confidentiality towards
all persons regarding the conduct of arbitral proceedings, and in particular regarding the parties involved, the witnesses, the experts and other evidentiary materials. Persons acting on behalf of any person involved in the arbitral proceedings
shall be obligated to maintain confidentiality.
43.2 The DIS may publish information on arbitral proceedings in compilations of
statistical data, provided such information excludes identification of the persons
involved.
I.
Background
1 Neither the German arbitration law nor the UNCITRAL Model Law contains a provision on
the confidentiality of arbitral proceedings. However, it is a recognized principle that parties,
arbitrators and arbitral institutions are under an obligation to maintain the confidentiality of
arbitral proceedings.
II.
Detailed Commentary
A.
2 Pursuant to Section 43.1 DIS Rules, the duty of confidentiality rests on all participants of
the proceedings, i.e. the parties, their legal representatives, the arbitrators, the persons assisting the parties or the arbitral tribunal in the conduct of the proceedings (e.g. secretarial
staff, translators, etc.) and the persons at the DIS Secretariat involved in administering the
proceedings. Not included, however, are witnesses and experts.
3 Confidentiality includes the duty to refrain from passing information to anyone not involved
in the proceedings. The duty of confidentiality does not prevent any participant from complying with statutory duties of information where such duties take precedence or where the
parties have agreed to exclude confidentiality.2
4 If a request for information about an arbitration is addressed to the German Institution of
Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) by someone not involved
in the proceedings, the DIS will inform the parties accordingly and ask them if the requested
information may be submitted to the third party. Unless the parties consent expressly, the
DIS will not provide the information requested.
5 However, since under German law the obligation on the DIS to maintain the confidentiality
of the proceedings does not create a privilege to deny access to the information, the DIS
will have to produce the requested information or documents if a third party, e.g. a public
prosecutor, requests information on the basis of a court order requiring the DIS to produce
the information in question.
1
2
para.631.
B.
723
Subsection 2 serves to clarify that the rules governing confidentiality do not prevent the DIS 6
from publishing statistical information on the development of DIS arbitration to the extent
that no specific data concerning individual cases can be discerned from it.

The provisions on confidentiality in institutional arbitration rules vary greatly. Some do not 7
contain explicit provisions, e.g. the Vienna Rules,3 or restrict the duty to maintain the confidentiality to the work of the institution, like the International Chamber of Commerce (ICC)
Arbitration Rules.4 Similar to the DIS Arbitration Rules, Article 44 Swiss Rules imposes a
duty of confidentiality on the parties, the arbitral tribunal and the administering body, the
Chambers.
Art. 41 Vienna Rules contains only a permission for the VIAC Board to publish awards unless one of the
parties has objected to it.
Art. 6 Statutes of the International Court of Arbitration and Art. 1 Internal Rules of the International
Court of Arbitration.
Section 44 Exclusion of Liability1

44.1 All liability of an arbitrator for any act in connection with deciding a legal matter
is excluded, provided such act does not constitute an intentional breach of duty.
44.2 All liability of the arbitrators, the DIS, its officers and its employees for any other
act or omission in connection with arbitral proceedings is excluded, provided
such acts do not constitute an intentional or grossly negligent breach of duty.
1 Neither the German arbitration law nor the UNCITRAL Model Law contains a provision
on the exclusion of liability.
2 Section 44.1 DIS Rules confirms that arbitrators are excluded from liability for any act in
connection with the decision on a legal issue. Unlike certain other arbitration rules, the
exclusion of liability does not cover an intentional breach of duty and is therefore in line with
the liability under German law of state court judges.2 The acts covered by the privilege
are the determination of the facts of the case, the application of the law and possibly also the
conduct of the proceedings.3
3 Liability for acts of arbitrators not in connection with the decision of legal issues, or of the
German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS), its
officers and its employees is excluded, provided that it does not constitute an intentional or
grossly negligent breach of duty.4 In view of possible mandatory restraints on the exclusion of
liability by domestic law,5 the DIS has refrained from introducing a more far-reaching exclusion of liability clause. An example of a blanket exclusion of liability may be found in Article
40 International Chamber of Commerce (ICC) Arbitration Rules.
1
2
3
4
5
Kreindler/Schfer/Wolf (2006), p. 172; Schtze-Theune (2011), DIS-Schiedsgerichtsordnung, 44 No. 1;
Lachmann (2008), p. 932.
Kreindler/Schfer/Wolf (2006), p. 172.
Similarly also Article 31 (1) LCIA Arbitration Rules, Article 48 SCC Arbitration Rules.
E.g. in Germany 276 (3) Civil Code (Brgerliches Gesetzbuch BGB) or 309 BGB.
PART IV
SELECTED AREAS AND ISSUES OF
ARBITRATION IN GERMANY

Stephan Wilske
Short Bibliography: Aguilar-Alvarez, To What Extent Do Arbitrators in International Cases Disregard the Bag and Baggage of National Systems?, in: van den Berg (ed.), International Dispute Resolution: Towards an International Arbitration Culture, The Hague 1998, p.139; van den Berg, The
ICC Arbitration Rules and Appointment of Arbitrators in Cases Involving Multiple Defendants, in:
Plantey/Bckstiegel/Bredow (eds), FS-Glossner, 1994; Berger, The Creeping Codification of the
Lex Mercatoria, The Hague 1998; Berger, The German Arbitration Law of 1998 First Experiences,
in: Briner/Fortier et al. (eds), FS-Bckstiegel, 2001, p. 31; Bischof, RVG: Erste Gebhrenprobleme
fr Schiedsverfahren und Mediation, SchiedsVZ 2004, 252; Borris, Abfassung von Schiedsklauseln
und Ausgestaltung des Schiedsverfahrens in Streitigkeiten aus gesellschaftsrechtlichen Vertragsverhltnissen, in: Bckstiegel/Berger/Bredow (eds), Mnchen 2005; Bredow, Schiedsgerichtsbarkeit
in Deutschland, in: Kronke/Melis/Schnyder (eds), Handbuch Internationales Wirtschaftsrecht,
Kln 2005; Briner, To What Extent Do Arbitrators in International Cases Disregard the Bag and
Baggage of National Systems?, in: van den Berg (ed.), International Dispute Resolution: Towards
an International Arbitration Culture, The Hague 1998, p.167; Gerold/Schmidt et al., Rechtsanwaltsvergtungsgesetz, Mnchen 2006; Glossner/Bredow/Bhler, Das Schiedsgericht in der Praxis, Heidelberg 1990; Gnther, Einschrnkungen der Erhebung von Dokumentenbeweisen aufgrund von
Vertraulichkeit und Geschftsgeheimnissen, in: Berger/Ebke et al. (eds), FS-Sandrock, 2000, p.342;
Hanefeld, Country Report Germany, in: Weigand (Hrsg.), Practitioners Handbook on International
Commercial Arbitration, Oxford 2010; Hunter, Arbitration in Germany A Common Law Perspective, SchiedsVZ 2003, 155; Konrad/Gurtner, Die Umsatzsteuer im Schiedsverfahren, Schriftenreihe
der Deutschen Institution fr Schiedsgerichtsbarkeit Band 24, Kln/Mnchen 2008; Kreindler/
Schfer/Wolff, Schiedsgerichtsbarkeit Kompendium fr die Praxis, Frankfurt 2006; Khn/Gantenberg, Confidentiality in Arbitration, in: Bachmann/Breidenbach et al. (eds), FS-Schlosser, 2005,
p.461; Lachmann, Handbuch fr die Schiedsgerichtspraxis, Kln 2008; Leisinger, Vertraulichkeit
im internationalen Schiedsverfahren, Mannheim 2012; Lew/Mistelis/Krll, Comparative International Commercial Arbitration, Hague/London/New York 2003; Lionnet/Lionnet, Handbuch
der internationalen und nationalen Schiedsgerichtsbarkeit, Stuttgart Berlin 2005; Lrcher/Lrcher,
Organisation eines Ad-hoc-Schiedsverfahrens, SchiedsVZ 2005, 179; Markert/Wilske, Arbitration
Law and Practice in Germany An Appealing Choice for International Commercial and Investment Dispute Resolution in the Heart of Europe, Revista Romana de Arbitraj 2008, 18; Martiny,
Mnchener Kommentar zum Internationalen Privatrecht, Mnchen 2010, Mayer/Kroi, Rechtsanwaltsvergtungsgesetz, Baden-Baden 2006; Mnch, Verjhrungshemmung durch Erhebung einer
Schiedsklage, in: Bachmann/Breidenbach et al. (eds), FS-Schlosser, 2005; Prtting, Vertraulichkeit
in der Schiedsgerichtsbarkeit und in der Mediation, in: Briner/Fortier et al. (eds), FS-Bckstiegel,
2001, p. 629; Raeschke-Kessler/Berger, Recht und Praxis des Schiedsverfahrens, Kln 1999; Risse/
Meyer-Burow, Umsatzsteuerpflicht von Schiedsrichterleistungen, SchiedsVZ 2009, 326; Rtzel/
Christ, Legal Privilege and Confidentiality in Germany, in: Greenwald/Russenberger (eds), Privilege and Confidentiality: An International Handbook, London 2012, p.133; Rtzel/Wegen/Wilske,
Commercial Dispute Resolution in Germany, Mnchen 2005; Schrder, Hamburg An International
Place of Arbitration and Conciliation, in: Plantey/Bckstiegel/Bredow (eds), FS-Glossner, 1994,
p.317; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005; Trappe, Arbitration in Germany
Some Aspects and Comparison of Law, SchiedsVZ 2013, 267; Trittmann/Kasolowsky, Germany, in:
Rowley (ed.), Arbitration World, London 2012, p.421; Wagner, in: Weigand (Hrsg.), Practitioners
Handbook on International Arbitration, Mnchen/Copenhagen 2002; Wagner, Schiedsgerichtsbarkeit in Scheidungssachen, in: Bachmann/Breidenbach et al. (eds), FS-Schlosser, 2005, pp.1025;
728
Wagner/Blau, Orders by Arbitral Tribunals: In the Stays of Party Agreements?, SchiedsVZ 2013,
6; Weber, Wider den Verlust des Bestellungsrechts bei Nichteinigung der Mehrparteiengegenseite
auf einen Schiedsrichter, in: Bachmann/Breidenbach et al. (eds), FS-Schlosser, 2005; Wilske, Internationalisation of Law in Arbitration A Way to Escape Procedural Restrictions of National Law?,
in: Vogt (ed.), Reflections on the International Practice of Law, Basel 2004, p.257; Wilske/Chen,
International Arbitration Practice in Germany, in: Campbell (ed.), Comparative Law Yearbook of
International Business, Vol.26, 2004, p.641; Wilske/Markert, Germany, in: Mistelis/Shore (eds),
World Arbitration Reporter, London 2010; Wilske/Rtzel/Fox, Supplementary International Commercial Arbitration Clauses, in: Campbell/Proksch (eds), International Business Transactions:
Commentary, Form and Documents, Vol. 4 Chapter 50.
Para.
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A. The German Tradition of and
Experience with ad hoc Arbitration . . . 2
B. The German Arbitration Law . . . . . . . . . 3
II. Requirements for a Valid Arbitration
Agreement under German Arbitration
Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
A. Arbitrability of Disputes . . . . . . . . . . . . . . 7
B. Formal Requirements for
Arbitration Agreements . . . . . . . . . . . . . . 8
C. Requirements as to the Content of
Arbitration Agreements . . . . . . . . . . . . . . 9
D. Mandatory Rules . . . . . . . . . . . . . . . . . . . 10
III. Conduct of ad hoc Proceedings under
the German Arbitration Law . . . . . . . . . . . . 11
A. The Essentials of ad hoc
Proceedings under the German
Arbitration Law . . . . . . . . . . . . . . . . . . . . . 12
1. Number of Arbitrators and
Qualification of Arbitrators in
ad hoc Proceedings . . . . . . . . . . . . . . . 12
2. Appointing Authority in ad hoc
Proceedings. . . . . . . . . . . . . . . . . . . . . . 13
3. Post-Dutco Multi-Party
Arbitration. . . . . . . . . . . . . . . . . . . . . . . 14
4. Challenge, Removal and
Replacement of Arbitrators in
5. Language of Arbitration in ad
hoc Proceedings . . . . . . . . . . . . . . . . . . 17
6. Place of Arbitration in ad hoc
Proceedings. . . . . . . . . . . . . . . . . . . . . . 18
B. General Conduct of ad hoc
Proceedings under the German
Arbitration Law . . . . . . . . . . . . . . . . . . . . . 19
1. Initiation of Proceedings in ad
hoc Proceedings . . . . . . . . . . . . . . . . . . 20
2. Challenge to Arbitral Tribunals
Jurisdiction in ad hoc Proceedings 21
3. Interim Relief in ad hoc
Proceedings. . . . . . . . . . . . . . . . . . . . . . 22
I.
Para.
4. Written Proceedings and Oral
Hearings in ad hoc Proceedings . . . 23
5. Establishing the Facts of the
Case in ad hoc Proceedings . . . . . . . 24
6. Confidentiality Obligations in
C. Making of Awards and
Termination of Proceedings in ad
hoc Proceedings . . . . . . . . . . . . . . . . . . . . . 31
D. Allocation of Costs by the Arbitral
Tribunal in ad hoc Proceedings. . . . . . . 34
E. Recourse against the Award in ad
hoc Proceedings . . . . . . . . . . . . . . . . . . . . . 35
1. Application for Setting Aside of
an Award in ad hoc Proceedings . . . 36
2. Enforcement of Awards in ad
hoc Proceedings . . . . . . . . . . . . . . . . . . 38
IV. Applicability of other Sets of Rules in
ad hoc Proceedings. . . . . . . . . . . . . . . . . . . . . . 40
A. German Statutory Law . . . . . . . . . . . . . . 40
B. Use of Foreign Procedural Law
and Procedural Tools in ad hoc
Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 41
C. Use of International Arbitration
Rules in ad hoc Proceedings . . . . . . . . . 42
V. Remuneration and Liability of
Arbitrators in ad hoc Proceedings . . . . . . . . 43
A. Arbitrator Contract under German
Law in ad hoc Proceedings . . . . . . . . . . . 44
B. Remuneration of Arbitrators in ad
hoc Proceedings . . . . . . . . . . . . . . . . . . . . . 45
1. Amount of Fees . . . . . . . . . . . . . . . . . . 45
2. Due Date, Advance Payment
and Options in the Case of
Non-Payment. . . . . . . . . . . . . . . . . . . . 52
3. Taxation of Arbitrator Fees and
Value Added Tax . . . . . . . . . . . . . . . . . 54
C. Liability of Arbitrators in ad hoc
Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . 56
VI. Conclusion on ad hoc Proceedings in
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Ad hoc Arbitration in Germany Wilske
I.
729
Introduction1
German law not only allows parties to an arbitration agreement to choose one of the mush- 1
rooming arbitration institutions administering arbitral proceedings;2 parties are also free to
agree on ad hoc arbitral proceedings, i.e. arbitration without the administrative support of an
institution.
A.
The German Tradition of and Experience with ad hoc Arbitration
Germany, in particular the North German Hanseatic cities such as Hamburg, has a long- 2
standing arbitration tradition.3 Hamburg Friendly Arbitration is probably the best-known
type of ad hoc arbitral proceeding4 in Germany, but also, for instance, in the construction
industry ad hoc arbitral proceedings have been conducted for over a century. A more recent
example is energy-related ad hoc arbitral proceedings relating to gas price review disputes.
Not surprisingly to practitioners from other countries, the number of ad hoc arbitral proceedings conducted in Germany per year is not known. Not much can be derived from
the number of (published) court decisions relating to ad hoc proceedings, e.g. setting aside
proceedings pursuant to 1059 Code of Civil Procedure (Zivilprozessordnung ZPO).
Also, only few ad hoc proceedings find their way into the media, like the still pending arbitral
proceedings initiated in 2004 by the Federal Republic of Germany against DaimlerChrysler
Financial Services AG, Deutsche Telekom AG and Toll Collect GbR.5 For these reasons, the
total number of ad hoc proceedings conducted in Germany per year can only be estimated.
Most probably, it does not exceed 1,000.6 It may be assumed that most ad hoc proceedings
in Germany are domestic rather than international and that a considerable number of cases
deal with disputes among shareholders of medium-sized German companies.7 Due to recent
changes to the legal framework in the energy sector, there has been an increase of arbitral
proceedings, both ad hoc as well as institutional, relating to energy law.
1
2
4
5
6
7
While the DIS is certainly the most important German arbitration institution, an arbitration user is by no
means limited to the DIS but has a choice of other institutions such as, e.g. the German Maritime Arbitration Association (GMAA), see www.gmaa.de, or the Chinese European Arbitration Centre (CEAC),
see www.ceac-arbitration.com; for a non-exhaustive list of German arbitration institutions see Rtzel/
Wegen/Wilske (2005), pp.424428.
Lrcher/Lrcher, SchiedsVZ 2005, 179 (180); Schrder, FS-Glossner (1994), p.317; Trappe, SchiedsVZ2013, 167.
Schrder, FS-Glossner (1994), p.319.
In these proceedings, the Federal Republic of Germany is, inter alia, seeking damages, contractual penalties and reimbursement of lost revenues in the total amount of more than EUR5 billion that allegedly
arose from delays in the operability of the toll collection system, see DaimlerChrysler Online Annual
Report 2005, http://reports.equitystory.com/cgi-bin/daimler/show.ssp?report_id=gb2005&language
=English&fn=content (Consolidated Financial Statements Notes Other Notes 31. Legal Proceedings); the length of the proceedings is due to the high complexity of the subject matter and the replacement of the chairperson for health reasons, it is not typical for ad hoc arbitral proceedings in Germany.
Lachmann (2008), para.115. With certain notable exceptions, preference for ad hoc proceedings is based
in many cases on an overestimation of the administrative costs of arbitration institutions (see Karrer,
Naives Sparen birgt Gefahren Kostenfragen aus Sicht der Parteien und des Schiedsgerichts, SchiedsVZ
2006, 113 (114)) and an underestimation of the services an arbitration institution may offer, in particular, to inexperienced parties and counsel.
730
B.
The German Arbitration Law
3 Ad hoc proceedings are governed by the 10th Book of the ZPO (German arbitration law).
In fact, the German arbitration law, while addressing both ad hoc proceedings and administered arbitration, is because of its dispositive character of particular significance to ad
hoc proceedings compared with administered arbitration where the respective rules of the
arbitration institution replace the respective rules of the German arbitration law.
4 The German arbitration law comprises only 41 provisions ( 10251066 ZPO), which
compared with the more than 1,000 provisions which govern regular German court proceedings and compared, e.g. with the 110 provisions of the English Arbitration Act already
demonstrates the high degree of autonomy which is left to the parties of ad hoc proceedings
in Germany. The 10th Book of the ZPO incorporates the UNCITRAL Model Law (ML)
with very few exceptions, for the most part generally choosing exactly the same wording
as that contained in the UNCITRAL Model Law itself and also following the order of the
provisions of the UNCITRAL Model Law.8
5 Pursuant to 1025(1) ZPO, the 10th Book applies to all arbitral (ad hoc or administered)
proceedings, whether national or international, that have their place of arbitration in Germany.9 It basically has the function of providing default rules for situations which are not governed by the parties arbitration agreement. The German arbitration law does not prescribe
that apart from the requirement of the place of arbitration being in Germany there be
any link to Germany. Accordingly, non-German parties are free to conduct their arbitration
in Germany even if both the issue of the dispute and the applicable law are not related to
Germany. Not surprisingly, such ad hoc arbitrations which are not related to Germany are
not uncommon given Germanys excellent arbitration infrastructure and its central location
within Europe.10
II.
Requirements for a Valid Arbitration Agreement under German Arbitration

Law
6 The requirements for a valid arbitration agreement under the German arbitration law are
in line with the UNCITRAL Model Law and international arbitration practice and, thus,
hold no surprises for any non-German practitioner. Whilst it is relatively easy to satisfy these
requirements, any practitioner drafting an arbitration agreement in line with international
standards is well advised to also consider whether additional issues should already be addressed in the arbitration agreement, such as composition of the arbitral tribunal (infra, paras
12 et seq.), conduct of the proceedings (infra, paras 19 et seq.) and allocation of costs (infra,
para. 34). Also, the parties should always consider whether there are issues which, despite
their arbitrability, are for particular reasons better decided by either state courts or a different arbitral tribunal under other rules.
10
Berger, FS-Bckstiegel (2001), p.33; Berger (1998), p.52; Wilske/Markert, in: Mistelis/Shore (2010), p.
2; Weigand-Hanefeld (2009), Germany, para. 7.02; Trittmann/Kasolowsky, in: Rowley (2012), para. 2.1.2.
Rtzel/Wegen/Wilske (2005), pp.112-113; certain sections of the 10th Book of the ZPO regarding, e.g.
court ordered interim measures, court assisted taking of evidence and enforcement of foreign awards
apply irrespective of seat, see Wilske/Chen, in: Campbell (2004), pp.642-643 and Rtzel/Wegen/Wilske
(2005), p.113.
A.
731
Arbitrability of Disputes
Any claim involving an economic interest can be the subject of an arbitration agreement 7
(1030(1) sentence 1 ZPO).11 Even an arbitration agreement concerning claims not involving an economic interest has legal effect to the extent that the parties are entitled to conclude
a settlement on the issue in dispute (1030(1) sentence 2 ZPO). There is no exhaustive list
of disputes that are not arbitrable in Germany. Basically, only those issues for which the state
has reserved exclusive rights to adjudication before the domestic courts are not arbitrable.12
Meanwhile, commentators are steadfastly arguing in favour of expanding the scope of arbitrability to fields of law formerly reserved to domestic courts.13
B.
Formal Requirements for Arbitration Agreements
Generally, the arbitration agreement itself must be contained either in a document signed by 8
the parties or in an exchange of letters, facsimiles, emails or other means of telecommunication which provide a record of the agreement (1031(1) ZPO). 1031(2) ZPO relaxes
the requirement of written form in that it provides that non-objection by any of the parties is
deemed consent if such understanding reflects usage in a particular field.14 Special provisions
for arbitration agreements apply to particular circumstances involving consumers or charter
parties.15 Finally, any non-compliance with the formal requirements is cured by entering into
argument on the substance of the dispute in the arbitral proceedings (1031(6) ZPO). Of
course, it is highly recommendable for ad hoc proceedings where no arbitration institution
reviews whether there is any valid arbitration agreement to have the parties consent to
arbitration documented in an unequivocal manner and not to rely upon statutory exceptions
or case law.
C.
Requirements as to the Content of Arbitration Agreements
The requirements as to the content of arbitration agreements are very limited. Pursuant to 9
1029(1) ZPO, it is sufficient for an arbitration agreement to be clearly linked to a particular
legal relationship, e.g. disputes arising out of or in connection with a certain contract, or to
a specific existing dispute which the parties unequivocally want to make subject to arbitration.16 While it is certainly recommended that an arbitration agreement contain additional
provisions17 supplementing the core arbitration clause, they are not mandatory because the
11
12
13
14
15
16
17
See supra, Part II, Huber/Bach, Commentary on 1030 for details relating to the interpretation of this
provision.
See supra, Part II, Huber/Bach, 1030 paras 7 et seq.; Berger (1998), p.49; for examples of disputes not
arbitrable under German law see Zller-Geimer (2014), 1030 para. 6.
Wagner, FS-Schlosser (2005), pp. 1025 et seq.; Huber, Schiedsvereinbarungen im Scheidungsrecht,
SchiedsVZ 2004, 280 et seq. (arguing inter alia in favour of arbitrability of claims of spouses relating to the
matrimonial property regime and claims for alimony).
This might be the case, inter alia, in dealings between merchants in the sense of 1 German Commercial
Code (Handelsgesetzbuch HGB), see Zller-Geimer (2014), 1031 para. 29.
See supra, Part II, Trittmann/Hanefeld Commentary on 1031 ZPO for details relating to the interpretation of this provision; see also Rtzel/Wegen/Wilske (2005), pp.115-118; Wilske/Markert, in: Mistelis/
Shore(2010), p. 5; Bredow, in: Kronke/Melis/Schnyder (2005), p.2035.
See supra, Part II, Trittmann/Hanefeld Commentary on 1029 ZPO for details relating to the interpretation of this provision; see also Wilske/Markert, in: Mistelis/Shore(2010), p. 4.
In general, it is recommended to additionally provide for clauses relating to the place of arbitration, the
number of arbitrators (and their qualification, if needed), the language of the arbitral proceedings and
732
default rules of the 10th Book of the ZPO will fill the gaps.18 Basically, parties to German
ad hoc proceedings are therefore in a comparable situation to parties who have agreed on
administered arbitration.
D.
Mandatory Rules
10 Not subject to party autonomy are the very basic, general rules of procedure stipulated in
1042(1) ZPO, namely that the parties shall receive equal treatment and that each party
shall be given the full opportunity to present its case.19 However, the German Federal Court
of Justice (Bundesgerichtshof BGH) has repeatedly ruled that while arbitrators must ensure
equal treatment and the right to be heard to the same extent as national courts, unlike judges
they are not subject to the rather strict obligation pursuant to 139 ZPO20 to discuss the
relevance of the factual or legal issues of the case with the parties at an early stage and provide
them with indications and feedback.21 Thus, while equal treatment and the right to be heard
are safeguarded, an arbitral tribunal is not burdened with too many formalities.
III. Conduct of ad hoc Proceedings under the German Arbitration Law

11 The German arbitration law grants in line with the UNCITRAL Model Law flexibility
and a corresponding high degree of party autonomy with respect to both the essentials as
well as the general conduct of ad hoc proceedings.
A.
The Essentials of ad hoc Proceedings under the German Arbitration Law
1.
Number of Arbitrators and Qualification of Arbitrators in ad hoc Proceedings
12 Unless otherwise decided by the parties, the number of arbitrators in German ad hoc proceedings is three (1034(1) ZPO). The parties are free to agree on any other number of
arbitrators, including an even number as was provided for in the German arbitration law
in effect before 1998.22 However, parties in German ad hoc proceedings rarely agree on any
other number of arbitrators but one or three.23 While the German arbitration law does not
restrict the parties right to select whoever they consider fit (subject to agreed qualifications
and impartiality and independence pursuant to 1036 ZPO), active judges and civil servants
require official permission (Nebenttigkeitsgenehmigung). Active judges may only be granted
such permission if they act as sole arbitrator or chairperson. Failure to obtain such valid
permission may even give the parties the right to seek recourse against the award that is,
18
19
20
21
22
23
the applicable law (whereby it is often overlooked by German practitioners that the Convention on the
International Sale of Goods, the so-called Vienna Sales Convention is part of German law); For supplementary arbitration clauses for the advanced practitioner see Wilske/Rtzel/Fox, in:Campbell/Proksch,
last updated August 2013.
OLG Karlsruhe 28.02.2012, NJOZ 2012, 809.
BGH 26.09.1985, BGHZ 96, 40 (47); id. 11.11.1982, BGHZ 85, 288 (291).
BGH 11.11.1982, BGHZ 85, 288 (291 seq.); OLG Mnchen 29.10.2009, SchiedsVZ 2011, 230 (232);
OLG Stuttgart 30.07.2010, SchiedsVZ 2011, 49 (53); see also Raeschke-Kessler/Berger (2009), paras649669; Musielak-Voit (2013), 1042 para. 13 with further references.
1028 ZPO pre-1998; while very uncommon, e.g. the rules of the GMAA provide for the Arbitral Tribunal to consist of two arbitrators unless otherwise agreed by the parties ( 3 GMAA Arbitration Rules).
Trappe, SchiedsVZ 2013, 167 (169).
733
according to one rather rigid and questionable point of view.24 With respect to qualifications,
it is not unusual to require, at least, the chairperson to be qualified for the office of judge (Befhigung zum Richteramt), i.e. to have passed the second German state exam in law. In most
cases, it is rather recommendable to preserve flexibility. Indeed, it is not unusual that even in
domestic ad hoc proceedings governed by German law, in particular shareholder disputes,
the parties attribute more significance to neutrality than knowledge of the applicable law and,
accordingly, may agree on a Swiss or Austrian chairperson.
2.
Appointing Authority in ad hoc Proceedings
Failing an agreement between the parties on the appointment of the arbitrators, a sole arbi- 13
trator is appointed upon request of a party by the court if the parties are unable to agree on
his or her appointment.25 As a default rule, the court also appoints the third arbitrator who
acts as chairperson (1035(3) sentence 3 ZPO). Arbitration clauses for ad hoc proceedings
often provide that, failing agreement, the president of a local chamber of commerce appoints
the chairperson or an arbitrator on behalf of the defaulting party. It is usually recommendable
(though not always done) to check prior to accepting such clause whether (i.) such appointing authority exists at all,26 (ii.) it is willing to perform the task assigned to it,27 and (iii.) it is in
a good position to assess which person has the required or sufficient qualification, availability
and logistical support to act as arbitrator. In most cases, an arbitration institution such as the
German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) is
by far the better appointing authority. Unless the parties agreed on certain qualifications of
the arbitrator(s), the appointing authority is not limited to appointing only lawyers (even
though this is, at least, the practice of courts appointing arbitrators on behalf of defaulting
parties).
3.
Post-Dutco Multi-Party Arbitration
The classic Dutco problem28 of multi-party arbitration has been addressed by 1034 (2) 14
ZPO.
24
25
26
27
28
Schwab/Walter (2005), Chap.9 para.3 and Chap.12 para.9; KG Berlin 06.05.2002, SchiedsVZ 2003, 185
(186) (with critical comment by Mecklenbrauck, pp.186-187); but see also OLG Stuttgart 16.07.2002,
SchiedsVZ 2003, 84 (87) denying recourse in the case of a missing official permission; the question was
explicitly left open by BGH 11.02.1971, BGHZ 55, 313 (320).
Pursuant to 1062(1) ZPO, the Higher Regional Court (Oberlandesgericht OLG) designated in the
arbitration agreement or, failing such designation, the OLG in whose district the place of arbitration is
situated, is competent for such appointment of an arbitrator.
For an extreme non-German (!) case in which the institution was a non-existent front put forth by
the opposing party in an effort to defraud its counterpart, see Rogers, The Vocation of the International
Arbitrator, (2005) 20 Am. U. Intl L. Rev. 957 (971, footnote 44).
See, e.g., OLG Mnchen 05.04.2012, docket no. 34 SchH 1/12, where the President of the Higher
Regional Court (OLG) of Munich had refused to act as appointing authority and the chairman of an
arbitral tribunal thus had to be appointed by the court competent pursuant to 1062, 1035 ZPO, which
happened to be the Higher Regional Court of Munich (which is to be distinguished from its President).
In the famous Dutco decision handed down by the French Cour de Cassation on 7January 1992, an ICC
award was annulled because of the inherent unfairness of the claimant having a greater influence on the
composition of the arbitral tribunal than the two respondents who had initially refused to nominate an
arbitrator jointly and had only done so upon threats by the ICC to appoint an arbitrator on their behalf
whereby they had reserved their right to challenge the regularity of the appointment procedure (Lew/
Mistelis/Krll (2003), paras 16-14 to 16-16); see Siemens AG/BKMI Industrieanlagen GmbH v. Dutco
734
15 In light of the Dutco decision handed down by the French Cour de Cassation on 7January 1992,
1034(2) ZPO provides that if the arbitration agreement grants preponderant rights to one
party with regard to the composition of the arbitral tribunal which place the other party at a
disadvantage, that other party may request the court to appoint the arbitrator or arbitrators in
deviation from the nomination made, or from the agreed nomination procedure.29 Standard
ad hoc arbitration agreements often fail to adequately address the so-called Dutco problem30
in multi-party arbitration.31 In the case of shareholder disputes involving multiple shareholders on one side of the arbitral proceedings, the BGH recently limited the scope of application
of 1034 (2) ZPO.32 However, this development should be regarded with great caution33
and it is very uncertain if and how this jurisprudence will apply to other constellations of
multiparty arbitration. Parties are precluded from raising an objection against the unequal
composition of the arbitral tribunal in setting aside proceedings when they did not make use
of their possibilities pursuant to 1034(2) ZPO.34 Pursuant to 1034 (2) sentence 3, 1032
(3) ZPO, the arbitral proceedings may continue when a request according to 1034 (2)
ZPO is pending with a state court, thereby any undue delay is prevented.
4.
Challenge, Removal and Replacement of Arbitrators in ad hoc Proceedings
16 1036 to 1039 ZPO incorporate almost verbatim Articles12 to 15 ML on the grounds for
challenging arbitrators, the challenge procedure, failure or impossibility of an arbitrator to
act and the procedure for appointing a substitute arbitrator in ad hoc proceedings.35 Accord-
29
30
31
32
33
34
35
Construction Company, Yearbook XVIII (1993), 140; original in French (1992) 119 JDI 712 with note by
Jarrosson, p.726; see also van den Berg, FS-Glossner (1994), pp.29-31.
See supra, Part II, Nacimiento/Abt/Stein Commentary on 1034 ZPO for details relating to the interpretation of this provision. Under the old German arbitration law, i.e. the applicable law prior to 1 January
1998, such nomination procedure would have been invalid and it was subject to interpretation of the
respective arbitration agreement whether the invalidity would extend to the whole arbitration agreement
(cf. Schwab/Walter (2005), Chap.9-12 and Chap. 6-8; see e.g. BGH 19.12.1968, BGHZ 51, 255 (263)
(deciding that the whole arbitration agreement is void because of lack of any indication of whether the
parties would have concluded an arbitration agreement with a different stipulation relating to the composition of the arbitral tribunal).
But see Weber, FS-Schlosser (2005), p.1063 arguing against an unwarranted extension of the ratio of the
Dutco decision.
In fact, von Schlabrendorff concluded in 2001 that all efforts to draft a model arbitration clause for multiparty situations in ad hoc proceedings have failed (see von Schlabrendorff, Mehrparteienstrukturen in
M&A-Transaktionen, in: DIS-MAT VIII (2001), 27 (35)); but also see Borris, in: Bckstiegel/Berger/
Bredow (2005), pp.127-129 (with further references to other efforts by Raeschke-Kessler, Trittmann, G.
Bredow, Weber and Zilles, on p.118).
The BGH stated that it does not cause a disadvantage pursuant to 1034 (2) ZPO if multiple shareholders on one side of the dispute are forced to apply the majority principle when appointing an arbitrator,
BGH06.04.2009, NJW 2009, 1962 (Schiedsfhigkeit II); BGH 24.11.2008, ZIP 2009, 216 (Schutzgemeinschaftsvertrag II); for comparison see 13.2 DIS Rules and 8.3 DIS Supplementary Rules for
Corporate Law Disputes 09 (DIS-SRCoLD) both providing that in case the parties on one side of the
dispute cannot agree on an arbitrator the DIS Appointing Committee shall select the arbitrators for both
sides of the dispute.
See Riegger/Wilske, Auf dem Weg zu einer allgemeinen Schiedsfhigkeit von Beschlussmngelstreitigkeiten?, ZGR 2010, 733 (743); Wolff, Beschlussmngelstreitigkeiten im Schiedsverfahren, NJW 2009,
2021 (2023) criticizing that the BGH is applying considerations of substantive law on procedural rules.
OLG Frankfurt a.M. 24.11.2005, SchiedsVZ 2006, 219.
See supra, Part II, Nacimiento/Abt/Stein Commentary on 1036-1039 ZPO for details relating to
the interpretation of these provisions; see also Rtzel/Wegen/Wilske (2005), pp.122-124 with further
735
ingly, an arbitrator may be challenged only if circumstances exist that give rise to justifiable
doubts as to his or her impartiality or independence, or if he or she does not possess the
qualifications agreed on by the parties. Pursuant to 1037(1) ZPO, the parties are free to
agree on a procedure for challenging an arbitrator (but rarely make use of such freedom). In
the absence of such an agreement, a party who intends to challenge an arbitrator must, within
two weeks after becoming aware of the constitution of the arbitral tribunal or of any basis
for challenge, send a written statement indicating its reasons for the challenge to the arbitral
tribunal (1037(2) ZPO). Unless the challenged arbitrator withdraws or the other party
agrees to the challenge, the arbitral tribunal decides on the challenge. The entire arbitral tribunal, i.e. including the challenged arbitrator, is entitled to rule on the challenge.36 However,
in practice the challenged arbitrator usually abstains from participating in the decision.37 If
the challenge is unsuccessful, the challenging party may request judicial review38 within one
month, or some other mutually agreed upon time limit, after having received notice of the
failed challenge. Most important for U.S. arbitration practitioners is that the standards for
impartiality are the same for all arbitrators, including the chairperson of an arbitral tribunal.39
Although the IBA Guidelines on Conflicts of Interests in International Arbitration, based on
the IBA Rules of Ethics for International Arbitrators and approved on 22May 2004 by the
Council of the International Bar Association, have not been incorporated into the ZPO, the
trend in Germany amongst the (officially non-existent) arbitration bar is to give quite some
weight to such internationally agreed standards.40
5.
Language of Arbitration in ad hoc Proceedings
According to 1045(1) ZPO, the parties are free to choose the language or languages to 17
be used in the arbitral proceedings but if they do not do so, the arbitral tribunal determines
the appropriate language. It is highly recommendable that foreign parties attach importance
to having an agreement with respect to the language of the arbitration, as this decision has
immediate consequences with respect to use of counsel, composition of the arbitral tribunal,
use of experts, costs of translations, etc. Conducting arbitral proceedings in English is no
problem for most German arbitration practitioners acting as counsel,41 but it is recommended to verify the language capabilities of potential arbitrators prior to nomination in
order to avoid subsequent recommendations, so to speak, by the arbitral tribunal to switch
languages.
36
37
38
39
40
41
references.
See BeckOK ZPO/Wolf-Eslami (2013), 1037 para. 6 with further references; while such interpretation
of 1037 ZPO is criticized for violating the principle that one shall not be judge in ones own cause
(Schwab/Walter (2005), Chap. 14, para. 22), it is overwhelmingly accepted because the tribunals decision is subject to review by a state court under 1037 (3) ZPO.
For challenges under the DIS Rules, which contain the same wording as 1037 ZPO, see infra, Part III,
Bredow/Mulder, DIS Section 18 para. 12; this also is common practice in challenges under 1037 ZPO.
Pursuant to 1062(1) ZPO, the OLG designated in the arbitration agreement or, failing such designation, the OLG in whose district the place of arbitration is situated, is competent for such challenge of an
arbitrator.
OLG Frankfurt a.M. 04.10.2007, SchiedsVZ 2008, 96; Kreindler/Schfer/Wolff (2006), para.538 (stating
that the IBA Guidelines reflect the international standard in the sense of best practice).
Judges or retired judges acting as arbitrators quite often have more difficulties with arbitral proceedings
conducted in the English language.
736
6.
Place of Arbitration in ad hoc Proceedings
18 The parties are free to agree on the place of arbitration. Failing such agreement, the place of
arbitration is determined by the arbitral tribunal having regard to the circumstances of the
case, including the convenience of the parties (1043 ZPO). As the parties do not need to
hold hearings at the place of arbitration (1043(2)ZPO), consent to one partys suggested
place of arbitration can be traded for consent to holding certain hearings elsewhere.42 When
deciding on a German place of arbitration, parties might want to consider convenience factors, such as the availability of experienced counsel and arbitrators in order to avoid travel
costs. Practising attorneys and law professors have initiated so-called arbitration circles with
the goal of fostering commercial arbitration in Frankfurt, Munich, Stuttgart and Hamburg.43
A so-called Dispute Resolution Forum exists in the Dsseldorf/Cologne region. All of these
locations can be conveniently reached from abroad (and from other German cities) and have
all necessary resources and logistics, including experienced counsel and arbitrators.
B.
General Conduct of ad hoc Proceedings under the German Arbitration Law
19 Failing an agreement by the parties, and in the absence of provisions in the 10th Book of the
ZPO, the arbitral tribunal conducts the arbitration in a manner that it considers appropriate (1042(4) ZPO). However, it is good practice and strongly recommended to agree on
procedural rules governing the ad hoc arbitration once the arbitral tribunal is constituted.
Such agreement by the parties on procedural issues is regularly incorporated either in a procedural order by consent, terms of reference or the arbitrator contract (see infra, para. 44).
In light of a recent decision by the Higher Regional Court of Frankfurt44 (Oberlandesgericht
Frankfurt OLG Frankfurt) particular caution is recommended with regard to procedural
orders by consent and terms of reference. The OLG Frankfurt set aside an arbitral award
because it found that the arbitral tribunal had unilaterally deviated from procedural rules
that were contained in a procedural order by consent. The OLG Frankfurt held that in the
particular case the process leading up to the procedural order was framed as party negotiations and the result accordingly was to be considered a party agreement, even if contained
in a procedural order.45 It further held that unilateral deviation from such party agreement
by the arbitral tribunal constitutes a ground on which the award could be challenged under
1059 (2) (No.1) ZPO.46 In order to avoid falling in the Frankfurt trap, arbitral tribunals
are advised to make it very clear in the procedural order that the arbitral tribunal reserves its
discretion to alter the procedural order at any time and that any party agreement restraining
the tribunals discretion should be explicit and in writing.47
1.
Initiation of Proceedings in ad hoc Proceedings
20 Unless otherwise agreed by the parties, ad hoc proceedings commence on the date on which
a request for arbitration is received by the respondent, whereby the request must state the
42
43
44
45
46
47
See Lrcher/Lrcher, SchiedsVZ 2005, 179 (182) with further references.

Chambers Client Report, Issue 15, February 2006, Germany, p.48; Wilske/Chen, in: Campbell (2004),
p.656.
OLG Frankfurt a.M. 17.02.2011, SchiedsVZ 2013, 49; for a detailed case summary see Wagner/Blau,
SchiedsVZ 2013, 6 (8 seq.).
OLG Frankfurt a.M. 17.02.2011, SchiedsVZ 2013, 49 (55).
See OLG Frankfurt a.M. 17.02.2011, SchiedsVZ 2013, 49 (56 et seq.).
Wagner/Blau, SchiedsVZ 2013, 6 (15); Wilske/Heuser, Higher Court in Germany finds procedural
order is an instrument of parties agreement, IBA Newsletter Arbitration News, Vol. 17 (2) 2012, p. 73.
737
names of the parties and the subject matter of the dispute and contain a reference to the
arbitration agreement (1044 ZPO). With respect to the limitation period, 204(1) No.11
Civil Code (Brgerliches Gesetzbuch BGB) states that the limitation period shall cease to
run upon commencement of the arbitral proceedings. While on the one hand, the parties
are free to stipulate their own rules relating to commencement of the arbitral proceedings
and the effect on limitation periods,48 in cases with obstructive respondents claimants might
experience difficulties in providing the required evidence49 as to whether or not the request
for arbitration was received by the respondent and if so, when. As one can easily imagine, in
a situation where the decision to file a request for arbitration is not made prior to the last day
of the limitation period, there might be very practical problems in securing such evidence.50
One method employed in practice to circumvent such problems is to file a claim with the
national court if there are arguments against the validity of the arbitration clause.51 This at
least avoids claims from becoming time-barred. However, one should be aware that this can
lead to the replacement of arbitral proceedings by state court proceedings, if the other party
chooses not to object under 1032 ZPO but rather to accept the state courts competence.
In any event, the parties are strongly recommended to have a close look at the notice and
service of process sections in the relevant agreements and provide for practical solutions
(e-mail transmission or service on a neutral third party to halt the limitation period, etc.).52
2.
Challenge to Arbitral Tribunals Jurisdiction in ad hoc Proceedings
In ad hoc proceedings, any challenge to the arbitral tribunals jurisdiction must be raised not 21
later than the date of submission of the statement of defence (1040(2) ZPO). If the arbitral
tribunal rules in favour of its own jurisdiction at this stage, then any party may within one
month of the receipt of such decision request the court to conclusively decide on the matter
of competence (1040(3)ZPO).53 Failure to make such a request to the court precludes
a challenge of the arbitral tribunals jurisdiction in subsequent setting aside or enforcement
proceedings.54 Pursuant to 1040 (3) sentence 3 ZPO, the arbitral proceedings may continue when such request is pending with a state court, thereby any undue delay is prevented.
48
49
50
51
52
53
54
Mnch, FS-Schlosser (2005), p.613 (634).

MnchKommZPO-Mnch (2013), 1044 para.12 (stating that the burden of proof is on the claimant).
In contrast hereto, arbitral proceedings pursuant to 6.1 DIS Rules commence upon receipt of the statement of claim by a DIS Secretariat.
von Bernuth/Hoffmann, Nach der Schuldrechtsreform: Verjhrungshemmung bei Klagen vor einem
ordentlichen Gericht trotz Schiedsklausel, SchiedsVZ 2006, 127 et seq.
Unless otherwise agreed by the parties, if the whereabouts of a party or of a person entitled to receive
communications on his behalf are not known, any written communication shall be deemed to have been
received on the day on which it could have been received at the addressees last-known mailing address,
place of business or habitual residence after proper transmission by registered mail/return receipt requested or any other means which provides a record of the attempts to deliver it there (1028 (1) ZPO);
see supra, Part II, Wagner Commentary on 1028 ZPO for details relating to the interpretation of this
provision.
See supra, Part II, Huber/Bach Commentary on 1040 ZPO for details relating to the interpretation of
this provision.
BGH 29.06.2005, SchiedsVZ 2005, 259 (with comment by Wilske/Krapfl, IBA Arbitration Committee
Newsletter February 2006, pp.21-22; BGH 27.03.2003, SchiedsVZ 2003, 133 = (2004) Int.A.L.R. N-23.
738
3.
Interim Relief in ad hoc Proceedings
22 The German arbitration law provides for a dual system for parties to an arbitration to seek
interim measures of protection, i.e. both the local courts and the arbitral tribunal are vested
with the power to order interim measures, unless otherwise agreed by the parties (see supra
1033 and 1041 ZPO). Accordingly, unless otherwise agreed by the parties, a party has the
option to request a court or the arbitral tribunal to issue interim measures of protection at
any stage of the arbitral proceedings.55 As German courts can order interim measures even
ex parte far more quickly than a three-member arbitral tribunal (that often has yet to be
constituted), it is generally not advisable to opt out of this dual system.
4.
Written Proceedings and Oral Hearings in ad hoc Proceedings
23 Subject to agreement by the parties, the arbitral tribunal decides whether to hold oral hearings or whether the proceedings are to be conducted on the basis of documents and other
materials only (1047(1) ZPO). Further, 1047(1) ZPO also stipulates that unless the
parties have agreed that no hearings are to be held, the arbitral tribunal must hold such hearings at an appropriate stage of the proceedings, if so requested by a party. Accordingly, while
the parties may always agree to do so, it is only if no party objects that the arbitral tribunal
may decide the case on the basis of documents only. Germany also fully adopted Article24
ML, which includes issues which are obvious in German court proceedings, such as the
parties right to be given sufficient advance notice of any hearing and of any meeting of the
arbitral tribunal for the purpose of taking evidence (1047(2) ZPO) and the obligation that
all statements, documents or other information supplied to the arbitral tribunal by one party
shall be communicated to the other party (1047(3) ZPO).
5.
Establishing the Facts of the Case in ad hoc Proceedings
24 Pursuant to 1042(4) sentence 2 ZPO, the arbitral tribunal has the power to determine the
admissibility of taking evidence, take evidence and freely assess such evidence.56 Again, for
a German trial lawyer, these rights of a court or arbitral tribunal are self-evident. These rules
should, however, remind a common law practitioner that the arbitral tribunal is intended to
be in charge of the taking of evidence and to actively manage the case.57 This also includes
the right of the arbitral tribunal not to further pursue evidence it considers irrelevant to the
case.58 Nevertheless, the arbitral tribunal is not forced to actively assume the power granted
to it by the German arbitration law. It may also, depending on the composition of the arbitral
tribunal and the parties, follow, e.g. a more U.S. style approach with a rather passive arbitral
tribunal throughout the proceedings which, apart from supervising the compliance of rules
agreed upon by the parties, does not take an active role prior to the announcement of its
award.59 However, under the German arbitration law, an arbitral tribunal has sufficient
55
56
57
58
59
See supra, Part II, Kreindler/Schmidt, Commentary on 1033 and supra, Part II, Schfer, Commentary on
1041 ZPO for details relating to the interpretation of these provisions; see also Rtzel/Wegen/Wilske
(2005), p.129.
Schwab/Walter (2005), Chap.15 paras7-17; for further details relating to the interpretation of this provision see supra, Part II, Sachs/Lrcher Commentary on 1042 ZPO.
Schwab/Walter (2005), Chap.15 para.35; Rtzel/Wegen/Wilske (2005), p.130.
Musielak/Voit (2013), 1042 para. 21.
Weigand-Hanefeld (2009), Germany, para.7.93; for a rather pointed description of the role and function
of a US judge see Magruder, Mr. Justice Brandeis, (1941) 55 Harv. L. Rev. 193 (194): The position of a
judge has been likened to that of an oyster anchored in one place, unable to take the initiative, unable
739
discretion and flexibility to adapt to the wishes, needs and expectations of the parties and the
circumstances of the case.60
a. Production of Documents in ad hoc Proceedings: German court proceedings allow only a 25
limited production of documents to be ordered by the court.61 In fact, the German arbitration law does not even specifically state that the arbitral tribunal may order the parties to
produce documents. However, it mentions in 1049(1) sentence 2 ZPO that the arbitral
tribunal may require a party to provide an expert access to any relevant documents.62 Further,
1048(3)ZPO stipulates that if a party fails to produce documentary evidence within a set
time-limit, the arbitral tribunal may continue the proceedings and make the award based
on the evidence before it. Quite logically, these provisions only make sense if the arbitral
tribunal has the right at all to order a party to produce documents.63 Nevertheless, in light
of the tradition of German civil procedure law64 and its reflection in arbitration practice, a
common law party should not expect an arbitral tribunal consisting of German practitioners to be sympathetic towards broadly drafted requests for production of documents. One
should rather expect the arbitral tribunal to limit such orders to documents which have been
described in reasonable detail and which the arbitral tribunal considers to be relevant and
material to the dispute.65 But again, the law also allows the arbitral tribunal to adopt a more
common law oriented approach in order to follow the expectations of the parties. Depending
on a partys bargaining power, it might be advisable to provide for application of the IBA
Rules on the Taking of Evidence in International Arbitration.66
b. Witnesses in ad hoc Proceedings: There are no specific provisions concerning witnesses in 26
the German arbitration law. It is generally accepted, however, that an arbitral tribunal may
hear witnesses in an oral hearing or accept written witness statements67 as evidence. Again,
German litigators without exposure to international arbitration might wrongly assume
that just like in court proceedings, testimony of a party would be treated differently from
testimony of a non-party.68 As usual, the conduct of witness examinations depends on the
60
61
62
63
64
65
66
67
68
to go out after things, restricted to working on and digesting what the fortuitous eddies and currents of
litigation may wash his way.
Rtzel/Wegen/Wilske (2005), p. 133; but see also Wilske/Mack, Production of documents under the
revised German Code of Civil Procedure, IBA Newsletter Arbitration and ADR, Vol. 8(1), 2003, p.43
(explaining 142 ZPO, a rule on the production of documents, which came into force on 01.01.2002 and
describing its impact on international arbitration).
See supra, Part II, Sachs/Lrcher Commentary on 1049 ZPO for details relating to the interpretation of
this provision; see also Rtzel/Wegen/Wilske (2005), pp.133-134.
Even with 142 ZPO, which was introduced in 2002, it is clear from the legislative history that court
orders for broad categories of information, as is common in U.S. litigation, are not permitted and that the
court may only issue a disclosure order to clarify a question or fact which was already stated in sufficient
detail by one of the parties, see Rtzel/Wegen/Wilske (2005), p.60.
Cf. Sachs, Use of documents and document discovery: Fishing expeditions versus transparency and
burden of proof, SchiedsVZ 2003, 193 (196).
In German court practice, written witness statements are not common practice, and are even sometimes
regarded with suspicion. It is, therefore, strongly recommended to address the issue of written witness
statements at the outset because counsel and arbitrators whose experience is limited to court proceedings
might otherwise consider such witness statements as an unethical attempt to manipulate a witness.
Rtzel/Wegen/Wilske (2005), p.135; see also Weigand-Hanefeld (2009), Germany, para.7.103.
740
expectations and agreements of the parties and their counsel as well as those of the arbitrators. While in German court proceedings a witness is generally questioned by the judge
and there is no cross-examination in a common law sense, even arbitrators with a civil law
background will generally not prevent such procedure.69 Also, they may add some questions
of their own. If a witness refuses to cooperate, i.e. if he or she does not attend the oral hearing,
or if the arbitral tribunal wishes to verify the truthfulness of testimony or request the witness
to testify under oath, it must apply to a court for assistance (1050ZPO).70
27 c. Experts in ad hoc Proceedings: 1049 ZPO, which adopts Article26 ML, contains rules
regarding tribunal-appointed experts. Pursuant to 1049 (3) ZPO, an expert appointed
by an arbitral tribunal must satisfy the same impartiality and independence requirements
as an arbitrator.71 Again, the parties may agree to exclude tribunal-appointed experts and to
only allow party-appointed experts. Further, even if the arbitral tribunal has appointed an
expert, there is nothing to stop the parties appointing their own experts as well.72 However,
foreign practitioners should be aware that in civil law jurisdictions such as Germany, courtappointed experts are the rule wherever factual issues are in dispute which the judge cannot
resolve based on his or her own knowledge and expertise. Further, an arbitral tribunal with a
German law background will regularly rely to a greater extent on a tribunal-appointed expert
than on a party-appointed expert.
28 d. Court Assistance in ad hoc Proceedings: 1050 ZPO differs from Article27ML in that
it provides for court assistance not only in the taking of evidence, but also other judicial
acts such as service of process.73 Possible measures include the testimony of a witness or an
expert, the administration of an oath, or orders for production of documents in the possession of third parties.74 Also, if material evidence is located abroad, a request pursuant to the
Hague Evidence Convention via a court is theoretically possible even though such requests
are very unusual because of the time it takes to process them.75 The competent court for such
applications under 1050 ZPO is the local court of first instance (Amtsgericht) at the place
where the order is to be executed, i.e. usually the place of residence of the witness or third
party (1062(4) ZPO). According to 1050 sentence 3 ZPO, the arbitrators are entitled to
participate in any judicial taking of evidence and to ask questions.
29 e. Privileges in ad hoc Proceedings: Neither the UNCITRAL Model Law nor the German
arbitration law deal with privileges. The parties could, of course, deal with privileges in their
arbitration agreement or come to an agreement in the course of arbitration (but rarely do so).
Accordingly, it is once more the bag and baggage76 of his or her national system that an arbitrator will consult when dealing with privileges in ad hoc proceedings. Accordingly, German
arbitrators will first apply the privileges which apply in German court proceedings.77 Further,
a German arbitrator will also carefully listen to arguments relating to either application of
69
70
71
72
73
74
75
76
77
Rtzel/Wegen/Wilske (2005), pp.134-135.

MnchKommZPO-Mnch (2013), 1049 para.45; Rtzel/Wegen/Wilske (2005), p.135.
See supra, Sachs/Lrcher Commentary on 1049 ZPO for details relating to the interpretation of this
provision; see also Rtzel/Wegen/Wilske (2005), p.136.
See 1049(2) sentence 2 ZPO which specifically mentions party-presented expert witnesses.
Hunter, SchiedsVZ 2003, 155 (159); Wilske/Chen, in: Campbell (2004), p.650.
Schwab/Walter (2005), Chap.17 para.15; Rtzel/Wegen/Wilske (2005), p.137.
Rtzel/Wegen/Wilske (2005), p.138; Rtzel/Christ, in: Greenwald/Russenberger (2012), pp. 153 seq.
Cf. Aguilar-Alvarez, in: van den Berg (1998), p.139 (140); Briner, in: van den Berg (ed.) (1998), p.169.
For the types of relationships subject to privilege under German law see Rtzel/Christ, in: Greenwald/
Russenberger (2012), pp. 144-146.
741
privileges originating in other legal systems or non-application of a privilege recognised in

Germany78 in order to assure fair and equal treatment of the parties as acknowledged, e.g.
by Article9.2(g) of the IBA Rules on the Taking of Evidence in International Arbitration.79
6.
Confidentiality Obligations in ad hoc Proceedings
The German arbitration law does not explicitly deal with confidentiality issues. As a con- 30
sequence, according to the prevailing opinion among legal commentators, the parties are
unless any stipulation to the contrary not restricted from disclosing to the public the
existence of arbitral proceedings or particular details thereof.80 In contrast hereto, RaeschkeKessler/Berger deduce the parties confidentiality obligation from an (alleged) implied term
in the arbitration agreement under which the parties are always bound to confidentiality.81
This general assumption, however, certainly does not always reflect the parties intentions
with respect to confidentiality. It also fails to acknowledge that one or both of the parties
may be under a contractual or statutory obligation to disclose information. Nevertheless, it is
advisable in ad hoc proceedings to consider how to deal with confidentiality in the arbitration
agreement.82 There is, however, broad consensus that arbitrators in ad hoc proceedings are
bound to treat the proceedings confidentially; if not by means of their arbitrator contract,
then by analogy of the respective rules relating to state court judges.83
C.
Making of Awards and Termination of Proceedings in ad hoc Proceedings
Again, 10511058 ZPO closely follow Articles2833 ML. Unless otherwise agreed by 31
the parties, any decision of the arbitral tribunal is made by a majority of all its members
(1052(1) ZPO). The award which pursuant to 1055 ZPO has the same effect for the
parties as a final and binding court judgment must be made in writing and signed by the
arbitrator or arbitrators (1054(1) ZPO). It must state the reasons upon which it is based,
unless the parties have agreed that no reasons are to be given or the award is an award on
agreed terms (1054(2)ZPO). Also, the award must state the date and place of arbitration.
Ad hoc proceedings may also be terminated by a termination order of the arbitral tribunal 32
pursuant to 1056 ZPO if, for example, the parties agree on the termination of the proceedings after a settlement agreement without the involvement of the arbitral tribunal.
78
79
80
81
82
83

See Rtzel/Wegen/Wilske (2005), pp.139-140.
Lachmann (2008), para. 146; Lionnet/Lionnet (2005), pp. 454-458; Prtting, FS-Bckstiegel (2001),
pp. 634-636; Gnther, FS-Sandrock (2000), pp. 342-344; see also Khn/Gantenberg, FS-Schlosser
(2005), pp.463-464.
Raeschke-Kessler/Berger (1999), paras683-688; see also Leisinger (2012), p. 184 in principle assuming
a confidentiality obligation in commercial arbitration while denying such obligation in investment
arbitration.
It is certainly not in all cases recommendable to have strict confidentiality obligations between the parties,
for example in cases where one of the parties might want to or might be required under applicable law
such as stock exchange regulations to make certain disclosures to the public; for further advice on drafting
confidentiality clauses see Oldenstam/von Pachelbel, Confidentiality and Arbitration a few reflections
and practical notes, SchiedsVZ 2006, 31 (33 seq.).
BGH 05.05.1986, BGHZ 98, 32 (35); Lachmann (2008), paras 145 and 4293-4295; Lionnet/Lionnet
(2005), pp. 456457; Prtting, FS-Bckstiegel (2001), pp. 632-634; Khn/Gantenberg, FS-Schlosser
(2005), pp.468469.
742
33 1052(2) ZPO includes a helpful German addition to Article29 ML. It stipulates that if
an arbitrator refuses to take part in the vote on a decision, the other arbitrators may take the
decision without him or her, unless otherwise agreed by the parties. In such situations, the
parties are to be given advance notice of the intention to make an award without the arbitrator refusing to participate in the vote.
D.
Allocation of Costs by the Arbitral Tribunal in ad hoc Proceedings
34 Finally, unless the parties agree otherwise, the arbitral tribunal allocates the costs of the
arbitration by means of an award whereby it does so at its discretion, taking into consideration the circumstances of the case and particularly the outcome of the proceedings (1057
ZPO). German parties and practitioners are used to the rule that costs follow the event and,
accordingly, have a strong preference for not granting the arbitral tribunal as much discretion
as provided for in 1057ZPO. While less experienced counsel sometimes argue that the
recoverable costs should be limited according to the Lawyers Fees Act (Rechtsanwaltsvergtungsgesetz RVG), such limitation exists only if agreed upon between the parties.
E.
Recourse against the Award in ad hoc Proceedings
35 The parties cannot waive in advance their right to seek recourse against an award because
such waiver would contravene the public interest. However, under certain conditions the
parties may waive claims arising from violations of procedural or substantive laws which
might allow recourse against an award. This is possible insofar as such laws are only aimed to
protect the parties individual rights and, at the very least, when such party has knowledge of
such violation of law that might make it possible to seek recourse against an award.84
1.
Application for Setting Aside of an Award in ad hoc Proceedings
36 The grounds for which parties to a German ad hoc arbitration can seek recourse against an
award by lodging an application for it to be set aside with the proper court, i.e. the Higher
Regional Court (Oberlandesgericht OLG), are very limited.85
37 Unless the parties have agreed otherwise, an application to the court for an award to be set
aside may not be made more than three months after the petitioning party received the award
(1059(3) ZPO).
2.
Enforcement of Awards in ad hoc Proceedings
38 Slightly different procedures exist for enforcement of foreign86 and domestic awards.
39 Domestic awards (i.e. awards rendered in an arbitration with the place of arbitration in Germany) are enforced if they have been declared enforceable (1060(1) ZPO). The application for a declaration of enforceability is refused and the award set aside if one of the limited
84
85
86
Schwab/Walter (2005), Chap.24 para.53; OLG Frankfurt 21.12.1983, NJW 1984, 2768; Zller-Geimer
(2014), 1059 para.81 all with further references.
See supra, Part II, Krll/Kraft Commentary on 1059 ZPO for details relating to the interpretation of this
provision; see also Rtzel/Wegen/Wilske (2005), pp.150-157.
The recognition and enforcement of foreign arbitral awards is granted in accordance with the New York
Convention 1958 (1061(1) sentence 1 ZPO).
743
grounds for setting aside exists (1060(2) ZPO).87 These limited grounds for setting aside
awards are listed in 1059 ZPO and comprise (i.) invalidity of the arbitration agreement,
(ii.) lack of proper notice of the appointment of an arbitrator or otherwise a partys inability
to present its case, (iii.) the arbitral proceedings or the award deal with a dispute not falling within the terms of the submission to arbitration or (iv.) the composition of the arbitral
tribunal not being in accordance with the agreement of the parties. Further, an award may
be set aside pursuant to 1059 ZPO if the court finds that the subject matter of the dispute
was not arbitrable or the award was in conflict with the ordre public.88 German courts and
commentators have continuously held that the parties may not validly waive the right to seek
recourse to a court against an arbitral award based on inarbitrability and conflict with public
policy.89
IV. Applicability of other Sets of Rules in ad hoc Proceedings

A.
German Statutory Law
Contrary to an assumption sometimes held by less experienced arbitration practitioners, the 40

other provisions of the ZPO outside the 10th Book are in principle not applicable to ad hoc
proceedings. Arbitral proceedings are not court proceedings with a differently composed
bench of deciders, but simply a different dispute resolution mechanism.90 Accordingly, rules
of the ZPO other than the 10th Book may only be applied by analogy in ad hoc proceedings
if they reflect principles of generally or even internationally recognised procedural law.91
Parties should also be rather reluctant with respect to any proposal by counsel or the arbitral
tribunal92 to consent to the application of the ZPO in its entirety (beyond the 10th Book
relating to arbitration). If accepted, such a proposal deprives the parties of the desired flexibility of arbitration and even creates difficulties where strict provisions relating to formal
requirements, time limits and often underestimated the taking of evidence do not fit the
arbitral proceedings or, at least, might work to the detriment of one party. For example, in
German court proceedings, testimony of a party which includes the executive officers of
a corporation is treated differently from testimony of a witness. While a German court
may hear the parties in person at any stage of the proceedings, restrictions are placed on
the parties testimony for evidentiary purposes.93 This restriction does not apply in German
87
88
89
90
91
92
93
See supra, Part II, Krll Commentary on 1060 ZPO for details relating to the interpretation of this
provision.
See supra, Part II, Krll/Kraft Commentary on 1059 ZPO for details relating to the interpretation of
this provision; see also Trittmann/Kasolowsky, in: Rowley (2012), para. 5.1.1; Weigand-Hanefeld (2009),
Germany, para.7.232.
BGH 26.9.1985, BGHZ 96, 40 (42); OLG Frankfurt 21.12.1983, NJW 1984, 2768 with note by Geimer;
Lachmann (2008), para. 2346 with further references.
Lachmann (2008), para.1277; Kreindler/Schfer/Wolff (2006), paras701703.
Examples might be the requirement of a signed statement of claim for proper commencement of arbitral
proceedings, Schwab/Walter (2005), Chap. 16 para. 2 and Wilske/Gack, Commencement of Arbitral
Proceedings and Unsigned Requests for Arbitration A Counsels Harsh Awakening?, Journal of International Arbitration, Vol. 24 No. 3, 2007, pp. 325 seq.; see also Vogt-Wilske (2004), p.257 (263) arguing
that under certain circumstances only the consideration of the bag and baggage of national systems
contribute to the quality of international standards and the success of international arbitral proceedings.
Cf. Aguilar-Alvarez, in: van den Berg (1998), p.140; Briner, in: van den Berg (1998), p.169.
Often such proposal is motivated by familiarity with court proceedings and lack of experience with
arbitral proceedings.
744
arbitration proceedings unless the parties have specifically agreed on the application of the
ZPO.94
B.
Use of Foreign Procedural Law and Procedural Tools in ad hoc Proceedings
41 Theoretically, the parties are free to also agree on the application of foreign procedural law
to the extent that it does not contradict mandatory provisions of German arbitration law.95
Any such foreign procedural law, however, would be applied as contractual agreement by
the parties and not in its initial character as statutory procedural law. In fact, provided that
mandatory German arbitration law is respected, there is nothing to stop the parties designing
their German ad hoc arbitral proceedings in the style of foreign court proceedings if, that is,
they can find counsel and arbitrators who are prepared to go along with these methods. However, in the event that the parties would require the assistance of the competent German state
courts or the review of the arbitral award, they should not expect that such foreign procedural
rules are applied or reviewed in the same manner the respective foreign court would apply
them. For non-German parties, and particularly for parties from common law countries, it is
more advisable to agree on the application of a set of (national or international) rules relating
to particular features of procedural law which should be followed in the arbitration instead
of the application of foreign procedural law in toto. This might be of particular relevance with
respect to the taking of evidence where parties may want to agree on the application of certain rules deriving from foreign national law or, e.g. the IBA Rules on the Taking of Evidence
in International Arbitration.96
C.
Use of International Arbitration Rules in ad hoc Proceedings
42 Finally, the parties are free to agree on the application of the UNCITRAL Arbitration Rules97
or institutional arbitration rules by analogy. In general, using rules of administered arbitration in an ad hoc arbitration (the so-called wildcat arbitration) is not recommended, at
least not without a careful review of the matter of which provisions should not apply or be
amended.98 Somewhat surprisingly perhaps, the UNCITRAL Arbitration Rules are actually
used in quite a number of domestic ad hoc arbitrations in Germany. Parties are of course
free to agree on the 1996 UNCITRAL Notes on Organizing Arbitral Proceedings, which are
designed to assist arbitration practitioners.
V.
Remuneration and Liability of Arbitrators in ad hoc Proceedings
43 Remuneration and liability of arbitrators are not governed by the German arbitration law but
are subject to generally applicable German law, unless explicitly regulated by the parties, i.e.
the parties to the dispute and the arbitrator or arbitrators.
94
95
96
97
98

Lrcher/Lrcher, SchiedsVZ 2005, 179 (182).
Cf. Kreindler/Schfer/Wolff (2006), paras731 and 832 (arguing that the IBA Rules reflect best practice
in international arbitration).
The UNCITRAL Arbitration Rules were adopted by UNCITRAL on 28.04.1976 and revised on
06.12.2010, they are available at www.uncitral.org/uncitral/en/uncitral_texts/arbitration/2010
Arbitration_rules.html.
This type of wildcat arbitration is meanwhile not infrequently used in investment disputes where the
parties agree, e.g. on ICC arbitration without the administration of the arbitration by the ICC International Court of Arbitration.
A.
745
Arbitrator Contract under German Law in ad hoc Proceedings
The legal relationship between the parties and the arbitrator(s) in ad hoc proceedings is con- 44
sidered to be a contractual one even where a third party appoints an arbitrator on behalf of a
party. It is good practice and recommended to explicitly conclude such contract between the
parties and the arbitrator(s) (arbitrator contract) once the arbitral tribunal is constituted,
and provide for a choice of law clause in such arbitrator contract. If the arbitrator contract
is silent with respect to the applicable law, it is not necessarily governed by the same law
as that of the arbitration agreement. Rather, unless otherwise agreed, the applicable law is
determined by Art. 4 of the EC Regulation on the Law Applicable to Contractual Obligations (Rome I).99 Pursuant to Art.4(1)No.1(b)Rome I, the place of habitual residence
of the service provider, in this case the arbitrator, determines the applicable law. In the event
of an arbitral tribunal composed of arbitrators from different countries, Art.4(3)RomeI
provides that the contract shall be governed by the law of the country with which it is most
closely connected. Regularly, the arbitration contract is most closely connected to the place
of arbitration.100 Under the arbitrator contract, the arbitrator is obligated to conduct to the
best of his or her abilities an orderly and expeditious proceeding in accordance with the rule
of law and the arbitration agreement.101 The parties have an obligation, in return, to compensate the arbitrator for his or her services. Both parties are jointly and severally liable for
the remuneration. While the arbitrator contract can be terminated jointly at any time by the
parties, the arbitrator can only terminate the contract either with the consent of all parties or
for good cause, e.g. non-payment of advance fees or serious illness.102
B.
Remuneration of Arbitrators in ad hoc Proceedings
1.
Amount of Fees
The amount of fees is usually set in the arbitrator contract. Typically, arbitrators and parties 45
will agree either to adopt (i.) the fee schedule of the DIS Rules, or (ii.) the fees for appellate
proceedings set by the Lawyers Fees Act (Rechtsanwaltsvergtungsgesetz RVG), which replaced the previously applicable Bundesrechtsanwaltsgebhrenordnung (BRAGO) on 1July
2004, or (iii.) an hourly rate for the arbitrators.
In the absence of such an agreement regarding the amount of fees or in cases where one party 46
refuses to sign the arbitrator contract, according to 612,103 315104 BGB the compensation
will be set by the arbitrators taking into consideration the fee schedule that is customary at
99
100
101
102
103
104
Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008; see
MnchKommIPR-Martiny(2010), Art.1 Rom I-VO para. 57 clarifying that the arbitrator contract is not
excluded from the scope of application of the Rome I Regulation because the exclusion stated in Art. 1
No. 2 (e) Rome I applies only to the arbitration agreement but not the arbitrator contract.
MnchKommZPO-Mnch (2013), Vorbemerkungen zu 1034 ff. para. 10.
BGH 05.05.1986, NJW 1986, 3077.
612 BGB stipulates that remuneration for work is deemed to have been tacitly agreed if in the circumstances it is to be expected that the work be performed only for remuneration.
315 BGB basically stipulates that where performance is not yet specified by the contracting parties, in
case of doubt it is to be assumed that the specification must be made at reasonably exercised discretion of
the party making it and that the specification made is binding on the party only if this is equitable. If it is
not equitable, the specification is made by judgement.
746
the place where the services are provided. However, it is still not conclusively settled how the
customary fees for arbitrator services in Germany are to be determined.105
47 a. Practice Prior to the Entry Into Force of the RVG: Until 2004, there was a broad consensus
that if the arbitrator is admitted to the German bar, his or her fees would customarily follow
those set by the statute regulating attorneys fees (Bundesrechtsanwaltsgebhrenordnung
BRAGO) for appellate level services, applicable until July 2004.106 For practical reasons and
in order to avoid unequal payment, non-lawyers acting as arbitrators received the same fees
based on BRAGO as arbitrators admitted to the German bar.107 This broad consensus was
reflected in a model fee agreement prepared by the German Lawyers Association (Deutscher Anwaltverein DAV) with consent of the German Judges Association (Deutscher
Richterbund).108 Technically, the BRAGO provisions determine the fees for attorneys who
represent clients and, therefore, not fees for arbitrators services. The BRAGO had a sliding scale fee schedule that was calculated based upon the value in dispute, with special fees
for participation in oral and evidentiary hearings. A least in domestic ad hoc proceedings, it
was general practice for the chairperson to receive 45/10 of the fee based upon the value in
dispute and for the party-appointed arbitrators to receive 39/10.109
48 b. Practice Since the Entry Into Force of the RVG: The new Lawyers Fees Act (RVG) was adopted in July 2004, completely reorganizing the fee schedules for attorneys. To calculate the
fees for arbitrators according to the RVG would reduce them considerably,110 although this
was certainly not the intent of the new law.111 Although a few commentators of the RVG112
and even a few commentators on arbitration law113 maintain that customary arbitrators fees
should now be calculated by simply applying the RVG unaltered, there is growing consensus
that such approach is not adequate.114 In fact, it is quite astonishing that some commentators
still refer only to the RVG because 1 (2) RVG explicitly stipulates that it does not apply to
arbitrators.115 Further, the application of the RVG is not really convincing for domestic ad hoc
105
106
107
108
109
110
111
112
113
114
115
Cf. DIS Conference on costs in arbitral proceedings (Kosten im Schiedsgerichtsverfahren) on 29April

2004 in Dsseldorf, DIS-MAT X (2005), in particular Elsing, Bemessungsgrundlagen fr Honorare und
Auslagen der Schiedsrichter, DIS-MAT X (2005), pp.5 et seq.
Weigand-Wagner (2002), para.139; Bischof, SchiedsVZ 2004, 252; Rtzel/Wegen/Wilske (2005), p.126.
Kreindler/Schfer/Wolff (2006), para.1213 with further references.
Reprinted in Lachmann (2008), para.4775 and Glossner/Bredow/Bhler (1990), pp.289-291.
LG Arnsberg 07.08.2006; LG Stuttgart 25.07.2005; LG Bielefeld 21.10.2003.
Bischof, SchiedsVZ 2004, 252. See, however, LG Mnchengladbach 14.07.2006, which applies the RVG in
a modified manner to ad hoc proceedings (applying e.g. the higher fees for appellate proceedings) which
leads to higher arbitrators fees and compares such fees to fees based on the DIS fee schedule.
MnchKommZPO-Mnch (2013), Vorbemerkungen zu 1034 para. 34; Lachmann (2008), paras 4205 et
seq.
Gerold/Schmidt (2006), 1 para.194; Mayer/Kroi (2006), 1 para.211. According to the authors own
empirical study, commentators of the RVG are almost exclusively not members of the German Institution of Arbitration, strongly indicating that their focus is not on arbitration and that, if at all, they have
only little personal experience of arbitration.
Schwab/Walter (2005), Chap.12 para.12; Kreindler/Schfer/Wolff (2006), paras587 and 1213-1214
with recommended modifications within the RVG system for difficult ad hoc proceedings which result
in higher fees compared with regular first-instance court proceedings.
MnchKommZPO-Mnch (2013), Vorbemerkungen zu 1034 paras 34 et seq.; Bischof, SchiedsVZ 2004,
252; Lachmann (2008) paras 4206 and 415 stating, however, that reference to the RVG may be made to
determine the minimum of arbitrator fees.
See also LG Arnsberg 07.08.2006, explicitly referring to this clear statement by the legislator and
MnchKommZPO-Mnch (2013), Vorbemerkungen zu 1034 para. 34.
747
proceedings because the services of an attorney are clearly different from those of an arbitrator and, quite unlike the situation prior to the entry into force of the RVG, there is no broad
consensus that despite these differences an arbitrators fee should follow the federal statute regulating attorney fees. In the meantime, the DAV with consent of the German Judges
Association has drafted a new model fee agreement, which they recommend for users in ad
hoc proceedings.116 While this draft agreement served its designed purpose to provide some
orientation and to advance the discourse,117 it did not establish itself as customary. Especially
for international ad hoc proceedings, the link to a national, non-self-explanatory fee schedule
such as the RVG is simply not acceptable and, accordingly, cannot be considered to form the
basis of the arbitrators remuneration.
Of course, arbitrators are still free to base their fee arrangements on the prior general practice 49
and can continue to refer to BRAGO fees in their arbitrator contract. However, if there is no
agreement between the arbitrators and the parties, it is unclear at this point which model of
calculation the customary fees for arbitrators should follow. Until now, there has been no
decision by the Federal Court of Justice on this question. In fact, there is no such decision
as regards the practice before the entry into force of the RVG either. Only limited case law
exists.118
c. Fee Schedule of the DIS Rules as Customary Fee Schedule: It appears to be the prevailing opin- 50
ion among German arbitration practitioners, in particular among members of the so-called
arbitration circles,119 that absent an agreement on fees a reference should be made to the fee
schedule under the DIS Rules.120 The fee schedule of the German Institution of Arbitration is
based on the amount in dispute and stipulates fees for the chairperson and the co-arbitrators
on a sliding scale covering the whole range of activities within a particular arbitration.121 This
is appropriate because the fee schedule in the DIS Rules was prepared especially for arbitrators fees, whereas the RVG is only geared towards attorneys fees. The DIS fee schedule is
widely considered to be fair, well-balanced and predictable.122 Therefore, it is not surprising
that reference to the DIS Rules was made in quite a few cases since the entry into force of
the RVG.123 One could even argue that in ad hoc proceedings, the arbitrators fees should
be higher than under the DIS Rules because arbitrators in ad hoc proceedings additionally
carry out the administrative functions of an arbitral institution. In order to control costs, it
is advisable for the parties to agree on the amount in dispute and seek acceptance of such
agreed amount from the arbitrators prior to their formal appointment.124 Further, it is
116
117
118
119
120
121
122
123
124
DRiZ 2006, 133; www.anwaltsverein.de/downloads/praxis/mustervertrag/SchiedsrichterverguetungDAV-DRiB.pdf.

MnchKommZPO-Mnch (2013), Vorbemerkungen zu 1034 para. 37.
But see LG Stuttgart 25.07.2005 and LG Bielefeld 21.10.2003, (upholding advance fee requests by
arbitral tribunals which were based on the model fee arrangement prepared by the DAV and Deutscher
Richterbund).
See supra, section III. A. 6.
Cf. Elsing, Bemessungsgrundlagen fr Honorare und Auslagen der Schiedsrichter, DIS-MAT X (2005),
pp.5(9); see also LG Arnsberg 07.08.2006, (stating that for determination of the appropriate arbitrators
compensation in ad hoc proceedings, reference to the DIS fee schedule may be made because other than
BRAGO and RVG it was tailored particularly to arbitrators).
Appendix to 40.5 of the DIS Rules.
Lachmann (2008), para. 4228; MnchKommZPO-Mnch (2013), Vorbemerkungen zu 1034 para. 38.
Cf. Wolff, Streitwertfestsetzung bei wertabhngiger Schiedsrichtervergtung Schiedsrichter in eigener
Sache?, SchiedsVZ 2006, 131 (141) (with a discussion of who otherwise determines the amount in
748
advisable in ad hoc proceedings to at least seek the general agreement of the arbitrators on a
reduction of fees in the event that the proceedings are terminated prematurely and that as a
consequence the work to be done by the arbitrators is reduced significantly.125 Even without
such explicit agreement, the argument may be made that where the arbitrators work is
reduced significantly equity obliges arbitrators to reduce their fees and accordingly make
partial repayments of cost advances.126
51 d. Fees Based on Hourly Rates: Particularly in international ad hoc proceedings, it is not unusual
to agree upon hourly rates for the arbitrators and, where applicable, for the administrative
secretary of the chairperson. As usual, the hourly rates vary depending on reputation, experience and seniority of the arbitrators. Differences in the hourly rates among the members of
the arbitral tribunal are rather the exception than the rule. As a general rule, the arbitrators
will make sure that their hourly rate is comparable to the rates for counsel of the parties.
2.
Due Date, Advance Payment and Options in the Case of Non-Payment
52 Unless otherwise provided, the arbitrators claim for remuneration arises upon the termination of the arbitral proceedings.127 The arbitrators claim to compensation is not dependent
on the validity of the award.128 The corresponding limitation period is three years and commences at the end of the year in which the claim accrued.129
53 Typically, arbitrators in ad hoc proceedings will request advance payment of the remuneration. This practice has become so common that there is also a presumption, even if not
expressly provided in the arbitrator contract, that the arbitrator may request prepayments
during the course of the arbitral proceedings.130 As with the remuneration in whole, the
parties are jointly and severally liable for the prepayments.131 If the parties fail to make the
requested prepayments, the arbitrator can refuse to perform services until payment. If one
party fails to make prepayments, the arbitrator may not sue that party. However, the other
party has several options: it may make the payment for the non-paying party, it may terminate the arbitration agreement for cause, or it may commence an action in the German courts
against the non-paying party for failure to perform under the arbitration agreement.132 The
arbitral tribunal may declare the arbitral proceedings suspended during such court action.
125
126
127
128
129
130
131
132
dispute within what limits and subject to whose review).

See, e.g. 40.3 of the DIS Rules which stipulates that if proceedings are terminated prematurely, the
arbitral tribunal may at its equitable discretion, reduce the fees in accordance with the progress of the
proceedings. However, even in DIS arbitral proceedings the parties should prior to constitution of the
arbitral tribunal discuss among themselves as well as with potential arbitrators (prior to their appointment) possible scenarios of early termination of the proceedings and corresponding fee reductions in
order to avoid bad surprises such as reluctance by the arbitrators to agree on any fee reduction once
even minimum work has been done by them. It goes without saying that in ad hoc proceedings such early
discussion is even more important.
See LG Mnchengladbach 14.07.2006, stating that in cases where no oral hearing and no taking of evidence
occurred and the arbitral tribunals activities were limited to certain procedural steps at the beginning of
the proceedings and one procedural order on jurisdiction and admissibility of the arbitral proceedings, a
fee reduction by 40% would be appropriate.
195 and 199 (1) BGB.
BGH 22.02.1971, BGHZ 55, 344 (347); Schwab/Walter (2005), Chap.12 para.16.
BGH 22.02.1971, BGHZ 55, 344 (348); LG Bielefeld 21.10.2003.
BGH 07.03.1985, NJW 1985, 1903 (1904).
3.
749
Taxation of Arbitrator Fees and Value Added Tax
An arbitrator who is a German resident, regardless of whether he or she serves as arbitrator in 54

Germany or abroad, is subject to income tax at his or her place of residence.133 Furthermore,
foreign arbitrators serving in Germany are also subject to German income tax and must pay
a reduced tax rate, unless a double taxation treaty provides otherwise.134 Most such treaties
provide that a resident of one country rendering services in another country is subject to
income tax in that country only if he or she maintains a fixed establishment there. Therefore,
a foreign arbitrator who simply holds hearings in Germany will not be subject to German
domestic income tax.135
Additionally, a German resident arbitrators fees may be subject to value added tax (VAT). 55
The VAT rate in Germany is currently 19%. Prior to the entry into force of the EU Directive 2008/08/EG, the so-called VAT Package,136 on 1 January 2010, a person whose place
of business was in Germany was obliged to pay VAT in Germany and not in the country
where he or she rendered services.137 This also meant that a resident of a foreign country
serving as arbitrator in Germany did not need to pay VAT in Germany and was therefore
also barred from charging VAT in addition to the standard fee.138 In short, whether VAT
was due in Germany depended on the arbitrators place of business. This legal framework
was modified by the VAT Package. Whether the arbitrators fees are subject to VAT now
depends on the legal nature of the recipient of the services, i.e. the respective party to the
dispute, and (if applicable) his or her place of business. If both the arbitrator and the party
to the dispute have their place of business in Germany or if the party to the dispute is not an
enterprise, VAT must be added to any fees charged by the arbitrator, as was the case under
previously applicable law.139 However, if the arbitrator has his place of business in Germany
and the party to the dispute is an enterprise under VAT tax law140 with its place of business in
another country,141 the service is deemed to be rendered at the place at which the recipient
of the service has its principal place of business.142 Therefore, VAT is to be paid in and under
the rules of the country in which the recipient, i.e. the party to the arbitral proceeding, has its
place of business.143 In these cases, it is the obligation of the respective party to properly claim
the VAT with the tax authorities of his or her country.144 The arbitral tribunals obligation is
133
134
135
136
137
138
139
140
141
142
143
144
1(1) Income Tax Law (Einkommensteuergesetz EStG).

1(1) Income Tax Law (Einkommensteuergesetz EStG); Risse/Meyer-Burow, SchiedsVZ 2009, p. 326
(329).
Weigand-Wagner (2002), para.143.
EU Directive 2008/08/EC of 12.02.2008; implemented into German law by the Jahressteuergesetz 2009
(see Risse/Meyer-Burow, SchiedsVZ 2009, p. 326 (327); see also EU Directive 2008/09/EC and EU
Regulation (EG) No 143/2008 adopted by the Council of the European Union on 12.02.2008 further
regulating tax issues.
In ECJ 16.09.1997, Case 145/96 (von Hoffmann v. Finanzamt Trier), (1997) ECR I-4870 the European
Court of Justice held that a German law professor working as an arbitrator in ICC arbitral proceedings
was obliged to pay VAT in Germany.
Risse/Meyer-Burow, SchiedsVZ 2009, p. 326 (329).
Risse/Meyer-Burow, SchiedsVZ 2009, p. 326 (330); Konrad/Gurtner (2008), p. 20.
See Konrad/Gurtner (2008), p. 20 and Art. 9 of EU Directive 112/2006/EC of 28 November 2006.
Konrad/Gurtner (2008), p. 20.
See Risse/Meyer-Burow, SchiedsVZ 2009, p. 326 (330).
See Risse/Meyer-Burow, SchiedsVZ 2009, p. 326 (330) explaining that an enterprise with its place of business within the European Union must consider the reverse charge mechanism, for an enterprise with its
750
to determine and document that the respective party is in fact an enterprise in the sense of
VAT law.145 The requirements to meet the arbitral tribunals obligations depend on whether
or not the enterprise in question has its place of business in the European Union. If so, the
arbitrator will require the party to provide its VAT identification number (Umsatzsteueridentifikationsnummer).146 Enterprises located outside the European Union will regularly be
asked to provide a certificate of entrepreneurial status (Unternehmerbescheinigung) issued by
the authorities of their respective country. However, there is no clear international standard
to verify the entrepreneurial status of an entity.147 Therefore, if any doubt remains, the arbitral
tribunal will rather err on the side of caution and assume that the respective party has to
pay VAT.148 Thus, especially for non-EU enterprises, the situation persists that they might
be charged VAT by a German arbitrator while the arbitrators from other countries do not
charge and the parties from other countries are not charged VAT. Arbitrators whose fees
are still directly subject to VAT, i.e. arbitrators providing services to parties with the same
place of business as the arbitrator or to non-enterprises, often seek to charge VAT to the parties as part of any cost advances. The general assumption in such ad hoc proceedings is that
Article2 (9) of Appendix III to the ICC Rules of Arbitration149 reflects a general principle
and, accordingly, allows the arbitrators to make such requests.150
C.
Liability of Arbitrators in ad hoc Proceedings
56 Unless otherwise agreed by the parties, arbitrators may be liable to the parties for negligence.
Such a situation could arise where an arbitrator delays proceedings without a justifiable
reason or refuses to perform his or her duties as an arbitrator.151 Also, an active judge or civil
servant who requires official permission to act as an arbitrator alongside his or her regular
occupation152 would also be liable if, due to his or her fault, an award was to be set aside for
lack of (valid) permission to act as arbitrator (Nebenttigkeitsgenehmigung).153 However, for
this issue there is practically no relevant case law.154 Where an arbitrator refuses to perform
his or her duties without a justified reason, he or she may be liable for damages, but will
not necessarily be obligated to perform said duties.155 Finally, according to old but mostly
145
146
147
148
149
150
151
152
153
154
155
place of business outside the European Union VAT obligations may only arise from that countries laws.
Such determination may prove difficult as, e.g. certain holding companies are not considered enterprises
under VAT law, see Risse/Meyer-Burow, SchiedsVZ 2009, p. 326 (331 et seq.) for a detailed overview.
This provision stipulates: Amounts paid to the arbitrator do not include any possible value added taxes
(VAT) or other taxes or charges and imposts applicable to the arbitrators fees. Parties have a duty to pay
any such taxes or charges; however, the recovery of any such charges or taxes is a matter solely between
the arbitrator and the parties. See also 40.1 DIS Rules.
See LG Arnsberg 07.08.2006, (ordering defendant to make such VAT payment to the arbitral tribunal).
Schwab/Walter (2005), Chap.12 para.9; Weigand-Hanefeld (2009), Germany, para.7.245; Rtzel/Wegen/Wilske (2005), p.127.
See supra at III. A. 1.
Weigand-Wagner (2002), para. 146 (referring to one published case of the OLG Hamburg where an
arbitrator was held liable for breach of contract for refusing to sign the award (OLG Hamburg 08.12.1960,
KTS 1961, 174 (176)) whereby the situation of the arbitrator who refuses to take part in the vote on a decision or refuses to sign the award is meanwhile explicitly dealt with in 1052(2) and 1054(1)ZPO).
Rtzel/Wegen/Wilske (2005), pp.127-128.
751
unchallenged case law,156 it is assumed that an arbitrator contract includes an implied clause
granting an arbitrator the same privileges of immunity as a German judge. Therefore, an
arbitrator is liable to the parties for damages only to the extent of his or her criminal liability,
i.e. only in case his or her behaviour qualifies as a criminal offence.157 Nevertheless, in ad hoc
proceedings, an arbitrator will frequently include an exclusion of liability for negligence in
his or her contract.
VI. Conclusion on ad hoc Proceedings in Germany

An international arbitration practitioner reviewing the German rules on ad hoc proceedings 57
for the first time will, in all likelihood, not be surprised at all. Since the revised German arbitration law came into force on 1January 1998, German ad hoc proceedings are fully based on
the UNCITRAL Model Law, which basically allows even a foreign arbitration practitioner
to follow or even run an ad hoc arbitration case in Germany.158 However, it should be kept in
mind when instructing German counsel or appointing a German arbitrator that arbitration in Germany is necessarily influenced by the fact that it is a civil law country.159 Quite
naturally, the less international experience and exposure to international arbitration a German counsel or arbitrator might have, the more he or she will look to German court practice
for answers to procedural issues which might come up in the course of the arbitration. On the
other hand, as party autonomy is the key feature of the German arbitration law, legally there
is nothing to stop either the parties or the arbitral tribunal from conducting their proceedings
following their own agreed standards or the standards of, e.g. common law countries, as long
as basic principles of equal treatment and the parties right to be heard are adhered to. In fact,
since the German arbitration law entered into force, Germany has sent a clear signal to businesses, as well as legal professionals abroad, that a modern and flexible legal framework for
ad hoc (and also institutional) arbitration is available and accessible in Germany.160 Together
with its central location within Europe and its arbitration infrastructure,161 today Germany is
considered an attractive international situs for ad hoc (as well as institutional) proceedings.162
156
157
158
159
160
161
162
BGH 06.10.1954, BGHZ 15, 12 (15 seq.); id. 19.11.1964, BGHZ 42, 313 (316); RG 21.03.1898, RGZ
41, 251 (255); RG 08.02.1907, RGZ 65, 175 seq.; OLG Hamburg 23.05.1950, MDR 1950, 480 seq.
Cf. Chambers Client Report February 2005, pp.38-40; Wilske/Chen, in: Campbell (2004), p.657.
Cf. Nacimiento/Molitoris, Arbitration in Germany, Chambers Client Report February 2005, p.40.
Trittmann/Kasolowsky, in: Rowley (2012), para. 1.
Wilske/Chen, in: Campbell (2004), pp.654-656; Trittmann/Kasolowsky, in: Rowley (2012), para. 1.
Wilske/Chen, in: Campbell (2004), p.657; Nacimiento/Molitoris, Arbitration in Germany, Chambers Client Report February 2005, p.40; Hunter, SchiedsVZ 2003, 155(163); Trittmann/Kasolowsky, in:Rowley
(2012), para. 1.
ICC Arbitration in Germany

Detlev Khner / Gustav Flecke-Giammarco1
Short Bibliography: Berger/Kellerhals, International and Domestic Arbitration in Switzerland,
Bern 2010; Bhler/Jarvin, in: Weigand (Hrsg.), Practitioners Handbook on International Arbitration, Mnchen/Copenhagen 2002; Bhler/Webster, Handbook of ICC Arbitration, London
2008; Craig/Park/Paulsson, International Chamber of Commerce Arbitration, NY 2000; Derains/
Schwartz, A guide to the ICC Rules of Arbitration, The Hague 2005; Fry/Greenberg/Mazza, The
Secretariats Guide to ICC Arbitration, Paris 2012 (ICC Publication 729); ICC International Court
of Arbitration Bulletin (ICC ICArb. Bull.); Voser/Fischer, The Arbitral Tribunal, in: Geisinger/Voser,
International Arbitration in Switzerland: A Handbook for Practitioners, Alphen aan den Rijn 2013;
Glossner/Bredow/Bhler, Das Schiedsgericht in der Praxis, 1990; Khadjavi, ICC Schiedsordnung
und deutsches Schiedsverfahrensrecht Kompatibilitt institutioneller Schiedsgerichtsbarkeit mit
nationalem Recht in verfahrensrechtlicher Hinsicht, Konstanz 2002; Lachmann, Handbuch fr die
Schiedsgerichtspraxis, Kln 2008; Lionnet/Lionnet, Handbuch der internationalen und nationalen
Schiedsgerichtspraxis, Stuttgart 2005; Raeschke-Kessler/Berger, Recht und Praxis des Schiedsverfahrens, Kln 1999; Reiner/Aschauer, Commentary on the ICC Rules of Arbitration, in: Schtze
(ed.), Institutional Arbitration, Mnchen 2012; Reiner, ICC Schiedsgerichtsbarkeit, Wien 1989;
Reithmann/Martiny et al. (eds), Internationales Vertragsrecht, Kln 2010; Sandrock, Internationale
Schiedsgerichtsbarkeit und Verjhrung nach deutschem Recht, in: Briner/Fortier/Berger/Bredow
(eds), FS-Bckstiegel, 2001, p.671; Seraglini/Ortscheidt, Droit de larbitrage interne et international,
Paris 2013; Schtze, Dissenting Opinions im Schiedsverfahren, in: Heldrich/Uchida (Hrsg.), FSNakamura, 1996; Schtze, Schiedsgericht und Schiedsverfahren, Mnchen 2012; Schwab/Walter,
Schiedsgerichtsbarkeit, Mnchen 2005; Wolf, Die institutionelle Handelsschiedsgerichtsbarkeit,
Mnchen 1992.
I.
II.
III.
IV.
V.
Para.
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Statistical Overview. . . . . . . . . . . . . . . . . . . . . . 7
Main Features of 2012 ICC Rules . . . . . . . . 9
The ICC Court and its Secretariat . . . . . . . 11
A. The ICC Court . . . . . . . . . . . . . . . . . . . . . 11
B. The Secretariat . . . . . . . . . . . . . . . . . . . . . . 13
Interplay and Articulation of the ICC
Rules with German Arbitration Law . . . . . 15
A. Background. . . . . . . . . . . . . . . . . . . . . . . . . 15
B. Discussion of the Salient
Provisions under the ICC Rules . . . . . 21
Para.
1. Commencement of the Arbitral
Proceedings and Articles6 (3)
and (4) ICC Rules Decisions . . . . . 22
2. Multi-Party and Multi-Contract
Arbitrations, Joinder,
Consolidation (Articles 710
ICC Rules) . . . . . . . . . . . . . . . . . . . . . . 39
3. Designation of Arbitrators
(Articles 1113 ICC Rules) . . . . . . 45
4. Challenges and Replacement
of Arbitrators (Articles 1115
ICC Rules) . . . . . . . . . . . . . . . . . . . . . . 49
Detlev Khner is a partner at BMH AVOCATS in Paris and a former Counsel at the Secretariat of the
ICC International Court of Arbitration. Gustav Flecke-Giammarco is presently the Counsel heading the
German-speaking case management team at the Secretariat. Any views expressed in this chapter are the
authors only, and not necessarily those of BMH AVOCATS or the ICC International Court of Arbitration or its Secretariat. Nothing in this chapter binds the Court or Secretariat. Thanks are due to Mr.
Fabian Rmer, at the time of writing an intern at the Secretariat, for his assistance in the preparation of
the statistical part of this chapter and to Deputy Counsel Viktor von Essen for his careful review of this
chapter.
754
Para.
5. Fixing of the Advance on Costs
(Article36, Article1 (1) of
Appendix III ICC Rules) . . . . . . . . . 54
6. Terms of Reference, Case
Management Conference
and Procedural Timetable
(Articles23 and 24 ICC Rules) . . . 59
7. Conduct of the Arbitral
Proceedings. . . . . . . . . . . . . . . . . . . . . . 66
8. Closing of the Proceedings and
Time Limit for Rendering the
Final Award (Articles27 and 30
ICC Rules) . . . . . . . . . . . . . . . . . . . . . . 71
9. Majority Decision by the
Arbitrators (Article31 ICC
Rules) . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10. Scrutinizing Arbitral Awards
(Article33 ICC Rules) . . . . . . . . . . . 90
I.
Para.
11. Correction and Interpretation
of the Award (Article35 ICC
Rules) . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
12. Decision as to the Costs of the
Arbitration (Article37 ICC
Rules) . . . . . . . . . . . . . . . . . . . . . . . . . .102
13. Fixing Arbitrator Remuneration
(Article37 (1) and (2),
Article2 (1)-(4) and (8) of
Appendix III ICC Rules) . . . . . . . .112
14. Waiver of Any Form of
Recourse against Awards
(Article34 (6) ICC Rules) . . . . . .117
15. Limitation of Liability
(Article40 ICC Rules) . . . . . . . . . .119
16. The Issue of VAT to be Paid
on the Arbitrators Fees and
Expenses . . . . . . . . . . . . . . . . . . . . . . .130
VI. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . .134
Introduction2
1 Whereas both the German arbitration law and the ICC Rules of Arbitration have been individually commented upon in numerous treaties,3 little has been said on their interrelation
and articulation. The following chapter shall therefore focus on the interplay of the German
arbitration law4 with the recently revised 2012 ICC Rules of Arbitration (ICC Rules) and
discuss the issues where German law may have a bearing on the conduct of an ICC arbitration seated in Germany.
2 To this end, this chapter will highlight Germanys important role in ICC arbitrations by way
of a detailed statistical overview (II.), outline the main features of the ICC Rules (III.), look
behind the scenes of the ICC Court and its Secretariat (IV.) and provide an in-depth analysis
of the interplay and articulation of the ICC Rules with German Arbitration Law (V.).
3 Founded in 1923, the International Chamber of Commerce (ICC) and its International
Court of Arbitration (ICC Court) are internationally recognized independent bodies. The
ICC Court is, however, not a separate legal entity but an administrative sub-division of the
ICC established under the French Associations Act of 1 July 1901, defined as an association
but non-lucratif.5 It can be said to be the pathfinder of international arbitration, having administered more than 20,000 international arbitration cases since its inception. With more than
500 new cases every year since 1999 and over 750 new cases every year since 2009,6 the ICC
underlines its role as the leading international arbitration institution.
2
3
4
5
Supra Bibliography and Short Bibliography.
10251066 ZPO (German Arbitration Law).
Article 1(1) ICC Rules and the decision by the Cour dAppel de Paris, 15.09.1998, Socit Cubic Defense
System c/ Chambre de Commerce Internationale; see also Schtze-Rainer/Aschauer, (2013), p.32, WeigandBhler/Jarvin, Art. 1 ICC Rules, para. 15.81, Raeschke-Kessler/Bhler, ZIP 1987, 1157, 1160, Glossner/
Bredow/Bhler, para. 55 and Lionnet/Lionnet, (2005), chapter. 9, p. 490 under b).
ICC ICArb. Bull. Statistical Reports 1999-2012.
ICC Arbitration in Germany Khner/Flecke-Giammarco
755
One of the key elements of ICC arbitration is to offer flexible arbitration and ADR Rules 4
which allow the handling of disputes originating from both the civil law and the common
law system. This is one of the main reasons why ICC arbitration has become the most widespread arbitration system worldwide. In 2012 alone, arbitral proceedings under the auspices
of the ICC took place in 59 different countries, including Germany.
In the same year, more than 132 German parties (68 claimants and 64 respondents) were in- 5
volved in ICC arbitral proceedings at various places of arbitration, mostly outside Germany.
Thus, German parties were the second greatest users of ICC arbitration in 2012.
The important role played by Germany and its legal culture in the field of international ar- 6
bitration is to a large extent attributable to the high number of German parties involved in
ICC arbitral proceedings. At the same time, the following statistics show that Germany has
become more attractive as a place of arbitration, in particular since the adoption of the new
arbitration law in 1998.7
II.
Statistical Overview
Statistics regarding the involvement of German arbitrators, parties and venues in ICC arbi- 7
tration by 6-year periods (19802009):8
Number of German
Arbitrators per year
(6-year average)
Number of German
Partiesper year
(6-year average)
Number of Places of
(6-year average)
1980-1985
20
58
1986-1991
39 (95% increase)
69 (19% increase)
10.1 (68% increase)
1992-1997
52 (33% increase)
80 (16% increase)
10.6 (5% increase)
1998-2003
76 (46% increase)
115 (44% increase)
21 (98% increase)
2004-2009
95 (25% increase)
130 (13% increase)
26.5 (26% increase)
The above schedule suggests on the one hand, that the number of German arbitrators and 8
parties has increased continuously, as it also holds true for Germany as a venue. On the other
hand, the impact of the new arbitration law of 1998 can best be seen in the rise in the number
of German venues, which have almost tripled since the adoption of the new law. Moreover,
these figures show that there are lot of German parties and arbitrators involved in ICC arbitration, which in their way of thinking may be influenced by the German Arbitration Law
they are familiar with.
The new law is to a large extent based on the UNCITRAL Model Law on International Commercial
Arbitration of 1985.
The average figures for the next 6-year period, so far composed of the years 2010 to 2012 only, are as
follows: number of German arbitrators: 96.6; number of German parties: 136.3; number of places of
arbitration in Germany: 30.
756
III. Main Features of 2012 ICC Rules

9 The ICC Rules9 were last revised in 2012 and are now published together with the ICC
Mediation Rules.10 The Rules for a Pre-Arbitral Referee Procedure11 remain in effect, but it is
expected that they will have limited practical relevance in the future due to the introduction
of the Emergency Arbitrator Provisions in Article 29 and Appendix V to the ICC Rules.
10 The new ICC Rules came into force on 1 January 201212 and added a further layer of flexibility whilst continuing to ensure utmost party autonomy in ever more complex proceedings.
While the core features of the ICC Rules and their overall structure and general functionality
remain intact, some new salient features were also introduced to:
address concerns about time and cost efficiency (cf. Articles 22 (1) and 24 ICC Rules,
Appendix IV, Article 37 (5) ICC Rules);
streamline the prima facie jurisdictional assessment under Article 6 (2) of the 1998 ICC
Rules and introduce a gateway procedure (cf. Articles 6 (3) and (4) ICC Rules);
provide transparent and comprehensive provisions for complex arbitrations (cf. Articles
7 to 10 ICC Rules, Article 12 (8) ICC Rules, Article 36 (4) ICC Rules);
allow more flexibility for the ICC Court to appoint arbitrators directly rather than
through ICC National Committees (cf. Article 13 (4) ICC Rules);
introduce the Emergency Arbitrator procedure (cf. Article 29 ICC Rules and Appendix
V); and
facilitate treaty-based arbitrations and other symbolic, cosmetic, or minor improvements (cf. for example Articles 1 (2), 12 (5), 17, 21 (2), 22 (3), 35 (4) and 36 (7) ICC
Rules).
IV. The ICC Court and its Secretariat

A.
The ICC Court
11 While many arbitration institutions are regional or national in scope, the ICC Court is truly
international. Currently composed of one president, 17 vice-presidents, 87 members and 37
alternate members for a total of 142 court members from 89 countries and every continent,
9
10
11
12
ICC publication No. 846.

ICC publication No. 865. In 2001, the ICC adopted the ADR Rules, replacing the former Conciliation
Rules, cf. ICC publication No. 809. The ADR Rules were recently revised and replaced by the new Mediation Rules, which came into effect on 1 January 2014. In 2003, the revised Expertise Rules entered into
force, cf. ICC publication No. 851. In 2004, a new set of rules was created in the form of the Dispute Board
Rules, cf. ICC publication No. 852. The Expertise and Dispute Board Rules are currently under revision.
ICC publication No. 846. Since 2012, the Pre-Arbitral Referee Rules are published separately from the
ICC Rules, cf. ICC publication No. 857.
Also the ICC Courts website (<www.iccwbo.org> or, for direct access, < http://www.iccwbo.org/
products-and-services/arbitration-and-adr/>) contains valuable information, inter alia on (1) guidance
to parties wishing to file a Request for Arbitration; (2) the ICC Commission Report Techniques for
Controlling Time and Costs in Arbitration, which should be consulted at the early stage of the drafting of the arbitration clause and (3) the cost of the arbitration through a cost calculator, which allows
the estimating of costs of the arbitration as fixed by the ICC Court. The cost calculator only covers the
arbitrators fees and the ICC administrative expenses. It does not include the arbitrators expenses. The
calculation is based on hypothetical average fees of the arbitrators, while the ICC Court may retain higher
or lower fees at the end of the proceedings.
757
the ICC Court is the worlds largest, most representative dispute resolution institution. Germany is currently represented on the ICC Court with one vice-president, one member and
one alternate member.
The ICC Court is not a court in the ordinary sense. As the ICC arbitration body, the ICC 12
Court ensures the application of the ICC Rules and is the only body authorized to administer
arbitrations under the ICC Rules.13 As such, the ICC Court regularly reviews the progress of
all pending cases. It safeguards that measures are taken in order to help the case advance as
quickly as reasonably possible and ensures that the proceedings are conducted in conformity
with the ICC Rules.
B.
The Secretariat
The ICC Court is assisted by a Secretariat (Secretariat) located at the ICC headquarters in 13
Paris, as well as in Hong Kong and New York. The Secretariat currently has a full-time staff
of 90 employees, including 45 lawyers of 25 different nationalities, working in 30 different
languages.14 The Secretariat closely follows all ICC cases and receives copies of all written
communications and pleadings exchanged in the arbitral proceedings. Given its composition and organization, it is available to provide assistance and information in a wide range of
languages.15
The ICC has always valued the German market and it is therefore possible to have a case run 14
entirely in the German language, with German lawyers as contact persons at the Secretariats
level.16
V.
Interplay and Articulation of the ICC Rules with German Arbitration Law
A.
Background
As shown above, most of the ICC arbitration cases involving German parties take place 15
outside of Germany and are therefore subject to the arbitration law of the respective place
of arbitration. However, there is a growing number of international arbitration cases and,
in particular, ICC arbitration cases that take place in Germany17 with German and foreign
companies as parties.
13
14
15
16
17
Article 1 (2) ICC Rules.

These figures, although rather stable over the last years, may obviously vary from time to time. Each of
the Secretariats nine case management teams is normally composed of a Counsel, three Deputy Counsel
and three Assistants. The Secretariat is headed by its management consisting of the Secretary General, the
Deputy Secretary General, the Managing Counsel and the General Counsel.
The Secretariat has state-of-the-art computerized case management and information retrieval systems
which function in four different languages, namely English, French, German and Spanish.
In 2012, 8 cases in which claimant and respondent were both of German nationality were pending before
the ICC Court. Also in 2012, 19 cases had their venue in Germany, 41 cases were governed by German
substantive law and 19 awards were rendered in German. The percentage of German language cases
pending before the ICC Court accounts for approximately 20% of the German-speaking case management teams case load of up to 220 cases at any given time.
Supra III. Statistical Overview. In 2012, the parties chose a city in Germany as the place of arbitration in
18 cases and the Court fixed a place of arbitration in Germany in one case. The most favoured places of arbitration in Germany in 2012 were Frankfurt am Main (10 cases), Munich (3 cases), Berlin (2 cases) and
Hamburg (2 cases); see also Hunter, Arbitration in Germany A Common Law Perspective, SchiedsVZ
2003, 155-163.
758
16 The German arbitration law of 199818 is to a large extent based on the UNCITRAL Model
Law. It is therefore not surprising that, at first sight, there exist little differences between the
German Arbitration Law and the ICC Rules. A more thorough analysis nevertheless reveals
some differences which may be of practical relevance and which should be known of when
commencing ICC arbitration on German soil. The starting point under German law is
1042 (3)Code of Civil Procedure (Zivilprozessordnung ZPO), dedicated to the determination of the rules governing the proceedings, which provides the parties the possibility to
make reference to a set of arbitration rules, such as the ICC Rules, subject to the mandatory
provisions of the German Arbitration Law.19
17 In contrast, Article19 ICC Rules does not make express reference to the mandatory provisions applicable at the place of arbitration. However, it is clear that ICC arbitrators, like all
arbitrators, must be attentive to these mandatory provisions as the breach of such law may,
in most countries, serve as a basis for setting aside an award.20 It is for this reason that when
scrutinizing draft awards in accordance with Article33 ICC Rules, the ICC Court considers,
to the extent practicable, the requirements of mandatory law at the place of arbitration.21
18 In other words, it may be said that under German law the ICC Rules may be agreed upon
subject only to mandatory provisions of German law and that the ICC Rules and the ICC
Courts practice do, in turn, confirm this same principle.
19 Read against this backdrop, also Article 21 ICC Rules and its interplay with 1051 ZPO
underscores the paramount importance of the parties autonomy to determine the rules
governing the proceedings pursuant to 1042 (3)ZPO. Some parts of the German literature
consider that 1051 ZPO constitutes a conflict of law rule which is specifically designed for
arbitrations seated in Germany and thus of mandatory nature, i.e. not subject to a procedural
agreement between the parties to the contrary in the sense of 1042 (3) ZPO.22 According
to this view, the parties choice of the ICC Rules, and therefore also Article 21 ICC Rules,
does not constitute a valid agreement with respect to determination of the applicable rules of
law by the arbitral tribunal.23
20 The predominant view, however, considers that Article 21 ICC Rules, or similar provisions in
other institutional arbitration rules,24 take precedence over 1051 ZPO.25 According to this
approach, Article 21 (1) ICC Rules simply requires that the arbitral tribunal shall apply the
rules of law which it determines to be appropriate and thus relieves the arbitral tribunal from
having to resort to a protracted or overly complex conflict of law rules analysis and therefore
provides it with more flexibility. The practical relevance of this disputed issue is however
limited, as ICC arbitral tribunals will generally aim at also taking into account the lex fori
18
19
20
21
22
23
24
25
The new law entered into force on 1 January 1998 and replaced the former law of 1877 which, since its
inception, had only been subject to sporadic modifications.
Even though there was no corresponding provision under the old German arbitration law, it was established by case law that reference to a set of arbitration rules was permissible.
Derains/Schwartz (2005), p.228. Under Article 41 ICC Rules, however, both the arbitral tribunal and the
ICC Court shall make every effort to make sure that the award is enforceable at law.
Article 6 Appendix II to the ICC Rules.
Cf. MnchKommZPO-Mnch (2012), 1051 ZPO, para. 1.
Cf. MnchKommZPO-Mnch (2012), 1054 ZPO, para. 17.
Cf. Schmidt-Ahrendts/Httler, SchiedsVZ 2011, 269, who consider that s. 23 DIS Rules takes precedence
over 1051 ZPO by virtue of the parties agreement pursuant to 1042 (3) ZPO.
Cf. Fry/Greenberg/Mazza, (2012), p. 221, para. 3-756.
759
principle and traditional conflict of law rules, such as the closest link doctrine foreseen by
1051 (2) ZPO, in a comparative analysis leading to the most appropriate rules of law.
B.
Discussion of the Salient Provisions under the ICC Rules
Hereafter, the most salient provisions of the ICC Rules shall be commented on, with a par- 21
ticular focus on areas where the ICC Rules may be in conflict with provisions under German
law.
1.
Commencement of the Arbitral Proceedings and Articles6 (3) and (4) ICC Rules Decisions
In accordance with Article4 (2) ICC Rules, the date on which the Request for Arbitration is 22
received by the Secretariat shall for all purposes be deemed to be the date of the commencement of the arbitral proceedings.26 This provision deviates from the general rule established
by 1044 sentence 1 ZPO, which provides that [u]nless otherwise agreed by the parties,
the arbitral proceedings in respect of a particular dispute commence on the date on which a
request for that dispute to be referred to arbitration is received by the respondent and thus
requires the notification of the Request for Arbitration to the respondent by the Secretariat.
The date of receipt of the Request for Arbitration by the Secretariat is, inter alia, relevant for 23
determining the applicable exchange rate for all types of claims, be it principal claims, counterclaims or set-off claims which are made in currencies other than US$. This date remains
relevant in case of subsequent increases or decreases in such claims.27
The date of commencement of the arbitration may also have an impact on interest calculation 24
and issues regarding statutes of limitations.28 In the context of an ICC arbitration governed
by German substantive law and conducted under the auspices of the German Arbitration
Law, the question of determining the relevant start date for default interest may be solved
by applying 291, 288 (1) and 187 (1) Civil Code (Brgerliches Gesetzbuch BGB)
mutatis mutandis29 and relying on the day following the date of the receipt of the Request for
Arbitration by the Secretariat. This appears justified, as determining the start date for interest
calculation is a question of substantive law according to the prevailing view in Germany.30
26
27
28
29
30
By contrast, Article 3(1) UNCITRAL Arbitration Rules sets forth that [t]he party or parties initiating
recourse to arbitration [] shall communicate to the other party or parties [] a notice of arbitration.
The Secretariat will however only notify the Request for Arbitration when the requirements of Article
4 (4) (a) and (b) ICC Rules are met, i.e. once claimant has provided a sufficient number of copies of
the Request for Arbitration and paid the filing fee of US$ 3000. There may thus be a significant delay
between the commencement of the arbitration (which may be triggered by the receipt of the Request for
Arbitration by the Secretariat by fax or email) and its notification to respondent.
The cost scale contained in Appendix III to the ICC Rules is US$-based and the advance on costs is
exclusively fixed by the Court in US$. All amounts claimed by a party in different currencies are thus
converted by the Secretariat into US$ at the exchange rate prevailing at the date of commencement of
the arbitration. Article 7 (1) sentence 2 ICC Rules stipulates along the same lines that [t]he date on
which the Request for Joinder is received by the Secretariat shall, for all purposes, be deemed to be the
date of the commencement of arbitration against the additional party. This may lead to the application
of another exchange rate with respect to any claims brought by one of the parties against the additional
party.
Derains/Schwartz (2005), p. 42.
See Part II, Sachs/Lrcher 1044, para. 7.
Palandt/Grneberg, (2013), 291 Rn. 1 and Reithmann/Martiny-Martiny, (2010) para. 336 with further
references.
760
The question of determining the relevant start date for a suspension of the statutes of limitations is also to be resolved with reference to the applicable substantive law.31 The actual date
of receipt of a Request for Arbitration by the Secretariat fulfilling all formal requirements
stipulated by Article 4 ICC Rules, which often includes the nomination of an arbitrator in
the Request for Arbitration pursuant to Articles 4 (3) (g) and 12 (4) ICC Rules, may thus be
sufficient for the purposes of 204 (1) No. 11 BGB and 1044 ZPO. 32
25 Should respondent not file an Answer within 30 days after receipt of the Request for Arbitration or should it raise one or more pleas concerning the existence, scope or validity of the
arbitration agreement or concerning whether all of the claims made in the arbitration may be
determined together in a single arbitration, the Secretary General will act as a gate keeper and
decide pursuant to Article 6 (3) ICC Rules whether such jurisdictional plea will be submitted to the Court or left to the arbitral tribunal to decide.33
26 The ICC Court, when the matter has been referred to it by the Secretary General pursuant
to Article 6 (3) ICC Rules, must ultimately decide whether the arbitration shall proceed. In
accordance with Article6 (4) ICC Rules, for an arbitration to proceed the ICC Court must
be satisfied that, prima facie, an arbitration agreement under the ICC Rules may exist. In the
affirmative, any decision as to the jurisdiction of the arbitral tribunal shall be taken by the
arbitral tribunal itself as expressly stated by Article 6 (5) ICC Rules.
27 Should the Court render a negative prima facie decision because it is not satisfied that an
arbitration agreement under the ICC Rules may exist, the parties will be notified that the
arbitration cannot proceed.34 In such event, the question arises regarding what remedies
the parties are left with, apart from retaining the right to ask any court having jurisdiction
whether there is a binding arbitration agreement.
28 Some German authors35 consider that the negative prima facie decision of the ICC Court
should be treated as an award on procedural issues (Prozessschiedsspruch), with the consequence that it could be set aside according to 1059, 1062 (1) No. 4 ZPO. Another view36
considers that the ICC Courts prima facie decision should not be treated as an award on
procedural issues, but rather as a mere administrative decision of final nature.
31
32
33
34
35
36
See Part II, Sachs/Lrcher, 1044, paras 3 et seq.

Sandrock FS-Bckstiegel (2001), p. 671 (679). It will ultimately be for the arbitral tribunal to determine
whether an allegedly pathological Request for Arbitration was sufficient to suspend a limitation period.
The Secretariat will not systematically verify compliance with all of the requirements of Article 4 (3)
ICC Rules and leave it to the arbitral tribunal to determine the validity or admissibility of the Request
for Arbitration under the ICC Rules or the applicable law, cf. Fry/Greenberg/Mazza, (2012), p. 47, para.
3-118.
The Secretary General took a total of 170 Article 6 (3) ICC Rules decisions based on the Secretariats
respective checklist and analysis in the year 2012. In 44 cases (25.9%), the matter was referred to the ICC
Court for a decision pursuant to Article 6 (4) ICC Rules. In all other 126 cases (74.1%), the matter was
referred directly to the arbitral tribunal for a decision.
In view of the administrative nature of a negative Article 6 (4) ICC Rules decision by the ICC Court,
Article 6 (7) ICC Rules confirms that any such decision shall not prevent a party from reintroducing
the same claim at a later date in other proceedings. Depending on the complexity of the case, the ICC
administrative expenses are normally fixed by the ICC Court at US$ 5,000 or US$ 10,000 in case of a
negative decision and the corresponding financial loss is to be absorbed exclusively by claimant.
Khadjavi (2002), p.98 et seq.; Wolf (1992), p.122.
Raeschke-Kessler/Berger (1999), paras327, 541; Jarvin, The sources and limits of the arbitrators powers,
Arb.Int. 1986, 140 (141, 160).
761
In the authors view, it becomes quite clear from the ICC Rules that the latter view must 29
be followed.37 Indeed, the ICC Court is an administrative body38 that does not itself settle
disputes, but merely ensures the application of the ICC Rules.39 Consequently, only the
arbitrators can issue awards as defined in Article2 (iii) ICC Rules. Further, Article 32 (2)
ICC Rules states that an award must state the reasons upon which it is based. In practice, the
ICC Courts decisions are based on extensive discussions between the Court members that
would be fairly difficult, if not impossible, for the Secretariat or the Court to transcribe into a
reasoned decision that could be communicated to the parties.40
Also, the power of the ICC Court to act as the ultimate gate keeper in determining whether 30
ICC arbitrations will proceed has broadly been confirmed by national courts.41 In the Cekobanka v. ICC42 case, in which the ICC Court took a negative decision under Article6 (2) 1998
ICC Rules, the French court did not itself consider whether arbitral jurisdiction existed, but
only whether the ICC Court had fulfilled its role under the ICC Rules, which the French
court considered to be administrative in nature.
In case the ICC Court takes a negative decision under Article6 (4) ICC Rules, a claimant 31
should seek relief under 1032 (2) ZPO in the form of a declaration on the admissibility
of the arbitral proceedings. This recourse is expressly suggested by Article 6 (6) ICC Rules
and admissible, since at that stage the arbitral tribunal is not yet constituted. This action is
to be filed with the Higher Regional Court (Oberlandesgericht OLG) designated in the
arbitration clause for that purpose, and, failing such designation, with the OLG of the place
of arbitration in accordance with 1062 (1) No. 2 ZPO.
In practice, the likelihood for the above situation to occur is extremely rare. First, the ICC 32
Court interprets the prima facie existence of an arbitration agreement in the broadest possible
manner. Second, most pleas concerning the validity and scope of the arbitration agreement
will not even be referred to the Court by the Secretary General for a decision under Article
6 (4) ICC Rules, but directly be addressed by the arbitral tribunal after having granted the
parties an opportunity to comment. Third, only in cases in which the existence of a valid
arbitration agreement binding all parties to the arbitration is seriously called into question
will the Secretary General refer such determination to the Court, pursuant to Article 6
(3) ICC Rules. Already under the ICC Courts old practice, only a very limited number of
37
38
39
40
41
42
Cour de Cassation 06.07.2000, Yearbook XXV (2000), 451-453; in that decision the Cour de Cassation
grants to the ICC Rules the character of rules of law.
Cour de Cassation 20.02.2001, Rev.Arb. 2001, 511; supra note 4.
Article1 (2) ICC Rules.
Currently, this is only expressly stated for decisions as to the appointment, confirmation, challenge or
replacement of an arbitrator (Article11 (4) ICC Rules). Although not encountered in practice to date,
a derogation from Article 11 (4) ICC Rules is conceivable as the ICC Commission Report States, State
Entities and ICC Arbitration suggests that states seeking transparency in investment arbitration may
exceptionally wish for the ICC Court to communicate the reasons for its decisions on objections to the
confirmation of arbitrators, non-confirmations of arbitrators, and challenges and replacements of arbitrators. The ICC Commission Report thus suggests a model clause for contracting states to include in their
BIT, multilateral investment treaty, investment chapter in their FTA, or domestic investment law (cf. ICC
publication No. 862, para. 21).
Craig/Park/Paulsson (2000), p.160.
TGI de Paris 08.10.1986, Rev.Arb. 1987, 367; Fouchard, Les institutions permanentes darbitrage devant
le juge tatique, Rev.Arb. 1987, 225 (233).
762
negative Article6 (2) decisions under the 1998 ICC Rules were rendered per year.43 In most
of these instances the ICC Court took a negative decision for obvious reasons, such as the
clear designation of a different arbitration institution. It is not likely that a German court
would find against the ICC Courts decision in such circumstances.
33 The only instance in which a state court could reasonably compel arbitration would therefore
seem to be a case of de jure or de facto denial of justice. In any event, the ICC Court takes this
concern into consideration when deciding whether or not to set the arbitration in motion
34 A majore ad minus the same holds true with respect to a positive decision under Article6
(4) ICC Rules by which the ICC Court is prima facie satisfied that an arbitration agreement
under the ICC Rules may exist and that the case shall therefore proceed. In that situation,
Article6 (5) ICC Rules provides that any decision as to the arbitral tribunals jurisdiction
shall be taken by the arbitral tribunal itself. This decision is normally rendered in the form
of an award. 1040 (3) ZPO merely states that these decisions should take the form of a
preliminary ruling. Some legal commentators do not consider these rulings to constitute
awards.44 However, decisions on jurisdiction being crucial by nature, the Secretariat will
make sure they are submitted to the ICC Court for scrutiny irrespective of their characterization as awards or mere procedural orders.
35 In contrast, the ICC Courts positive decision under Article6 (4) ICC Rules is, again, administrative in nature and cannot be characterized as an award.
36 However, in principle, 1032 (2) ZPO also provides for the possibility to file an application with the competent court seeking a declaration on the non-admissibility of the arbitral
proceedings in the event the ICC Court has rendered a positive Article6 (4) ICC Rules
decision. This is so since at the stage of the Article6 (4) ICC Rules decision of the ICC
Court, the arbitral tribunal is not yet constituted. It may nevertheless be hoped and expected
that the German courts, if seized, would accept the ICC Courts positive Article6 (4) ICC
Rules decision and would respect the mechanism foreseen under the ICC Rules, whereby
the arbitral tribunal must decide on its own jurisdiction once constituted.45
37 Thus, in accordance with 1040 (3) ZPO, the arbitral tribunals decision in which it retains
jurisdiction can be challenged by each party within one month after having received written
notice of the decision. This action must be filed with the OLG designated in the arbitration
clause for that purpose and, failing such designation, before the OLG of the place of arbitration, in accordance with 1062 (1) No. 2 ZPO.
38 In summary, actions against the ICC Courts decisions under Article6 (4) ICC Rules should
be made under 1032 (2) ZPO. While there is no particular issue in compelling arbitration,
43
44
45
In a six year period ranging from 2006 to 2011, a total of 1,309 Article 6 (2) decisions under the 1998 ICC
Rules were taken by the ICC Court. In 1,170 cases (89.38 %), the ICC Court was prima facie satisfied
that an arbitration agreement may exist and decided to let the matter proceed. In 88 cases (6.72 %), the
ICC Court took a partially negative Article 6 (2) decision excluding certain parties or claims from the
arbitration and in 51 cases (3.90 %) the ICC Court decided not to set in motion the arbitration at all.
Zwischenentscheid in the sense of 1040 (3) sentence 1 ZPO which is not an award according to
Thomas/Putzo-Reichold (2013), 1040, para. 6 and Musielak-Voit (2013), 1054, para. 2. In any event,
such preliminary award will not be subject to the challenge procedures under 1059 seq. ZPO but is
rather a decision sui generis which is only subject to court control under 1040 (3) sentence 2 ZPO, cf.
Part II, Huber/Bach, 1040, paras 32 et seq.
Supra, note 42, the French courts decision implicitly recognized the considerable discretionary power
the ICC Court enjoys when deciding whether to set an arbitration in motion.
763
it would seem unlikely for the German courts to decide against the ICC Courts decision to
set the case in motion.
2.
Multi-Party and Multi-Contract Arbitrations, Joinder, Consolidation (Articles 7 10 ICC

Rules)
Although Articles 7 10 ICC Rules do not contain any provisions which may give rise to 39
potential conflicts with German law in the authors view, as salient new features of the ICC
Rules they deserve to be given special attention.
Disputes arising from business transactions nowadays often involve multiple parties or 40
multiple contracts and thus significantly add to the complexity of administering arbitrations
under the ICC Rules. The recent codification of the ICC Courts established multi-party and
multi-contract practice46 in the ICC Rules recognizes the fact that disputants are moving
away from the traditional one claimant/one respondent arbitrations arising out of one sole
contract.47
In practice, the ICC Court applies a holistic assessment aiming at establishing prima facie 41
consent in any type of multi-polar arbitration. Articles 7 (1), 8 (1) and 9 (1) ICC Rules
all contain cross-references to Articles 6 (3) and (4) ICC Rules and consciously follow the
same design plan. As set out above, Articles 6 (4) (i) and (ii) ICC Rules increase transparency and should serve as a roadmap for users when drafting ICC arbitration clauses in complex multi-party and/or multi-contract cases. Its two alternatives, Article 6 (4) (i) (which
is applicable when more than two parties and one arbitration agreement are involved in a
single case) and 6 (4) (ii) (which is applicable when two or more parties and two or more
arbitration agreements are involved in a single case), cover any conceivable type of multiparty and multi-contract scenario and provide the foundation for resolving all jurisdictional
issues under the ICC Rules.
Article 7 ICC Rules aims at putting all parties on equal footing when it comes to naming 42
the parties to the arbitration. It introduces the possibility of filing a Request for Joinder
that must fulfill the formal requirements of a Request for Arbitration pursuant to Articles 7
(1)(3) ICC Rules and leads to the right of the additional party to set forth any jurisdictional
46
47
Whereas multi-party and multi-contract arbitrations and the joinder of additional parties were not
expressly foreseen under the 1998 ICC Rules, the consolidation of two arbitrations into a single arbitration was already foreseen by Article 4 (6) 1998 ICC Rules. Under the applicable test for Article 6 (2)
1998 ICC Rules, the ICC Court mainly examined whether (i) all parties have signed all contracts, (ii)
all arbitration agreements are compatible and (iii) all contracts relate to the same economic transaction.
Under the previous joinder practice which was now replaced by Article 7 ICC Rules, the ICC Court
examined whether (i) the party to be joined is a signatory to the arbitration agreement, (ii) specific claims
against the additional party are being introduced and (iii) no confirmation or appointment of arbitrators
has taken place. Under Article 4 (6) 1998 ICC Rules dealing with consolidation of cases the ICC Court
examined whether (i) the parties in all cases are identical, (ii) the cases relate to the same legal relationship and (iii) the Terms of Reference have not been established.
In 30.7% of all ICC arbitrations pending in 2012, more than two parties were involved. The highest number of parties encountered in an ICC arbitration in a single case over the last ten years was 82 in 2004. This
increased level of sophistication is further evidenced by the fact that the ratio between contracts and cases
has constantly increased over recent years and is now at 1.18 contracts/case in 2012.
764
objections, to file an Answer or to introduce claims against any of the parties pursuant to
Article 7 (4) ICC Rules.48
43 Articles 8 and 9 ICC Rules serve as a clarification that no institutional barriers for crossclaims or multi-contract arbitrations exist and that the ICC Rules are aligned with the general
obligation of a party to indicate the arbitration agreement under which each claim is made
in its Request for Arbitration, Answer or Request for Joinder pursuant to Articles 4 (3) (f), 5
(5) (d) and 7 (2) (c) ICC Rules.
44 In comparison with Article 4 (6) 1998 ICC Rules, Article 10 ICC Rules broadens the scope
of consolidation of arbitrations in order to adapt to the commercial realities described above.
This is achieved by no longer requiring the identity of the parties in the arbitrations concerned in Article 10 (b) ICC Rules or by no longer relying on the establishment of the Terms
of Reference as the last possible opportunity for introducing a request for consolidation. In
practice, most requests for consolidation will fall under Article 10 (b) ICC Rules (which
applies when claims are made under the same arbitration agreement) or Article 10 (c) ICC
Rules (which applies when claims are made under more than one arbitration agreement),
the latter establishing a test similar to the criteria mentioned in Article 6 (4) ICC Rules.49
3.
Designation of Arbitrators (Articles 1113 ICC Rules)
45 The ICC Rules provide very detailed provisions regarding the constitution of the arbitral
tribunal. These provisions prevail over the corresponding provisions foreseen in 1035 et
seq. ZPO, which are mostly of dispositive nature. Under the ICC Rules, the arbitral tribunal
is generally composed of one or three arbitrators.50 When only one arbitrator is to be designated, he or she is appointed by the ICC Court, unless the parties agree otherwise.51 When
three arbitrators are to be designated, each party usually nominates an arbitrator52; the third
48
49
50
51
52
Out of 22 joinder requests in 2012, 6 joinder requests were introduced under the 1998 ICC Rules and 16
joinder requests were introduced under Article 7 ICC Rules. Interestingly, the ICC Court only rejected
two of the joinder requests made by parties acting under the 1998 ICC Rules and accepted the other four
joinder requests made under the 1998 ICC Rules. All joinder requests made under the 2012 Rules were
directly referred to the arbitral tribunal for a decision (14 joinder requests) or lead to a positive Article 6
(4) ICC Rules decision by the ICC Court (2 joinder requests). Virtually all Requests for Joinder which
were filed under Article 7 ICC Rules were thus consensual in the first year of application of this provision.
Out of 10 consolidation requests in 2012, 7 consolidation requests were accepted by the ICC Court (3
consolidation requests under Article 4 (6) 1998 ICC Rules and 4 consolidation requests under Article 10
ICC Rules). At the same time, the ICC Court rejected three consolidation requests (two consolidation
requests were made concerning cases among which one case was governed by the 1998 ICC Rules and
the other case by the ICC Rules and one consolidation request was made concerning two cases equally
governed by the ICC Rules).
Article 12 (1) ICC Rules. The ICC Court, guided by the principle of party autonomy enshrined in Article
11 (6) ICC Rules, will however endeavor to give effect to any party agreement to the extent that it is not
contrary to the principles of Article 11 ICC Rules or the spirit of Articles 12 and 13 ICC Rules as well as
operable under the given circumstances.
Article 12(3) ICC Rules foresees the joint nomination of sole arbitrators by the parties as the default rule.
The statistical relevance of appointments by the ICC Court is however particularly high with respect to
sole arbitrators. In the period between 2007 and 2011, 251 (22%) of all sole arbitrators were nominated
jointly by the parties whereas 871 (77%) sole arbitrators were appointed by the ICC Court and 15 (1%)
sole arbitrators were selected by way of other appointment mechanisms.
Article 12(4) ICC Rules. In the period between 2007 and 2012, 3,922 (94.51%) of all co-arbitrators were
party-nominated whereas the ICC Court only appointed 228 (5.49%) of all co-arbitrators following a
765
arbitrator, who presides the arbitral tribunal, is nominated either by agreement of the parties
or by the co-arbitrators, or appointed by the ICC Court.53 Where the parties are unable to
agree on the number of arbitrators, the ICC Rules provide that the ICC Court shall appoint
a sole arbitrator, save where it appears to the court that the dispute is such as to warrant the
appointment of three arbitrators.54
Obviously, when deciding this issue the main criterion looked at by the ICC Court, besides 46
the complexity of the case, is the amount in dispute. Even though there is no clear cut
amount or rule, the amount of USD 2,000,000 and later USD5,000,000 previously served
as a yardstick. Beyond this amount, it was likely that a three-member arbitral tribunal would
be constituted. The ICC Courts practice has however evolved. Although there is still no
amount in dispute that per se triggers the ICC Courts decision to appoint three arbitrators,
it has been unlikely in the ICC Courts recent practice to decide in favour of a three member
arbitral tribunal where the amount in dispute remained below US$ 5,000,000, or to decide in
favour of a sole arbitrator where the amount in dispute exceeded US$ 30,000,000. 55
When it comes to the appointment of arbitrators, the ICC Court enjoys the support of 47
national committees and groups in some 90 different countries. These national committees
are able to identify potential arbitrators with appropriate qualifications all over the world.
The ICC Court does not require that arbitrators be selected from pre-established lists, but
relies on the national committees expertise and first-hand knowledge of the local arbitration
community. The involvement of national committees in the appointment of arbitrators is
one of the distinctive features of ICC arbitration and will remain the general rule despite the
addition of provisions such as Article 13 (4) ICC Rules, which allows bypassing the national
committee system only in closely enumerated circumstances and facilitates direct appointments by the ICC Court.
Article13 (5) ICC Rules, whereby the president or the sole arbitrator shall be of a nationality 48
other than those of the parties, is of particular relevance when the ICC Court is called upon
to appoint an arbitrator. This provision may still come as a surprise for some users who would
rather expect that the choice of the president is in the first instance aligned with the applicable
law. However, the applicable law is only one of several criteria looked at by the ICC Court
when choosing the appropriate candidate to act as sole arbitrator or president. 56 In fact, and
53
54
55
56
partys non-participation or failure to nominate (jointly) a co-arbitrator.

Article 12(5) ICC Rules foresees the appointment of the president of the arbitral tribunal by the ICC
Court as the default rule. The statistical relevance of appointments by the ICC Court is however significantly lower with respect to presidents. In the period between 2007 and 2011, 129 (8%) of all presidents
were jointly nominated by the parties whereas 834 (51%) were jointly nominated by the co-arbitrators,
644 (39%) were appointed by the ICC Court and 29 (2%) were appointed by using other mechanisms
or appointing authorities.
Article 12 (2) ICC Rules thus creates a reversible presumption in favour of a sole arbitrator. Special factors that will be taken into account by the ICC Court are, for example, the involvement of a state or state
entity and the legal or technical complexity of the subject matter of the dispute which may militate in
favour of the ICC Court deciding to submit the matter to a three member arbitral tribunal.
Fry/Greenberg, The Arbitral Tribunal: Applications of Articles 7-12 of the ICC Rules in Recent Cases,
(2009) 20(2) ICC ICArb. Bull. para. 18. The number of arbitrators in cases submitted to the ICC Court
between the years 2007 to 2012 reflects this practice: 2,052 (60.23%) cases were referred to a three
member arbitral tribunal whereas only 1,355 (39.77%) cases were referred to a sole arbitrator.
Article 13 (1) ICC Rules lists several criteria and the ICC Court has also regard to the prospective arbitrators specific qualifications, the nature and complexity of the dispute, the language of the arbitration,
the place of arbitration and the peculiarities of each national committee. The arbitrators availability has
766
contrary to what some users might assume, many cases can be decided solely on the basis of
the provisions of the contract. In those cases, the applicable law does not play a decisive role.
In that sense, Article21 (2) ICC Rules states, [t]he arbitral tribunal shall take account of the
provisions of the contract, if any, between the parties and of any relevant trade usages.
4.
Challenges and Replacement of Arbitrators (Articles 1415 ICC Rules)
49 In accordance with Article14 ICC Rules, the ICC Court decides on the admissibility and
merits of the challenge of arbitrators. Pursuant to Article11 (4) ICC Rules, those decisions
shall be final.
50 However, 1037 (3) ZPO offers the possibility to seize the competent German court in cases
where a challenge is rejected. The question thus arises who should have the last say as regards
the challenge of arbitrators. At first sight, the possibility to definitively submit this question
to a body such as the ICC Court appears to be in line with 1037 (1), 1042 (3) ZPO,
which provide that the parties may agree upon a set of arbitration rules, also with respect
to the procedure as to the challenge of arbitrators. However, 1037 (3) ZPO provides that
if a challenge under any rules agreed upon by the parties is not successful, the challenging
party may request, within one month after having received notice of the decision rejecting
the challenge, the competent court to decide on the challenge.
51 Hence, the decision of the ICC Court to reject a challenge against an arbitrator may be
reviewed by the competent state court, which, in accordance with 1062 (1) No. 1 ZPO,
is the OLG designated in the arbitration agreement, and failing such designation the OLG
of the place of arbitration. While this recourse is not admitted in some albeit important
non-Model Law countries,57 it has been accepted by Model Law countries, such as Germany,
which have adopted Article13 (3) UNCITRAL Model Law in identical terms.
52 In view of the clear wording of 1037 (1) ZPO, which states that the parties cannot derogate
from the procedure foreseen in 1037 (3) ZPO,58 it would seem a difficult task for a party
to argue that another party should be deprived of seizing the competent OLG in cases where
an arbitrator could not be successfully challenged by that party before the ICC Court.59 The
57
58
59
become one of the most important criteria listed in Article 13 (1) ICC Rules to be considered by the
ICC Court when confirming and appointing arbitrators. In fact, as of August 2009, i.e. under Article 9 (1)
1998 ICC Rules as an identical provision, prospective arbitrators are required to fill in an additional form
indicating the number of arbitration and litigation cases the arbitrator is currently involved in.
E.g. France (Seraglini/Ortscheidt p. 674 Rn. 743 (2013) with reference to Cour de cassation Civ. 2e, 7. Oct.
1987, Rev. arb. 1987, p. 479) or Switzerland (Voser/Fischer (2013) p. 68, with reference to Swiss Federal
Tribunal 4A_644/2009 of 13 April 2010); however, in the case AT&T Corp v. Saudi Cable Co [2000] 1
All ER 625 (CA) the English Court of Appeal held that Article7 (4) 1998 ICC Rules (now Article 11 (4)
ICC Rules) did not operate to exclude the English courts jurisdiction to remove an ICC arbitrator under
the Arbitration Act 1950 where the arbitrator had been unsuccessfully challenged before the ICC Court.
For more detail see Part II, 1037 (3) ZPO.
In that sense Raeschke-Kessler/Berger (1999), paras545-546 who refer to the Bill of the Arbitration Law
Reform Act and Lionnet/Lionnet (2005), p.251, who overlook that Article 7 (4) 1998 ICC Rules is
equivalent to the former Article2 (13) 1988 ICC Rules in terms of finality of the ICC Courts decision
regarding challenges. In contrast, Schwab/Walter (2005), Chap. 49 para.6 seem to accept that the ICC
Courts decision cannot be reviewed by the competent state court by means of 1037 (3) ZPO, but can
incidentally be controlled at the stage of the enforcement proceedings. This corresponds to the position
in non-model law countries like France (Seraglini/Ortscheidt, p. 674, para. 743 (2013)) and Switzerland
(Voser/Fischer, (2013) p. 68).
767
main argument which could be asserted by a party in order to prevent a review by the German Courts would be that the decisions of the ICC Court in relation to the challenge of
arbitrators are final pursuant to Article 11 (4) ICC Rules.
As the procedure foreseen is not adapted to ICC arbitration, it may be expected from the 53
German courts, when confronted with a request under 1037 (3) ZPO in an ICC arbitration, that a kind of judicial self-restraint be exercised. In other words, the German courts
should normally follow the ICC Courts decision, whose experience and reputation in this
particular field is universally recognized.
5.
Fixing of the Advance on Costs (Article36, Article1 (1) of Appendix III ICC Rules)
Under the ICC system, a claimant is requested to effect payments at three different stages. As 54
such, the Request for Arbitration must be accompanied by a non-reimbursable filing fee of
US$3,000, in accordance with Article1 (1) of Appendix III to the ICC Rules. Thereafter, in
accordance with Article36 (1) ICC Rules, the claimant must pay the so-called provisional
advance fixed by the Secretary General. This amount is intended to cover the costs up to
the Terms of Reference. As soon as practicable, usually once the respondents Answer has
been received,60 the ICC Court fixes the advance on costs in accordance with Article36 (2)
ICC Rules. As a general rule, each party is thereafter invited to pay half of the advance on
costs as fixed by the ICC Court within 30 days (cf. Article36 (3) ICC Rules). The payments
already made by claimant are considered a partial payment of claimants share. In any event,
the Secretariat will ensure that the full advance is paid when the case passes the Terms of
Reference stage. 61
In cases where one party fails to pay its half of the advance on costs, the other party is free to 55
pay the outstanding amount in order to prevent the case from being withdrawn pursuant to
Article36 (6) ICC Rules.62 Alternatively, a claim may be filed before the state courts against
the defaulting party. German courts seem to accept the principle that both parties have to
contribute to the advance payments in equal shares.63
Even though none of these decisions were rendered with respect to the ICC Rules, the 56
same approach would most likely be followed in cases under the ICC Rules. As a further
alternative, a party may request the arbitral tribunal to render a partial award ordering the
60
61
62
63
Since the advance on costs is fixed based on an ad valorem system and the cost scales contained in Appendix III to the ICC Rules, the Secretariat will make every effort to obtain information regarding the
number of arbitrators and the aggregate amount in dispute or estimated monetary value of all claims.
The ICC Rules now require the parties to specify the monetary value of all unquantified parts of their
relief sought in any Request for Arbitration (Article 4 (3) (d) ICC Rules), Answer (Article 5 (5) (b) ICC
Rules) or Request for Joinder (Article 7 (2) (c) ICC Rules).
Article 1 (3) Appendix III to the ICC Rules.
Article 36 (3) ICC Rules, in pertinent part, states: However, any party shall be free to pay the whole of
the advance on costs in respect of the principal claim or the counterclaim should the other party fail to
pay its share. Article36 (6) ICC Rules, in pertinent part, states: When a request for an advance on costs
has not been complied with, and after consultation with the arbitral tribunal, the Secretary General may
direct the arbitral tribunal to suspend its work and set a time-limit which must be not less than 15 days,
on the expiry of which the relevant claims, or counterclaims shall be considered as withdrawn.
The Local Court (Amtsgericht AG) Dsseldorf (AG Dsseldorf 17.06.2003, SchiedsVZ 2003, 240, by
means of summary proceedings (Urkundsverfahren)) as well as the Regional Court (Landgericht LG)
Bielefeld (LG Bielefeld 21.10.2003, available at <www.dis-arb.de>) both ordered the defaulting party to
pay its share of the advance on costs.
768
reimbursement of the share of the advance on costs paid pursuant to Article 36 (5) ICC
Rules in substitution for the defaulting party.
57 According to the contractual approach,64 Article 36 (2) ICC Rules, which establishes the
principle that [t]he advance on costs fixed by the Court [] shall be payable in equal shares
by the claimant and the respondent, creates a reciprocal substantive obligation between the
parties, whose breach can be enforced like any other term of a contract by bringing a claim
for damages. Pursuant to the procedural approach, Article 36 (2) ICC Rules merely creates
procedural obligations between the parties and the ICC and any order or award dealing with
the consequences of a partys breach thereof must meet the pertinent higher standards of a
conservatory and interim measure pursuant to Article 28 ICC Rules. While an increase of requests for a partial award based on the contractual approach can be identified in recent years,
there are numerous examples of ICC awards both accepting and rejecting such requests for
reimbursement.65
58 Pursuant to Article 36 (4) ICC Rules, the ICC Court may also fix one or more advances on
costs where claims are made under Articles 7 and 8 of the Rules. However, in most situations
in which one or more additional parties are joined or claims are made between multiple parties, the ICC Court is likely to fix only one advance on costs and determine the respective
portions thereof to be paid by each party. Where the ICC Court deviates from the general
principle that the advance on costs is payable in equal shares pursuant to Article 36 (2) ICC
Rules and decides to apportion the advance on costs, it determines the amount that each
party must pay towards the advance on costs. When doing so, the ICC Court will ensure that
a party shall only contribute towards the claim or claims in which it is either involved as a
claimant-party or a respondent-party.66
6.
Terms of Reference, Case Management Conference and Procedural Timetable (Articles23

and 24 ICC Rules)
59 The ICC Rules require that, within two months of receiving the file, the arbitral tribunal prepare and submit to the ICC Court a document defining its Terms of Reference.67 As a unique
feature of ICC arbitration, the Terms of Reference serve the purpose of bringing the arbitrators and parties together at an early stage of the proceedings and help identify the issues they
will be required to deal with, as well as the procedural details that need to be addressed. The
ideal forum to discuss those details, including the Procedural Timetable, is the Case Management Conference which was newly introduced by the 2012 ICC Rules as another unique
feature aiming at tailor made proceedings. The Case Management Conference promotes the
arbitral tribunals early attention to the specificities of the case and requires it to consult the
parties before rendering procedural decisions. The initial Case Management Conference
should take place either as a procedural meeting or by way of a telephone or video conference
and may be repeated throughout the proceedings. It is an excellent occasion to discuss the
64
65
66
67
Secomb, Awards and Orders Dealing with the Advance on Costs in ICC Arbitration: Theoretical Questions and Practical Problems, (2003) 14(1) ICC ICArb Bull. 59 (60) and Fadlallah, Payment of the
Advance to Cover Costs in ICC Arbitration: The Parties Reciprocal Obligations, (2003) 14(1) ICC
ICArb Bull. 53(55).
Fry/Greenberg/Mazza, (2012), p. 385, para. 3-1412.
The ICC Court will apportion the advance on costs by calculating advances for each set of claims, adding
up all partial advances and calculating the percentage that each partial advance forms as part of the total
amount. Such apportionment will generally not increase the advance on costs fixed by the ICC Court.
This deadline can be extended by the ICC Court in accordance with Article23 (2) ICC Rules.
769
case management techniques contained in Appendix IV to the ICC Rules or other consensual approaches to procedural issues such as document production, a possible bifurcation
or the sequence and content of submissions with the parties counsel. The arbitral tribunal
may further require the attendance of the parties internal representatives and thus bring all
players and decision makers in the arbitral process to the table already at the outset of the
proceedings.
The Terms of Reference are not intended to replace the parties arbitration agreement. How- 60
ever, because the Terms of Reference normally bear the signatures of all of the arbitrators and
the parties, they may nevertheless produce a number of effects. For example, they may be
regarded as a form of a submission agreement in those jurisdictions where this is required.68
This is, however, not necessary in Germany. The term Schiedsvereinbarung (arbitration agreement) in 1029 (2) ZPO equally covers submission agreements (Schiedsabrede) and arbitration clauses (Schiedsklausel) and the following provisions in the German arbitration law refer
to the term Schiedsvereinbarung interchangeably. Thus, the same consequences are attached
to these two different forms of agreement under German law.
However, where there may be doubts as to the existence or validity of an arbitration agree- 61
ment between the parties, the Terms of Reference may serve as an agreement to arbitrate also
from a German law perspective. The condition for this would however be that both parties
have actually signed the Terms of Reference.69 Thus, the OLG Kln in a decision of 1992
refused to treat the Terms of Reference signed by only one of the parties as an arbitration
agreement.70
Parties contesting the jurisdiction of the arbitral tribunal may therefore be reluctant to sign 62
the Terms of Reference for fear of waiving their objections in this regard. It has, however,
been accepted by state courts that a party does not waive its position on jurisdiction and
agree to arbitration if it signs the Terms of Reference subject to an express reservation.71
It is further sometimes possible at the Terms of Reference stage for the parties to reach agree- 63
ment on certain outstanding issues, such as the language of the arbitration or the governing
substantive law. Users should not overlook that a significant proportion of ICC arbitration
cases are amicably settled at the stage of the Terms of Reference.72
As one of the features already introduced under the 1998 ICC Rules, the Procedural Time- 64
table under Article24 (2) ICC Rules has proven to be an important tool. It has been welcomed by most arbitrators and parties in the German speaking countries and elsewhere as
68
69
70
71
72
Under French law, the scope of the arbitration clause ratione materiae is wider in case of a submission
clause (Arts 2059, 2060 Code Civil, compromis) than in case of an arbitration agreement (Art. 2061
Code Civil clause darbitrage).
For the avoidance of doubt, some arbitral tribunals therefore insert a paragraph in the Terms of Reference
stating that each original [thereof] forms an original arbitration agreement for the purposes of Art. II and
IV (1) of the New York Convention.
OLG Kln, 16.12.1992, Yearbook XXI (1996), 535 (536).
Craig/Park/Paulsson (2000), p.286 et seq., decisions in that sense were rendered in France and England
and it may be assumed that the German courts would take the same approach.
For example, in 2012 a total of 398 cases were withdrawn at different stages of the arbitration. 208 cases
(52.26%) were withdrawn before the arbitral tribunal was constituted, 61 cases (15.33%) were withdrawn after the arbitral tribunal was constituted, 105 cases (26.38%) were withdrawn after the Terms
of Reference were established, 22 cases (5.53%) were withdrawn after a partial or interim award was
rendered and 2 cases (0.50%) were withdrawn at the final award stage.
770
a useful organizational tool. The Procedural Timetable, unlike the Terms of Reference, may
be adapted from time to time and should therefore be established in a separate document.73
Otherwise, the Procedural Timetable may be considered as part of the parties agreement as
reflected in the Terms of Reference by which the arbitral tribunal would be bound without
having any discretion to unilaterally deviate from it,74 as only the parties can deviate from such
agreement by way of an actus contrarius. It is thus important to merely insert a cross-reference
to the Procedural Timetable or any specific procedural rules for the arbitration which are to
be established in separate documents and should not form part of or be integrated into the
Terms of Reference. This practice has been recently confirmed by the Flex-n-Gate vs. GEA
decision of the OLG Frankfurt75: as a result of having been agreed between the parties, the
Procedural Timetable or specific procedural rules could otherwise constitute an agreement
between the parties in the sense of 1059 (2) 1 (d) ZPO. If the Procedural Timetable or
specific procedural rules were not fully complied with, it is conceivable that the arbitral
proceedings did not correspond to [] an admissible agreement between the parties in the
sense of the above provision, and any award rendered by the arbitral tribunal may ultimately
be set aside if a timely objection to said irregularity has been raised pursuant to 1027 ZPO.
65 The Procedural Timetable should further, to the extent possible, take into account the
6-month time limit for rendering the final award (cf. Article30 (1) ICC Rules) and reflect all
salient stages of the arbitral proceedings, such as submissions of additional briefs and witness
statements, bifurcation of the proceedings, production of documents, hearings, interim/
partial awards, post-hearing briefs, cost statements, closing of the proceedings and expected
date for the submission of the draft final award for scrutiny by the Court.
7.
Conduct of the Arbitral Proceedings
66 The newly introduced Article 22 (1) ICC Rules states that the arbitral tribunal and the parties shall make every effort to conduct the arbitration in an expeditious and cost-effective
manner, having regard to the complexity and value of the dispute. It establishes a general
obligation for parties and arbitrators which can entail cost sanctions for the parties pursuant
to Article 37 (5) ICC Rules and fee reductions for the arbitral tribunal pursuant to Article 2
(2) Appendix III to the ICC Rules in cases of significant non-compliance with these principles of procedural economy.
67 Article25 (1) ICC Rules further states that the arbitral tribunal shall proceed within as short
a time as possible to establish the facts of the case by all appropriate means. As an additional
due process and equal treatment of the parties requirement which is fully aligned with 1042
(1) ZPO, the arbitral tribunal must act fairly and impartially and ensure that each party has
reasonable opportunity to present its case pursuant to Article 22 (4) ICC Rules. It should
be emphasized that, in contrast to Article 18 UNCITRAL Model Law, the ICC Rules do not
require an arbitral tribunal to give a party a full opportunity of presenting his case and thus
provide the arbitral tribunal with more flexibility in view of the reasonableness standard. The
arbitral tribunal therefore enjoys wide discretion when organizing the arbitral proceedings.
The above provisions have to be read in conjunction with Article19 ICC Rules, whereby the
73
74
75
The Procedural Timetable or any specific procedural rules that will govern the arbitration should be
discussed with the parties on the occasion of the Case Management Conference but issued by the arbitral
tribunal in the form of a procedural order.
OLG Mnchen, 07.02.2011, para. 64.
OLG Frankfurt 26 Sch 13/10; Wagner/Blau, SchiedsVZ 2013, 6 and Wolf/Hasenstab, RiW 2011, 612.
771
proceedings before the arbitral tribunal shall be governed by the Rules and, where the Rules
are silent, by any rules which the parties or, failing them, the arbitral tribunal may settle on,
whether or not reference is thereby made to the rules of procedure of a national law to be
applied to the arbitration. This is in line with 1042 (3) and (4) ZPO, which also provide for
a system of controlled party autonomy.
Parties might sometimes be tempted to agree on some sections of the ZPO, e.g. the sec- 68
tions regarding the taking of evidence, if not the entire ZPO, which they are familiar with.
However, this would often raise more problems than it would resolve, since these provisions
are generally not adapted for use in international arbitral proceedings. The parties and the
arbitral tribunal should therefore make use of their respective powers to mold a set of specific
procedural rules that best suits their case.
While the ICC Rules give some guidance in that respect (cf. Articles 25 and 26 ICC Rules), 69
they generally keep a neutral approach, in particular with respect to issues such as the admissibility of requests for disclosure of documents or for cross examination of witnesses. In other
words, the ICC Rules leave it to the parties and the arbitral tribunal to decide whether they
wish the case to be conducted in a common law or a civil law manner. Consequently, it is
possible that the parties and the arbitral tribunal, inspired by some ZPO principles, agree on
procedural rules that come very close to what they are familiar with.
Obviously, the choice of the arbitrators is of major importance when it comes to the question 70
of whether a case between a German and an Anglo-Saxon party should be run in a common
law or civil law manner,76 as nothing prevents an arbitration taking place in Germany to be
run in a common law manner.
8.
Closing of the Proceedings and Time-Limit for Rendering the Final Award (Articles27 and
30 ICC Rules)
Two distinct obligations are imposed on arbitral tribunals by Article 27 ICC Rules: (a) to de- 71
clare the proceedings closed with respect to the matters to be decided in any award rendered
and (b) to inform the Secretariat and the parties of the date by which it expects to submit
its draft award to the Court for approval, in accordance with Article 33 ICC Rules. These
obligations aim at increasing transparency with respect to the probable duration of the proceedings and must be read in conjunction with the provisions of the Procedural Timetable to
be established at the outset of the arbitration.
Article 27 (a) ICC Rules mentions two procedural events which should trigger the closing 72
of the proceedings, i.e. the hearing or the last authorized submissions concerning the matters
to be decided in the award. The fact that Article 27 (b) ICC Rules henceforth obliges arbitral
tribunals to inform the parties with respect to the expected date of submission of the draft
award for scrutiny should create a self-policing effect, as the parties will expect a realistic time
commitment from the arbitral tribunal.77
76
77
It is supposed that the parties have not previously agreed on any procedural rules in the arbitration clause
or elsewhere.
Apart from the parties expectations, adhering to the expected date for submitting the Final Award is
particularly important for the arbitral tribunal as Article 2 (2) Appendix III to the ICC Rules now includes the timeliness of submission of the draft award as one of the decisive criteria for the ICC Courts
decision to fix the arbitrators fees.
772
73 Article 27 ICC Rules empowers the arbitral tribunal to close the proceedings without setting
a final time limit for the parties78 and to thereafter reject any further submission or argument
[] or evidence produced, with respect to the matters to be decided in the award. In practice, the Procedural Timetable itself may often already include cut-off dates for submitting
new briefs or evidence.
74 According to Article 30 (1) ICC Rules, the arbitral tribunal must render its final award
within six months after the last signature date of the Terms of Reference or, in case only one
party signs the Terms of Reference, the date of the notification to the arbitral tribunal by
the Secretariat of the approval of the Terms of Reference by the ICC Court. Sometimes this
provision has misled parties to expect the final award to be rendered within six months after
the commencement of the arbitral proceedings, ignoring that the stage prior to the constitution of the arbitral tribunal and the establishment of the Terms of Reference usually take at
least three months. Typical reasons therefore may be:
difficulties in notifying the Request for Arbitration and corresponding time extensions
requested by a respondent for submitting the Answer;
the existence of a pathological arbitration clause which requires a prima facie decision by
the ICC Court under Article6 (4) ICC Rules;
the filing of a Request for Joinder pursuant to Article 7 (1) ICC Rules or a partys reservation of such right following the Secretariats warning that it will soon be in a position
to take steps towards the constitution of the arbitral tribunal;
difficulties in constituting the arbitral tribunal, particularly if several claimants and/or

respondents are involved; and
difficulties in having the Terms of Reference agreed and signed by the parties.
75 Overall, the average time period for an ICC arbitration concluded by way of a final award is
approximately two years.79
76 In practice, the ICC Court will thus very frequently depart from the default six month time
limit for rendering the final award and fix a longer time limit based on the Procedural Timetable, pursuant to Article 30 (1) ICC Rules, at the time the Procedural Timetable is communicated to the ICC Court pursuant to Article 24 (2) ICC Rules. This interplay between
Articles 22 (1) and 27 ICC Rules aims at setting a reasonable target date for the final award
and is notably one of the main tools of the ICC 2012 Rules constant striving for time and
cost efficient tailor-made arbitrations. The ICC Court will base its decision to fix a different
time limit on the Procedural Timetable that reflects the parties and the arbitral tribunals
expectations as to the duration and conduct of the proceedings80 and routinely add two to
78
79
80
This is in line with the solution adopted by Article 29 UNCITRAL Rules which foresees that the arbitral
tribunal may inquire of the parties if they have any further proof to offer or witnesses to be heard or
submissions to make. Other institutional arbitration rules, such as s. 31 DIS Rules, however require the
arbitral tribunal to set an additional time limit prior to declaring the proceedings closed.
Depending on the particularities of the case, this time period may be substantially shorter or longer. It
should further be seen in the context of resolving complex international and high-value disputes, with the
average amount in dispute in an ICC arbitration amounting to US$ 43.5 million in 2012.
Contrary to Article 18 (4) 1998 ICC Rules, the Procedural Timetable is no longer considered as provisional. This implies, even though the Procedural Timetable can be modified throughout the course of the
arbitration, that the dates established for each procedural milestone are to be met by the parties and the
arbitral tribunal.
773
three months81 to the last major procedural steps mentioned in the Procedural Timetable,
i.e. the hearing or parties last substantive submissions. This corresponds to the time frame
in which the ICC Court normally expects arbitral tribunals to render an award. The arbitral
tribunal and the parties are thus now normally informed already at the outset of the proceedings of the individual time limit fixed by the ICC Court for rendering the final award.
However, it is often necessary that the 6-month time period or the time limit fixed at the 77
outset of the case based on the Procedural Timetable be extended at least once by the ICC
Court, in accordance with Article30 (2) ICC Rules.82 Especially towards the end of the case,
the ICC Court will normally only grant time extensions of one month to closely monitor the
progress of the case and request to be updated regularly as to the sources of delays. The president of the ICC Court plays a very active role in this process and may ultimately personally
express the ICC Courts concerns as to the number of time extensions granted or any undue
delays encountered in bringing the case to an end. As a last resort, the arbitral tribunals attention may also be drawn to the possibility of fee reductions pursuant to Articles 37 (1) ICC
Rules and 2 (2) Appendix III to the ICC Rules or, ultimately, the initiation of replacement
proceedings pursuant to Article 15 (2) ICC Rules for failure to fulfil the arbitrators functions
in accordance with the Rules or within the prescribed time limits.
However, if the time limit is about to expire without a final award having been rendered, the 78
Court is left with no reasonable alternative to granting an extension. Although the Court has
in some cases been criticized for this approach, the consequence of doing otherwise would
be even more detrimental to the arbitral process and contrary to the parties interest. Extending the time limit for rendering the final award on the ICC Courts own initiative pursuant to
Article 30 (2) ICC Rules may be a crucial aspect for protecting the validity of the award, as
the existence of the award itself, inter alia, depends on the arbitral tribunals power to render
an award which in turn stems from the parties arbitration agreement. Certain arbitration
agreements or arbitration laws foresee that the arbitral tribunals decision must be made
within a predetermined period of time,83 failing which the arbitration agreement is considered to be terminated.84 In such cases, the power of the arbitral tribunal is not indefinite and
if the term of its mandate expires, or if it is not extended by the arbitral institution, any award
rendered out of term could be potentially set aside pursuant to 1059 (2) 1 (a) ZPO due to
an invalid arbitration agreement.85
Arbitral tribunals should therefore always make sure to incorporate the most recent time 79
extension granted by the ICC Court for rendering the final award and sign and date the
award at a date prior to the expiry of the last time extension mentioned in the award. While
81
82
83
84
85
While sole arbitrators are routinely expected to submit draft awards within a time frame of two months,
arbitral tribunals usually have three months at their disposal.
Until 2009, the ICC Court normally granted time extensions of three months. This practice has changed
even prior to the introduction of the 2012 ICC Rules and the ICC Court now grants time extensions
based on the Procedural Timetable and the particularities of each case.
Cf. for example Article 529 of the Turkish Civil Procedure Code which provides in pertinent part: The
arbitrators must enter the award within six months after their first meeting. Otherwise, the proceedings
will be deemed void and the dispute will be settled by a competent court. This period may be extended
only by express written approval of all the parties to the dispute or by a judges order.
Cf. Part II, Krll/Kraft, 1061, para. 76, who correctly conclude that the expiry of time limits for rendering the award will however only lead to the termination of the arbitration agreement where this is clearly
stated in the arbitration agreement.
774
it should be obvious from the wording of Article 30 ICC Rules, it must be emphasized that
the time limit for rendering the final award should also cover the period of time required for
the Secretariat to notify the parties of the award, in accordance with Article 34 ICC Rules.
80 The ICC Court is not required to give reasons for its decision to extend the time limit. Until
2009, only the arbitral tribunal received a notification of the extension, with an indication
that it was up to the arbitral tribunal to decide whether it wished to inform the parties directly.
However, even prior to the introduction of the 2012 ICC Rules, this practice had changed
and the Secretariat now routinely copies the parties when notifying arbitral tribunals of the
Courts decisions. While the French courts86 have in the past examined whether those time
extensions were actually granted by the ICC Court, the same courts have found that the ICC
Court is not required to solicit the parties prior comments or even to inform them of its
decision.87
81 The Federal Court of Justice (Bundesgerichtshof BGH) adopted the same approach in a
decision of 1988.88 In that decision, the BGH found, inter alia, that the fact that the parties
were not offered the possibility to comment prior to a decision of the ICC Court to extend
the time limit to render the final award does not infringe German public order. Although this
decision was rendered with respect to the 1975 ICC Rules, it is relevant with respect to the
current ICC Rules, which have maintained the same mechanism regarding the extension of
time limits by the ICC Court to render the final award.89
9.
Majority Decision by the Arbitrators (Article31 ICC Rules)
82 Article31 (1) ICC Rules states the following:

When the Arbitral Tribunal is composed of more than one arbitrator, an award is
given by a majority decision. If there is no majority, the award shall be made by the
president of the arbitral tribunal alone.
83 This provision goes beyond what is foreseen under German law in 1052 ZPO, which provides only for the possibility of a majority decision of the arbitral tribunal. However, in some
cases, it may be difficult for a president to be obliged to subscribe to the position of one of
his co-arbitrators. In these cases, it may be useful for a president to render a decision alone
without being obliged to follow the one or the other extreme. The mere existence of this
possibility under the ICC Rules may assist a president to ultimately bring about a majority
decision, if not a unanimous decision.
84 1052 (1) ZPO grants the parties the possibility to deviate from the principle that there
must be a majority decision. Hence, a president sitting in an ICC arbitration in Germany
may benefit from the additional possibility offered by the ICC Rules to render awards alone.
85 As regards majority decisions, the ICC Rules do not expressly foresee the rendering of
dissenting opinions. According to the ICC Courts practice, the position of the overruled
86
87
88
89
Cour de cassation, 1er ch C, 06.07. 2005 AIC El Amiouny c/ Skanska (Case 10317/DB) and Cour dAppel
de Paris, 22.01.2009 SNF c/ CCI (case 11018/DB). Both courts have examined the respective minutes
of the ICC Courts sessions at which time extensions for rendering the final award were granted and have
found that the ICC Court diligently monitored and timely extended all relevant time limits.
Derains/Schwartz (2005), p.305.
BGH 14.04.1988, NJW 1988, 3090.
This approach was recently confirmed by the Cour dAppel de Paris, Ple 1, Chambre 1, 12.05.2011,
Maschinenfabrik Mllers c/ Al Khaleej Sugar Company.
775
arbitrator may either be included in a separate document or the award itself. With a view to
German law, one intricate issue is whether the communication of dissenting opinions to the
parties may serve as a possible ground for setting aside the award, pursuant to 1059 (2) 1 d)
ZPO, due to a breach of confidentiality of the arbitral tribunals deliberations.
German scholars are strongly divided on the question of admissibility and communication 86
of dissenting opinions to the parties. An important part of the German literature considers
that dissenting opinions are not permissible, at least in domestic arbitrations, unless the parties have agreed otherwise.90 Other authors opine that dissenting opinions are permissible
unless they are explicitly excluded.91 Rolf A. Schtze, in particular, considers that a publication
of the dissenting opinion runs against the confidentiality of the deliberations and is therefore
not admissible under German law. Accordingly, the arbitral tribunal does not even have the
authority to decide on the communication of the dissenting opinion to the parties pursuant
to 1042 (4) ZPO.92
The principle of confidentiality of deliberations can be derived from the arbitration agree- 87
ment itself, customary law or an analogous application of Article 43 German Judiciary Act
(Deutsches Richtergesetz DRiG). 93 It is linked to the trust in the decisions of the arbitral
tribunal and the anonymity of the decision in order to avoid the dissenting arbitrator being
categorized as the one who stood on the other side.94
The risk of potential attacks on the award based on the communication of a dissenting opin- 88
ion can, however, be significantly reduced when all arbitrators unanimously agree pursuant
to 1042 (4) ZPO that the dissenting opinion be notified to the parties and include a respective statement in the award.95 The principle of confidentiality of deliberations mainly protects
the authority and integrity of the arbitral tribunal and would consequently not appear to be
affected.96
The mere existence or communication of a dissenting opinion in an ICC proceeding should 89
therefore not give rise to a procedural violation that may lead to a setting aside of the award.
10. Scrutinizing Arbitral Awards (Article33 ICC Rules)
One of the most important tasks of the ICC Court and a hallmark of ICC arbitration is the 90
scrutiny of arbitral awards. The ICC Rules provide that the ICC Court must approve all
awards as to their form and that it may also, without affecting the arbitrators liberty of decision, draw their attention to points of substance. In ICC arbitration, scrutiny is a key element
to ensure that arbitral awards are of the highest possible standards and thus less susceptible to
90
91
92
93
94
95
96
Lachmann, para. 1775; Peltzer, Die Dissenting Opinion in der Schiedsgerichtsbarkeit, 2000, p. 129
Krll, ICCA Handbook, Report-Germany, p. 39 with further references.
Schtze, Schiedsgericht und Schiedsverfahren, para. 204 and Schtze, FS-Nakamura, 1996, p. 535.
This provision reads: A judge shall preserve secrecy regarding the course of deliberations and voting also
after his service has ended.
Westermann, Das dissenting vote im Schiedsgerichtsverfahren, SchiedsVZ 2009, 107.
MnchKommZPO-Mnch (2013), 1054 ZPO, paras 22 and 23; see also Part II, von Schlabrendorff/
Sessler, 1054, para. 20.
During the scrutiny process, the Secretariat routinely informs the arbitral tribunal that the dissenting
opinion will be communicated to the parties with the award, unless the majority of the arbitrators indicate that under the law of the place of the arbitration the communication of a dissenting opinion in itself
endangers the validity of the award.
776
annulment in national courts.97 This unique quality-control mechanism provides the parties
with an additional layer of protection that would otherwise not be available, since arbitral
awards are generally not subject to appeal.
91 That being said, arbitrators generally enjoy wide discretion as how to structure their awards.
By way of example, the ICC Court would not ask a German arbitrator98 to transfer the decision (Tenor) from the first page to the last page of the award, even though international
practice would suggest that solution.
92 Arbitrators in ICC proceedings profit from the vast experience assembled by the Court
and its Secretariat in its now over 90 years of existence.99 With respect to the quality control
exercised by virtue of the scrutiny process, one may further identify a certain trend in that the
ICC Courts review has become more thorough over the course of the years. Out of a total of
341 awards in 2001, 160 awards were approved by the ICC Court (subject to various comments) and 181 awards were straight-out approved (19 awards were initially not approved).
By 2012, out of a total of 491 awards, 483 awards were approved by the ICC Court (again,
subject to various comments) and only 8 awards were straight-out approved (59 awards were
initially not approved). This trend is mainly due to two factors: first, the scrutiny process
has arguably become more formalized with the introduction of the ICC Award Checklist
and more thorough in terms of review due to the high number of experienced individuals
involved on the level of the ICC Court and its Secretariat during the review process. Second,
an informal pre-scrutiny of draft awards, during which the Counsel in charge of the case
draws the arbitral tribunals attention to points of form and substance in order to facilitate the
scrutiny process by the ICC Court, is now only conducted in exceptional cases.100
93 Another recent development has been the introduction of Special Committee Sessions of
the ICC Court constituted exclusively for awards drafted in Spanish, Portuguese and German. In these sessions, which take place in addition to the regular court sessions in frequent
intervals, only native speakers or Court members with language capabilities close to the level
of a native speaker from the relevant jurisdictions attend and discuss such awards in the very
language in which they were drafted. This avoids the need to translate awards which are not
drafted in English or French, the two official languages of the Court,101 and increases the
overall familiarity with the applicable substantive laws. This innovation has also helped to
further raise the quality of the review and reduce the overall turn-around time for submitting
awards to the Court.
97
98
99
100
101
Even though no official statistics exist in that respect, this number is very limited, representing supposedly only a couple of awards per year. Indeed, as a direct consequence of the ICC Courts unique scrutiny
process, the large majority of awards rendered in ICC proceedings are voluntarily complied with.
In fact, an important number of German arbitrators adopt the structure of a German court judgement for
their awards.
Over the last three years, an average of almost 500 awards per year has been rendered in ICC arbitrations.
In 2010, 479 awards were rendered (305 final awards, 130 partial or interim awards and 44 awards by
consent). In 2011, 508 awards were rendered (347 final awards, 120 partial or interim awards and 41
awards by consent). In 2012, 491 awards were rendered (341 final awards, 119 partial or interim awards
and 31 awards by consent).
This course of action is only applied to cases in which the award requires significant improvements in
order to later pass the Courts high quality standards and threshold for approving awards, or if the Secretariats comments exclusively concern straight-forward formal points.
This enhances the quality control by the ICC Court as even the best translations sometimes remain subject to interpretation or are not able to properly address the linguistic specificities of certain legal systems.
777
11. Correction and Interpretation of the Award (Article35 ICC Rules)

Similar to German arbitration law, most institutional arbitration rules provide for possible 94
additional awards as to claims presented in the arbitral proceedings but not dealt with in
the award.102 However, this is not the case in ICC arbitration, where the arbitral tribunals
intervention under Article35 ICC Rules is limited to correction and interpretation of the
award. The question therefore arises whether an arbitral tribunal can render an additional
award in the sense of 1058 (1) No. 3 ZPO under the ICC Rules.
When Article29 1998 ICC Rules was introduced, there was little support for the inclusion of 95
the possibility to issue additional awards when the arbitral tribunal fails to decide on a claim,
i.e. decides infra petita. The reason expressed for excluding such a provision from the ICC
Rules was that the scrutiny process renders such a provision unnecessary.103 For the same
reason, the idea of an expansion of Article 35 ICC Rules to expressly allow for additional
awards was not implemented during the recent rules revision process and thus said article
has not undergone significant changes.
However, it should not be concluded that such voluntary omission is intended to prevent 96
ICC arbitral tribunals from rendering additional awards in cases where they have failed to
decide a claim when such intervention is allowed by the lex arbitri.104 Indeed, such a remedy
may be available as has been confirmed by the Secretariat in its 1 October 1999 note regarding the Correction and Interpretation of Arbitral Awards.105 The final paragraph of the note
states:
Where the relevant national law or court practice provides specific circumstances
in which an Arbitral Tribunal may render certain decisions other than corrections
or interpretation regarding an award which had been approved and notified, such
situations shall be treated in the spirit of this Note.
The note therefore leaves the door open for other post-award proceedings, provided that 97
national laws or courts allow for them.106
102
103
104
105
106
See e.g. Art.30 AAA Rules; Articles 35 and 36 UNCITRAL Rules; Art.27 LCIA Rules; Art.66 WIPO
Rules; s.37 DIS Rules.
Derains/Schwartz (2005), p.323. One of the standard tasks of the Secretariat and the ICC Court in the
context of the scrutiny process consists of comparing the list of issues to be determined as contained in
the Terms of Reference and the parties most recent prayers for relief with the arbitral tribunals findings
in the body of the award and its decisions contained in the dispositive section. This considerably reduces
the risk of an omission to decide on a certain claim on the part of the arbitral tribunal.
In addition to 1058 (1) No. 3 ZPO see e.g. Art. 51 of Egyptian Law No. 27; Art. 1715 3 of the Belgian
Judicial Code; Art. 1061 of the Netherlands Code of Civil Procedure; s. 57 (3) (b) of the English Arbitration Act; Art. 1485 (2) of the French Code of Civil Procedure; Art. 32 of the Swedish Arbitration Act;
Art. 33 (3) of the Danish Arbitration Act; Art. 39 (1) (c) of the Spanish Arbitration Law; Art. 1202 of the
Polish Code on Civil Procedure; Art. 33 (3) of the UNCITRAL Model Law.
The most recent version of this note is dated 31 March 2014. Accordingly, the post-award remedies set
forth in Article 35 ICC Rules are not to be considered as exclusive of other possible remedies available
under the law governing the arbitration proceedings.
For further practical examples cf. Hauser/Nedden, Correction and Interpretation of Arbitral Awards and
Additional Awards, Post Award Issues ASA special series no. 38 (2011) pp 33 et seq. A request for
rendering an additional award may even be admissible under the lex arbitri in the absence of a respective
provision in the arbitration law, cf. Berger/Kellerhals, (2010), p 401.
778
98 In some cases,107 arbitrators have been asked to act beyond the scope of Article35 ICC Rules
and render an additional award basing their jurisdiction on national law or a court order.
Thus, in ICC Case No. 9235, the arbitral tribunal rendered an additional award as foreseen
under Egyptian law.108 This additional award rendered in the form of a decision was submitted to the ICC Court for scrutiny and subsequently approved. Consequently, in practice
there is generally no difficulty in rendering an additional award if that possibility is foreseen
by the lex arbitri. That, of course, also applies with respect to 1058(1)No.3ZPO if the
place of arbitration is in Germany.
99 With respect to remission of awards, the ICC Courts practice in dealing with cases in which
an award was (partially) set aside by a state court and remitted to the arbitral tribunal is now
codified in Article 35 (4) ICC Rules.109 In such rare cases, upon request of one of the parties, the ICC Court may take any steps as may be necessary to enable the arbitral tribunal
to comply with the terms of such remission. In addition, the ICC Court may fix an advance
to cover any additional fees and expenses of the arbitral tribunal and any additional ICC
administrative expenses pursuant to Article 2 (10) Appendix III to the ICC Rules.
100 The ICC Rules previously did not contain any provision regarding the reopening of proceedings after notification of the final award to the parties, nor the administrative closing of the
case. However, the Court had previously decided that it is empowered to reopen a case if the
applicable law at the place of arbitration permits corrections and interpretations of awards (cf.
Article 29 1998 ICC Rules) or if a situation of non-enforceability of the award could arise if
the Court were to decide otherwise (notion of harmony with the spirit of the Rules, cf. Article 35 1998 ICC Rules and Article 1 (1) Appendix I ICC Rules). Such recourse to Article 35
1998 ICC Rules (now Article 41 ICC Rules) is no longer necessary as this situation is now
expressly dealt with in Article 35 (4) ICC Rules.
101 From a German perspective, the reopening of the case by the ICC Court in such circumstances would be in accordance with 1059 (4) ZPO, which provides that if annulment has
been requested, the court can, while setting aside the award, in appropriate circumstances
and upon request of a party, refer the matter back to the arbitral tribunal.110
12. Decision as to the Costs of the Arbitration (Article37 ICC Rules)
102 When deciding which party must bear the costs of the arbitration or in which proportion the
costs of the arbitration shall be borne by the parties, the arbitral tribunal is vested with considerable discretion under Article37 (4) ICC Rules. Article 37 (5) ICC Rules provides further guidance with respect to the allocation of costs by stating that in making decisions as to
costs, the arbitral tribunal may take into account such circumstances as it considers relevant,
including the extent to which each party has conducted the arbitration in an expeditious and
107
108
109
110
ICC Case No. 9235, see in detail Daly, Correction and Interpretation of Arbitral Awards under the ICC
Rules of Arbitration, (2002) 13(2) ICC ICArb. Bull. 61 (68).
Supra, note 103.
This provision reads in pertinent part: Where a court remits an award to the arbitral tribunal, the provisions of Articles 31, 33, 34 and this Article 35 shall apply mutatis mutandis to any addendum or award
made pursuant to the terms of such remission.
A similar provision in the context of a domestic arbitration is contained in Art. 394 of the Swiss Civil
Procedure Code which reads in pertinent part: After hearing the parties, the appellate court may remit
the award to the arbitral tribunal, setting a deadline to rectify or amend it. The Swiss PILA on the other
hand does not contain any such provision.
779
cost-effective manner. The ICC Rules now expressly link the parties procedural behavior
to cost allocation and introduce the concept of proportionality between the complexity of
the matter and the amount in dispute on the one hand, and a partys conduct and the time
and effort invested in bringing its claims or defenses on the other. Unlike other institutional
arbitration rules or 1057 (1) ZPO, the ICC Rules do not provide for any specific method
to be applied for allocating costs and do not expressly list the outcome of the proceedings
as a relevant factor. However, in the majority of cases, the arbitrators apply the costs follow
the event principle. In other words, the proportion of won and lost claims is calculated for
each party individually and the costs of the arbitration are thereafter allocated to the parties
proportionally.
The costs of the arbitration comprise the costs as fixed by the ICC Court (arbitrators 103
fees and expenses111 and the ICC administrative expenses) and the costs for the parties
defense.112 The latter are composed of the lawyers fees and expenses, the experts fees and
expenses, as well as the other costs incurred by the parties in the arbitration. The costs fixed
by the ICC Court are covered by the advance payments made by the parties and the ICC
Court decides whether any reimbursement should be made to the parties. In contrast, it is
the arbitral tribunals task to decide whether the costs for the parties defense are reasonable
within the meaning of Article 37 (1) ICC Rules.
Arbitral tribunals may often find that the allocation of the costs of the arbitration as fixed by 104
the ICC Court and the allocation of the costs for the parties defense should not necessarily
follow the same proportion. This may be illustrated by the following example: an arbitral
tribunal decides to grant 75 per cent of the claimants claim. The decision on costs would
normally be that the respondent pay 75 per cent of the costs of the arbitration as fixed by the
ICC Court and reimburse 75 per cent of the claimants costs for its defense. However, if the
claimants lawyers fees are considerably higher than those incurred by the respondent, the
arbitral tribunal may either reduce the amount of lawyers fees claimed by the claimant to a
reasonable degree or decide that the respondent must only reimburse, for example, 50 per
cent of the claimants lawyers fees.
Turning to a particularity under German law, the following conflicting situation may arise 105
between Article37 ICC Rules and 1057 (2) ZPO: under the ICC Rules, decisions on costs
generally have to be taken at the end of the proceedings in the final award; however, 1057
(2) ZPO provides for the possibility of rendering a separate award on costs even after the
arbitral proceedings. Although this issue of taxing of costs is of little dogmatic interest, one
should be mindful of such issue to prevent unnecessary problems in practice.
It becomes clear from the interplay of Articles 33113 and 37 (4)114 ICC Rules that the render- 106
ing of a separate cost award after the closing of the arbitral proceedings is virtually impossible
111
112
113
114
Strictly speaking, the expenses are not fixed by the ICC Court. Rather, the Secretariat checks the conformity of the expenses incurred applying the section Personal and Arbitral Tribunal Expenses (as of 1
September 2013) of the Note to the Arbitral Tribunal on the conduct of the arbitration transmitted to
the arbitral tribunal with the file.
Article37 (1) ICC Rules addresses the arbitrators, who have to decide on the allocation of the costs of the
arbitration.
Article33 ICC Rules, in pertinent part, states: No award shall be rendered by the arbitral tribunal until it
has been approved by the Court as to its form.
Article37 (4) ICC Rules states: The final award shall fix the costs of the arbitration and decide which of
the parties shall bear them or in what proportion they shall be borne by the parties.
780
in ICC arbitration. First, Article37 (4) ICC Rules provides that the cost decision must be
stated in the final award. Second, any subsequent cost award could not be scrutinized by the
ICC Court under Article33 ICC Rules, which is of mandatory nature. Therefore, any cost
related issues necessarily have to be settled at the stage of the final award.
107 It should be noted that this also means that no decision on costs as fixed by the ICC Court
may be rendered prior to the final award. Only the arbitral tribunal can take decisions on
costs at any time during the proceedings.115 These decisions concern the parties costs of
defense only, as opposed to the costs fixed by the ICC Court.
108 There are also practical reasons why the ICC Court cannot fix the costs of arbitration in
the course of the proceedings. Thus, in a recent unpublished ICC case, the ICC Court was
asked to fix the costs of the arbitration with respect to the claimant and only one of the two
respondents, with whom the claimant had reached a partial settlement agreement. Even
though the parties and the arbitral tribunal were in agreement that this respondent should
be released from the proceedings, the ICC Court could not follow this request for the following reason: said respondent had paid a part of the advance on costs to the ICC, but the
ICC Court could not fix the costs of the arbitration up to the partial settlement agreement,
because the proceedings up to that stage could not be evaluated without knowing how long
the proceedings between claimant and the remaining respondent would continue.
109 In contrast, had said respondent not participated in the payment of the advance on costs to
the ICC, it could have been released from the proceedings since contrary to the ICC Court,
the arbitral tribunal can take decisions on costs at any time during the proceedings.116
110 In the course of the proceedings, separate awards on costs under 1057 (2) ZPO are therefore only possible with respect to the parties costs of defense, i.e. mainly lawyers and experts
fees. Also, in view of the clear wording of Article37 (4) ICC Rules,117 it is not possible to
render a separate cost award after the arbitral proceedings as foreseen in 1057 (2) ZPO.
111 Article 37 (6) ICC Rules now codifies the ICC Courts previous practice in case a party
objects to the other sides request for a withdrawal of the matter. It further clarifies that if the
parties have not agreed upon the allocation of the costs of the arbitration or other relevant
issues with respect to costs, such matters shall be decided by the arbitral tribunal. This approach is in line with 1056 (2) 1 (b) ZPO.118 A party may thus request a decision on costs,
which will usually be rendered in the form of an award and accordingly be subject to scrutiny
pursuant to Article 33 ICC Rules. Even if the arbitral tribunal has not been constituted at the
time of such withdrawal or termination, a party may request the ICC Court to proceed with
the constitution of the arbitral tribunal for this purpose. Provided that the additional costs
which will be incurred by the ICC and the arbitral tribunal in deciding any unresolved cost
issues are covered by the advance payments of the parties, the arbitral tribunal will determine
whether the party who objected to the withdrawal has a legitimate interest in a reimbursement of its legal and other costs in its final award on costs.119
115
116
117
118
119
Article37 (3) ICC Rules, in pertinent part, states: Decisions on costs other than those fixed by the Court
may be taken by the arbitral tribunal at any time during the proceedings.
Such an award could then be called Partial Final Award.
Supra, note 113.
A different solution for the termination of the proceedings by way of an order by the arbitral tribunal (as
opposed to a cost award) is for example envisaged by s. 39 (2) 1 DIS Rules.
Cf. however Part II, von Schlabrendorff/Sessler, 1056, para. 8.
781
13. Fixing Arbitrator Remuneration (Article 37 (1) and (2), Article 2 (1)(4) and (8) of
Appendix III ICC Rules)
Under the ICC Rules, unlike under many other institutional rules the arbitrators are not 112
remunerated on the basis of an hourly or daily rate, and play no role in determining their own
fees. Rather, their fees are fixed by the ICC Court at the end of the arbitration on the basis of
a published scale attached to the ICC Rules. Under that scale, the arbitrators fees are fixed
with reference to the amount in dispute.
In fixing the arbitrators fees, the ICC Court takes into account the manner in which the 113
arbitration was handled, and, in particular, the arbitrators efficiency and compliance with
Article 22 (1) ICC Rules.120 Relevant factors for the ICC Courts decision are the diligence of
the arbitrators, the time spent, the rapidity of the proceedings, the timeliness of the submission of the draft award and the complexity of the dispute.121
The ICC system is intended to encourage the efficient handling of cases within a financial 114
framework that is proportionate to the amount in dispute. German users appreciate this
mechanism with which they are familiar and which also ensures transparency and predictability of the costs to be incurred.
In addition, as the scales are based on the amount in dispute, they have the virtue of dis- 115
couraging the submission of frivolous or inflated claims and counterclaims because their
introduction has a direct impact on the costs of the arbitration and the arbitral tribunal will
most likely penalize parties for such unreasonable procedural behavior by issuing cost sanctions pursuant to Articles 37 (5) ICC Rules.
In case of a withdrawal of all claims before the rendering of a final award, the ICC Court fixes 116
the fees and expenses of the arbitrators and the ICC administrative expenses at its discretion.122
In doing so, the ICC Court takes into account the stage attained by the arbitral proceedings
and any other relevant circumstances which notably include whether the arbitral tribunal has
facilitated the parties settlement negotiations or assisted them in coming to a commercial
solution of their dispute, which may often be economically more viable than the amounts at
stake in the arbitration would suggest. The average fee under the costs scales in Appendix III
to the ICC Rules may, however, normally only serve as a benchmark for the arbitrators fees
in the case an award has already been rendered. Unlike under other institutional arbitration
rules, a significant portion of the advance on costs may be reimbursed to the parties by the
ICC Court in case of a withdrawal.123
14. Waiver of Any Form of Recourse against Awards (Article34 (6) ICC Rules)
According to Article34 (6) ICC Rules, parties shall be deemed to have waived their right to 117
any form of recourse insofar as such waiver can validly be made. In some jurisdictions, this
120
121
122
123
According to an internal survey, the costs of an ICC arbitration are composed of the following elements:
82 per cent for counsel fees, 13 per cent for arbitrator fees and 5 per cent for administrative expenses.
Cf. Techniques for Controlling Time and Costs in Arbitration Report from the ICC Commission on
Arbitration, (ICC publication 843), p. 6.
Cf. s. 35 (4) and s. 40 (2) DIS Rules, where this delicate issue lies in the hands of the arbitral tribunal.
782
waiver can validly be made in advance.124 For Germany as a Model Law country, the starting
point must be the UNCITRAL Model Law. Even though this law is silent on the subject, it is
generally considered that such waiver shall not be permissible.125 In fact, the BGH has already
decided in 1986126 that no general waiver of the right to seek the annulment of an award can
be made in advance. This position was confirmed in 2008 by the OLG Hamburg.127 However,
some authors128 consider that a waiver can validly be made in advance with respect to some
of the grounds listed in 1059 ZPO.129
118 In contrast, there is agreement that once the award is rendered, a waiver can be validly made
with respect to grounds not affecting public policy. It would therefore seem that a carefully
drafted waiver clause not affecting public policy, excluding some individual grounds for annulment, should be more successful before the German courts than the general exclusion
contained in Article34 (6) ICC Rules, which, in any event, is not sufficient. The parties
might therefore consider inserting a tailor made waiver clause in the Terms of Reference,
taking into account the above principles.
15. Limitation of Liability (Article40 ICC Rules)
119 Article40 ICC Rules excludes any liability of the arbitrators, the ICC Court and its members,
the ICC, its employees and national committees. The question arises whether and to what
extent this general exclusion of liability is valid under German law.
120 With the UNCITRAL Model Law remaining silent on this issue, and the issue of liability
remaining controversial in national laws, various arbitration institutions have filled the gap
by adopting provisions dealing with liability.130 However, Article40 ICC Rules is the only
provision which excludes all liability of the arbitrators and all participants in the ICC Courts
activities for any act or omission, without exception. All other cited institutional rules contain at least an exclusion for deliberate wrongdoing, and some also for gross negligence. In
adopting such a broad exception, the ICC recognized that it would not likely be effective in
all jurisdictions. It was nevertheless surprising to see that this solution was finally adopted,
124
125
126
127
128
129
130
E.g. in Switzerland this waiver can be made by foreign parties pursuant to Art. 192 PILA and, in France, it
can be made by any party pursuant to Art. 1522 CPC.
Sanders, Unity and Diversity in the Adoption of the Model Law, Arb.Int. 1995, 1 (23).
BGH 26.09.1985, NJW 1986, 1436 with respect to the old law and the 1988 ICC Rules. Art.24 (2) 1988
ICC Rules referred to a waiver of any form of appeal and the BGH found that the annulment procedure
was no appeal in the sense of Article24 1988 ICC Rules. This was one of the reasons why the 1998 ICC
Rules now refer to any recourse, which, no doubt, also covers annulment procedures. The German version of both, the 1988 and the 1998 ICC Rules referred interchangeably to Rechtsmittel and stressed the
fact that already under the 1988 Rules, the idea was to not only cover appeals in the strict sense, but also
annulment proceedings. However, as the decision of the BGH refers to appeal, it was obviously inspired
by the prevailing English text of the 1988 ICC Rules. The new ICC Rules now refer to Rechtsbehelfe in
Article 34 (6) ICC Rules.
OLG Hamburg 30.05.2008 11Sch 9/07.
Zller-Geimer (2012), 1059 para.80; Baumbach/Lauterbach (2013), 1059 para.3; Raeschke-Kessler/
Berger (1999), paras1013 et seq.; Lachmann (2002), para.2346; also BayObLG 15.12.1999, available at
<www.dis-arb.de>, referring to the decision of the BGH in note 59.
That provision lists six grounds for setting aside an award. Only those grounds shall be waivable which do
not concern public policy.
S.44 DIS Rules; Art. 31.1 LCIA Rules; Art. 35 AAA Rules; Art. 42 SCC Rules; Art. 77 WIPO Rules.
783
even though the ICC working party on the status of the arbitrator131 had not concluded in
that sense.
a. Arbitrators Liability: The first question which has to be answered is whether and when 121
German liability provisions apply to the contract between the arbitrator and the parties in
an ICC arbitration. German case law considers that this contract is a contract sui generis,
whereas legal commentators characterize this relationship either as a mandate, service or
agency contract.132 The most satisfactory answer to this question is that German law applies
whenever the place of arbitration is located in Germany. In fact, if one were to consider that
the law of the arbitrators nationality applies to the issue of arbitrator liability and not the law
at the place of arbitration, one would have to accept that the arbitrators of one and the same
arbitral tribunal are subject to different standards of liability. This is far from being an ideal
solution.
The law applicable to the arbitration clause or the applicable procedural law could, in prin- 122
ciple, also serve as connecting factors. However, it is often a difficult task to determine these
laws. In contrast, the place of arbitration is a reliable factor, which is either agreed upon by
the parties or fixed by the ICC Court and which is always existent.133 Once it is clear that
arbitrators sitting in Germany are subject to German liability provisions, these provisions
should be looked into.
The German courts consider that the arbitrator, when exercising judicial functions, is 123
tantamount to a state court judge and should therefore be subject to the same standard of
liability. The underlying idea is to guarantee that the arbitrator, like the state court judge, is
not influenced by whatever means when taking its decisions. In that capacity, the arbitrator is
only liable for deliberate wrongdoing.134
In all other situations, the arbitrator is liable even for negligent behavior,135 e.g. in the case of 124
non-disclosure of facts which may affect the arbitrators independence, or in the case that
the final award is not rendered within the foreseen deadline. At this stage, Article40 ICC
Rules comes into play, excluding any form of liability of the arbitrator. This general conclusion is not in line with 276 (3) BGB, which states that deliberate wrongdoing cannot be
excluded in advance. Legal commentators consider that this provision is mandatory and that
the arbitrators privilege cannot extend to deliberate wrongdoing.136
As regards the arbitrators activities outside the decision making process, nothing would, in 125
principle, prevent an exclusion of the arbitrators liability for negligence and gross negligence.
However, at that stage, 309 No. 7 BGB may intervene if one considers that Article40 ICC
Rules is part of the standard terms and conditions (Allgemeine Geschftsbedingungen AGB),
with the first consequence being that no exclusion of deliberate wrongdoing and of gross
negligence is possible.137 While at first sight it would seem difficult to consider that the ICC
Rules or parts of it are, if at all,138 the arbitrators or one partys standard terms and conditions,
131
132
133
134
135
136
137
138
(1996) 7(1) ICC ICArb. Bull. 27 (58).

Reiner (1989), p.290.
Schwab/Walter (2005), Chap. 12, para.9.
The relevant provision which defines the various degrees of liability is 276 BGB.
Lachmann (2008), para.4340
Lachmann (2008), para.4342; Lew/Mistelis/Krll (2003), para.12-47.
Atzpodien/Mller, Die FIDIC-Standardbedingungen als Vorlage fr europische AGB im Bereich des
Industrieanlagen-Vertragsrechts, RIW 2006, 331 (336) consider that the FIDIC Conditions of Contract
784
it cannot be entirely excluded that the German courts would retain such characterization. It
would nevertheless seem that the control of standard terms and conditions can only apply
to and be effective between the parties themselves. Consequently, the validity of a possible
exclusion of liability can only be tested with respect to one partys liability vis--vis the other
party, but not with respect to the arbitrators liability vis--vis the parties.
126 The second consequence would be even more important, since under German law Article40
ICC Rules would then have to be considered void. There is no certainty that the German state
courts would consider that the exclusion of liability for negligence, albeit in line with German
law, survives the invalidity of Article 40 ICC Rules.139 While a prohibition to exclude liability
for gross negligence may certainly be acceptable for the arbitrators non-judicial activities, the
same may not necessarily be true for negligence. In fact, the above described consequences
under the rules for standard terms and conditions would seem to be too harsh for foreign
arbitrators sitting in Germany. Also, although this not necessarily an excuse, those arbitrators
may have looked into Article40 ICC Rules at some point in time but may not be acquainted
with German liability provisions in detail.
127 As long as this issue has not been decided by the German courts, one may consider including
an additional provision in the Terms of Reference which excludes an arbitrators liability for
negligence, in the event Article40 ICC Rules does not apply.
128 b. Liability of the Institution: In terms of liability, the Paris based ICC is subject to French
law.140 This may not prevent a foreign court from holding that it has jurisdiction over the ICC
under its own law.141 Whether the German courts would do so may be seriously doubted.
129 The administrative character of the ICC Court and its decisions is a principle that has long
been enshrined in French case law and has been reiterated by the French Cour de Cassation in
the famous Cubic-case142 in which the ICC was sued by a party. At the same time, it was held
in that decision that the institution is only liable in cases of intentional breach of contractual
obligations or in cases of gross negligence. This would remain the position in French law even
in an ICC arbitration, despite Article40 ICC Rules.143
16. The Issue of VAT to be Paid on the Arbitrators Fees and Expenses
130 Article2 (13) of Appendix III to the ICC Rules provides the following:
Amounts paid to the arbitrator do not include any possible value added taxes (VAT)
or other taxes or charges and imposts applicable to the arbitrators fees. Parties have
a duty to pay any such taxes or charges; however, the recovery of any such charges or
taxes is a matter solely between the arbitrator and the parties.
131 Since the judgment of the European Court of Justice in the Bernd v. Hoffmann case,144 all
arbitrators residing in the European Union have to pay value added tax (VAT) on their fees
139
140
141
142
143
144
(International) for Civil Engineering Works are, in principle, standard terms and conditions under
German law. This notwithstanding, they conclude that in view of the international character of these
conditions, there should be no control under307 et seq. BGB.
Reiner (1989), p.291.
Derains/Schwartz (2005), p.383.
Supra notes 4 and 37.
Delvolv/Rouche/Pointon, French Arbitration Law and Practice, The Hague 2009, para.180.
ECJ 16.09.1997, Case C-145/96 (Bernd v. Hoffmann v. ICC).
785
and expenses. Even though this decision was rendered more than fifteen years ago, it would
seem that it is still respected to varying degrees in the member states. However, irrespective
of whether one supports that decision or not, it leaves little space to argue. Therefore, instead
of discussing the decision as such, the practical solutions should be considered to best deal
with the problem.
In the wake of the decision, arbitrators have generally relied on the parties obligation to pay 132
their VAT contained in Article2 (13) of Appendix III to the ICC Rules. However, more and
more faced with the problem that parties were not willing to pay the arbitrators fees once the
award was rendered, the ICC accepted145 that the arbitrators include a standard provision into
the Terms of Reference by which the undersigning party or parties accepted to pay, sometimes even jointly and severally, the arbitrators VAT. It is now also standard practice in ICC
arbitrations to include the parties respective VAT identification numbers into the Terms of
Reference and to ascertain at this early stage of the proceedings whether the Reverse-ChargeProcedure will be applied.146 The parties are usually invited by the arbitral tribunal to pay
an amount which corresponds to the VAT they have to pay on their prospective fees and,
as the case may be, expenses on an escrow account opened by the arbitral tribunal for that
purpose. At the end of the proceedings, the arbitral tribunal will provide the parties with an
invoice and any overpaid amount will be reimbursed to the parties. The parties are thereafter
reimbursed by the local tax authorities against the presentation of the invoice.
While the ICC has not changed its rules on the occasion of the last rules revision, it may be 133
hoped that the institution can henceforth play a more active part as regards the VAT issue.
However, it is already envisaged that the parties make an advance payment to the ICC on a
VAT account opened by the ICC for this particular purpose pursuant to the ICC Note on
VAT, Taxes, Charges and Imposts Applicable to Arbitrators Fees, which was most recently
revised on 13 October 2010. Besides the fact that the support of the institution removes
some of the administrative burdens of the arbitrators, it also stimulates the parties to timely
effect their advance payments. However, during the recent revision of the ICC Rules it was
decided that this principle should not be extended to issues regarding the advance payment
for VAT. Thus, an arbitral tribunal may not hold back the notification of an award in cases
where the VAT advance has not yet been paid by the parties, as it would be entitled to do
under Article 34 (1) ICC Rules with respect to outstanding payments towards the costs of
the arbitration.
VI. Conclusion
The above analysis of the interplay and articulation of the ICC Rules with the German arbi- 134
tration law has shown that there are very few areas which may give rise to conflicting views
or issues. Consequently, the use of ICC arbitration on German soil can be recommended
unconditionally. Some of the above suggestions may help the users of ICC arbitration in
Germany to optimize their procedural strategy and prevent potential problems.
It is hoped that the growing number of ICC cases taking place in Germany will be confirmed 135
in the future. This would help to develop and complete German case law in the field of international arbitration and, in particular, in ICC arbitration.
145
146
(2006) 17(1) ICC ICArb. Bull. 31.

Council Directive 2006/112/EC of 28 November 2006.
Maritime Arbitration in Germany

Jan Wlper
Short Bibliography: Khl, Schiedsgerichtsbarkeit im Seehandel, Hamburg 1990; Rabe, Seehandelsrecht, Mnchen 2000; Rieckhoff, Deutsche Seeschiedsgerichtsbarkeit unter der GMAA, Hamburg
2006; Trappe, Maritime Schiedsgerichtsbarkeit, in: Plantey (ed.), FS-Glossner, 1994, p.459, Felix
Sparka, Jurisdiction and Arbitration Clauses in Maritime Transport Documents 2009.
Para.
Legal Framework . . . . . . . . . . . . . . . . . . . . . . . . 1
German Maritime Arbitration
Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
III. GMAA Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
IV. GMAA Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
A. Arbitration Agreement . . . . . . . . . . . . . . . 5
B. Place of Arbitration . . . . . . . . . . . . . . . . . . 6
C. Applicable Law . . . . . . . . . . . . . . . . . . . . . . 7
D. Appointment of Arbitrators . . . . . . . . . . 8
E. Choice of Arbitrators. . . . . . . . . . . . . . . . . 9
F. Challenging an Arbitrator . . . . . . . . . . . 10
G. Multi-Party Arbitration. . . . . . . . . . . . . . 11
H. Arrest, Seizure of Assets . . . . . . . . . . . . . 12
I.
II.
I.
Para.
I. Evidence. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
J. Amicable Settlement . . . . . . . . . . . . . . . . 14
K. Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
L. Rules of Procedure . . . . . . . . . . . . . . . . . . 16
M. Confidentiality. . . . . . . . . . . . . . . . . . . . . . 17
V. Deutsches Seeschiedsgericht . . . . . . . . . . . . . . . 18
VI. Normal Course of Maritime Arbitral
Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
VII. German Maritime Law Reform 2013 . . . . 20
VIII. Court Rulings on GMAA . . . . . . . . . . . . . . . 21
IX Unfair Arbitration Clauses . . . . . . . . . . . . . . 22
X. Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Legal Framework1
Maritime arbitration has a long history in Germany. Disputes within the shipping com- 1
munity in Germany and between German and non-German interests were taken to regular
arbitral tribunals, in line with the general provisions on arbitration laid down in the German
Code for Civil Procedure (Zivilprozessordnung ZPO), for more than a hundred years.
Many maritime arbitrations are still conducted in accordance with these general rules.2
II.
In 1983 the German Maritime Arbitration Association (GMAA) was founded. The reason 2
for this was not to offer an institutional arbitration administered by the association, but to
provide a modern set of ad hoc arbitration rules designed for maritime arbitration conducted
not only by professional arbitrators or lawyers but, in particular, also by commercial arbitrators. In Germany, maritime disputes are hardly ever taken to any institutional arbitration
organisations like the DIS; ad hoc arbitration, in particular under the GMAA rules, is the
most common choice. Most disputes handled by GMAA arbitrators are related to charter
parties and bills of lading, but a considerable number of GMAA proceedings are also related
to shipbuilding agreements and other transport-related contracts.3 Although the rules of
GMAA have already undergone some revisions,4 the basic principle was and still is to provide
a short and easy-to-handle set of rules for arbitrations of shipping disputes. Furthermore, by
1
2
3
4
Khl (1990), p.59.
Trappe (1994), p.466.
Latest edition 1 January 2013.
788
fixing the costs of GMAA arbitrations in relation to the values at stake, the GMAA intended
to provide the opportunity to arbitrate disputes on smaller amounts at more reasonable and
predictable costs. Whereas GMAA arbitration clauses are more and more frequently found
in charter parties and other transport related contracts, a reference to GMAA is not yet found
in any of the standard contracts drafted by the Baltic and International Maritime Conference
(BIMCO) or other organizations. Some standard contracts, however, provide special sections wherein GMAA can be chosen as an alternative to London Arbitration or New York
Arbitration.5
III. GMAA Index

3 On the GMAA website,6 both its arbitration rules and the GMAA Rules on the remuneration of the arbitral tribunal are provided in English and in German. The following indices
demonstrate the clarity of both sets of rules.
Arbitration Rules of the German Maritime Arbitration Association
Index
2 Choice of Arbitrators
3 Number of Arbitrators
4 a Multi-Party Dispute
4 b Company Dispute
4 c Further Independent Appointments
of Arbitrators
5 Duties of the Arbitrators
6 Challenging an Arbitrator
7
8
9
10
11
12
13
14
15
Costs of the Arbitration Proceedings

Place of Arbitration, Registration of
the Proceedings
Institution of Proceeding
Procedural Principles
Arbitral Proceedings
Applicable Law
Arbitral Settlement
Award
Service and Competent State Court
GMAA-Rules on the Remuneration of the Arbitral Tribunal

Index
1 Remuneration of Arbitrators
2
3
Value of the Matter in Dispute

Fees (VAT excluded)
IV. GMAA Rules

4 Special features of GMAA arbitration are dealt with hereafter. To the extent the GMAA
Rules do not provide particular rules, GMAA arbitral tribunals will apply the general rules
on arbitration as laid down in 1025 et seq. ZPO.
A.
5 An agreement on GMAA arbitration does not require more than the phrase GMAAArbitration which stands for:
E.g. GENCON 1994 cl. 19

(a) Arbitration Act and Small Claim Procedure of the London Maritime Arbitrators Association
(b) Title 9 of the United States Code and the Maritime Law of the United States and Small Claims
Procedure in accordance with Shortened Arbitration Procedure of the Society of Maritime
Arbitrators
(c) Choice of other arbitration
<www.gmaa.de>.
Maritime Arbitration in Germany Wlper
789
All disputes arising out of or in connection with this contract or concerning its validity shall be finally settled by arbitration in accordance with the arbitration rules of the
German Maritime Arbitration Association.7
B.
Place of Arbitration
Any place of arbitration may be added. In the absence of an agreement on the place of arbitra- 6
tion, the tribunal may determine either Hamburg or Bremen as the place of arbitration (8.1
GMAA Rules).
C.
Applicable Law
The parties may choose the applicable law. In the absence of such an agreement, the GMAA 7
tribunal will by default apply German law ( 12.1 GMAA Rules), but the tribunal always
takes into account accepted customs of the trade ( 12.2 GMAA Rules). The tribunal will
only decide on equitable principles when the parties have expressly authorised it to do so (
12.3 GMAA Rules).
D.
Appointment of Arbitrators
By default, which is accepted in most cases, GMAA tribunals consist of two arbitrators, one 8
appointed by each party, who only appoint a chairman if they cannot agree on a decision
during the proceedings ( 4.1 GMAA Rules). However, the parties are free to agree on a
tribunal consisting of only one or three arbitrators, which in the latter case will again consist
of two arbitrators appointed by the parties and a chairman appointed by these two ( 4.2
GMAA Rules). The parties are free in their choice of arbitrators. The GMAA can offer a wide
range of qualified arbitrators, whose names and qualifications can be found on the GMAA
website.8 But the parties may select any other person they consider qualified. If a party fails
to appoint an arbitrator or if the two arbitrators cannot agree on a chairman, the chairman or
another member of the GMAA board will appoint the second arbitrator or the chairman at
the request of one of the parties ( 4.3/4 GMAA Rules). In line with the statutory provisions
on arbitration, GMAA Rules do not provide that the arbitrator appointed by the claimant
shall act as sole arbitrator if the respondent does not appoint a second arbitrator in time.9
Some authors criticise that the GMAA Rules do not provide as a rule (but rather as an exception) the choice of an arbitral tribunal consisting of one arbitrator or three arbitrators. These
authors argue that a tribunal consisting of only two arbitrators may in many cases end up in a
deadlock requiring the appointment of a chairman at a rather late stage of the proceedings.10
However, it was confirmed in various annual meetings of the GMAA that probably less than
10 per cent of the GMAA proceedings which were commenced with two arbitrators only in
line with 4.1 GMAA Rules led to the appointment of a chairman at a later stage. This shows
the efficient functioning of German arbitral tribunals consisting of only two arbitrators and
also the impartiality of GMAA arbitrators.
7
8
9
10
Cf. <www.GMAA.de> Clause.

Trappe (1994), p.461.
Cf. supra, Part II, Nacimiento/Abt/Stein, 1035 paras 23 et seq.
Rieckhoff (2006), p.300; Khl (1990), p.68.
790
E.
Choice of Arbitrators
9 The GMAA Rules do not require any specific qualification that the arbitrators must meet;
therefore, the parties are free in their choice of arbitrators, including the choice of arbitrators
who are not members of the GMAA. Arbitrators from other countries may also be chosen.
GMAA arbitral tribunals consisting of one legally qualified person and one technical expert
have proven to be very effective and cost efficient, particularly in case of highly technical
disputes, e.g. on ship machinery or ship gear, since the tribunals then do not need assistance
from external experts.
F.
Challenging an Arbitrator
10 Impartiality of each arbitrator is, of course, mandatory.11 Thus, the GMAA Rules provide that
any arbitrator may be challenged by a party for the same reasons that a state judge is excluded
from the performance of his judicial office or if there is another reason which justifies doubts
as to his impartiality ( 6.1 a) and b) GMAA Rules). The challenge must be declared within
two weeks after the party concerned becomes aware of the reason for such challenge ( 6.3
GMAA Rules). If neither the arbitrator terminates his mandate, nor the other party accepts
the challenge, the concerned party must request a ruling over the challenge from the court of
appeals that has jurisdiction at the place of arbitration within a period of another two weeks
( 6.4 GMAA Rules).
G.
Multi-Party Arbitration
11 Tailored in line with the prerequisites set by the Federal Supreme Court12 regarding multiparty arbitration clauses, the GMAA Rules provide for multi-party arbitration. In ordinary
multi-party disputes, the claimants shall jointly appoint one arbitrator whereas the respondents shall jointly appoint the second arbitrator. If they do not do so within a time limit of four
weeks, the Chairman of the Board of GMAA or his substitute shall, upon hearing the parties,
appoint two arbitrators. Such appointment shall replace an appointment by the claimants
without affecting the commencement of the arbitration proceedings ( 4a GMAA Rules). In
the event of a dispute between a company and its shareholders, its organs and/or members
of such organs as well as in the event of disputes amongst shareholders, organs and members
of such organs the tribunal is constituted by the Chairman of the Board of GMAA or his
substitute appointing two arbitrators upon the claimants application ( 4b GMAA Rules).
H.
Arrest, Seizure of Assets
12 Measures for interim legal protection, such as ship arrests, are typically applied for in ex parte
proceedings and prior to initiating arbitral proceedings on the merits. Furthermore, any order of an arbitral tribunal on ship arrests or seizure of other assets would have to be declared
enforceable by a further court order of a German state court in order to be enforceable in
Germany. Therefore, the authors of the GMAA Rules decided to restrict the arbitral tribunals
powers on interim measures to those required for securing evidence (11.7 GMAA Rules).
For example, upon application from either party, the arbitral tribunal may appoint a neutral
expert on the state of a ships hull or engine for enabling the owner to complete the repairs
without delay and also without destruction of evidence possibly needed for the arbitration.
11
12
Cf. OLG Hamburg 11.03.2003, Transportrecht 2003, 206 et seq.

BGHZ 180, 221-235
I.
791
Evidence
A special feature of the GMAA is that a GMAA tribunal, although bound by the parties ap- 13
plications regarding the aim of the arbitration ( 5.2 GMAA Rules) is not limited to the facts
and means of evidence presented and offered by the parties. The tribunal will investigate the
facts submitted by the parties to the dispute as it deems necessary. It may at its own discretion
summon and hear witnesses, appoint experts and demand the presentation of documents or
other matters of relevance as evidence ( 11.1 GMAA Rules). This deviation from the basic
rules of German civil procedure was made to provide a compromise between the general
principle of German civil procedure following which state judges may only decide on the
facts presented by the parties on the one hand, and the Anglo-American system providing
far-reaching rules of discovery on the other hand. This benefits the parties twofold. Firstly,
neither party can hide relevant documents. Secondly, it is cost efficient, as disclosure of
documents is restricted to those documents that are found by the arbitral tribunal to be truly
relevant to the case.
J.
Amicable Settlement
A further speciality of GMAA arbitration is that unlike Anglo-American arbitration, GMAA 14

tribunals are obliged at any stage of the proceedings to consider the possibility of an amicable
settlement of the dispute or of single issues of the dispute and, if it considers it expedient to
do so, to suggest such settlement to the parties ( 13.1 GMAA Rules). This tool of dispute
resolution is often successfully used and is one reason for many, if not most,13 GMAA arbitrations being finalised by agreement rather than by an award. Additionally, amicable settlement
in the course of an arbitration is presumably another reason for mediation not yet having
developed very much in the German shipping community.
K.
Costs
Although the parties are free to agree on the fees payable to their own attorneys, recover- 15
ability of costs and thereby the risk of being faced with excessive legal costs from opponents
if a case is lost, is regulated by restricting recoverability of costs to the fixed fees which
German lawyers may charge according to the statutory table of fees (Lawyers Fees Act
(Rechtsanwaltsvergtungsgesetz RVG)) for appellate proceedings ( 7.4 GMAA Rules).14
In combination with the fixed fee system for the arbitral tribunals fees ( 7.2 GMAA Rules,15
Rules on the Remuneration of the Arbitral Tribunal) the costs of GMAA arbitrations are
very much predictable.
L.
Rules of Procedure
Whereas the GMAA Rules are designed to cover most of the usual questions arising in the 16
course of an arbitration, as previously stated the statutory provisions of 1025 et seq. ZPO
apply to the extent an issue is not covered by the GMAA rules.16
13
14
15
16
80-90 per cent according to Trappe (1994), p.465.

E.g. value at stake EUR 100,000 recoverable fees max. net EUR 4,679.30 for each party plus travel
expenses, etc.
E.g. value at stake EUR 100,000 max. net EUR 6,000 per arbitrator plus expenses, e.g. for expert
assistance.
E.g. 1026 ZPO restriction of jurisdiction of state courts.
792
M. Confidentiality
17 Due to the confidentiality of GMAA proceedings, only a limited number of GMAA awards,
the publication of which has been accepted by the parties, are available, e.g. via the GMAA
secretary and the GMAA website.17 However, following the records on GMAA arbitrations
kept by the GMAA secretary, GMAA arbitrations are widely acknowledged in the German
shipping industry and also amongst its partners in many of the neighbouring states.
V.
Deutsches Seeschiedsgericht
18 In former times, another German maritime arbitration institution, the Deutsches Seeschiedsgericht, was often used for solving salvage disputes. However, the Deutsches Seeschiedsgericht has
not been called upon in recent years.
VI. Normal Course of Maritime Arbitral Proceedings

19 Arbitral proceedings under both the GMAA Rules and maritime arbitrations that follow the
statutory provisions of 1025 et seq. ZPO tend to follow a similar pattern. The claimant appoints a first arbitrator, combined with a brief summary of the vital facts for clearly allocating
the appointment to a particular dispute. The respondent appoints the second arbitrator and,
if so agreed, the two arbitrators appoint a chairman. No appointment fees are charged. As a
next step, the claimant submits the detailed points of claim whereafter the arbitral tribunal
can calculate and request security for, or advance payment of, its fees. The tribunal then
invites the respondent to file the points of defence within a certain period of time. Once the
arbitral tribunals fees have been advanced in full and the points of defence have been lodged,
the arbitral tribunal invites first the claimant and then the respondent to file further more
thorough points of claim and points of defence again within a fixed period of time. Finally, the
tribunal summons the parties to a first hearing. German maritime arbitrations, like other German arbitral proceedings, are primarily based on the parties written submissions. Although
an arbitral tribunal does not prevent either party from presenting its arguments in one of the
hearings, German maritime arbitration hearings are most often, if not always, restricted to
an exchange of views and arguments on the issues in dispute. As a result, hearings often do
not take more than one to three hours and do not require the preparation of comprehensive
oral pleadings. In the first hearing, the arbitral tribunal discusses with the parties only the
vital facts and legal considerations. Additionally, in most maritime arbitrations the arbitral
tribunal also offers to make a settlement proposal if it considers a settlement appropriate. Approximately more than 50 % of German maritime arbitrations are settled in the first hearing
and often in line with the tribunals proposals. If there is no settlement, the arbitral tribunal
usually provides both parties with the opportunity to file further submissions, again within
fixed periods of time. The arbitral tribunal then either issues its award or, if taking evidence
e.g. by interviewing witnesses or involving experts is necessary, the arbitral tribunal orders a
second hearing for taking evidence. At the end of such second hearing, German maritime
arbitral tribunals in most cases repeat the offer to submit a settlement proposal. If the case
remains unsettled, the parties are often given the opportunity to file within fixed periods of
time final submissions with an evaluation of the results of the taking of evidence, following
which the arbitral tribunal issues its award. The award comprises the decision on the merits
and a decision on the allocation or apportionment of the costs of the proceedings. Unless the
17
<www.gmaa.de>.
793
parties agree on the amount of the recoverable fees and costs in line with this cost decision,
the arbitral tribunal, upon the other partys request and after receipt of the corresponding
figures and documentation, issues a second award on the recoverability of costs.
VII. German Maritime Law Reform 2013

In 2013, the German Maritime Law Reform led to a great number of changes in German law 20
which became effective as of 25 April 2013. As regards maritime arbitration, a major change
was to abolish 1031 para. 4 ZPO and to introduce the new 522 para. 1 phrase 2 German
Commercial Code (Handelsgesetzbuch HGB). In accordance herewith, it is no longer
possible to agree on arbitration in bills of lading by referring to the arbitration clause in the
underlying charter party. The arbitration clause now must be stipulated in the bill of lading
itself. In particular, clause (1) of the frequently used CONGENBILL 2007, which makes
reference to all terms and conditions, liberties and exceptions of the charterparty, dated as
overleaf, including the law and arbitration clause/dispute resolution clause, are herewith incorporated, will not be enforceable anymore if the bill of lading is governed by German law.
VIII. Court Rulings on GMAA

There are only very few court decisions on maritime arbitration, all of which were delivered 21
by the Court of Appeals of Hamburg. On 25 January 2008, the court confirmed that GMAA
arbitration can be agreed by means of a regular fixture confirmation.18 On 12 July 2005, the
same court found that 6 para. 3 GMAA Rules is valid.19 The same terms are now found in
6 para. 4 GMAA Rules. In case a party challenges the appointment of an arbitrator and the
other party does not approve such challenge or the arbitrator resigns from the appointment
within one week, the matter shall be referred to the competent court of appeal. The arbitral
tribunal is thus not entitled to decide about the challenge itself. On 11 March 2003, the same
court held that an arbitrator cannot be challenged just because he has been acting as arbitrator or even as attorney in other matters with a similar factual background and similar legal
issues. Bearing in mind that the community of maritime arbitrators is rather small, not only
in Germany but also in other major maritime arbitration centres like London and New York,
this ruling is of particular importance.
IX. Unfair Arbitration Clauses

As a rule, arbitration clauses in maritime transport documents do not unreasonably dis- 22
criminate against the other party. Arbitration agreements are only invalid in exceptional cases
where the agreement amounts to deliberate injury of the other partys interests. This would be
the case where the clause is effectively intended to impede the enforcement of claims against
the carrier, for example by choosing a remote forum or by choosing a particular expensive
mode of arbitration in cases where the value of the claim is low.20
X.
Summary
Arbitration is arguably the most frequently used form of dispute resolution in the marine 23
industry world-wide, and this is also the case in Germany. The main reason for the shipping
18
19
20
Cf. OLG Hamburg 25.01.2008, SchiedsVZ 2009, 17 et seq.

Cf. OLG Hamburg 12.07.2005, SchiedsVZ 2006, 55 et seq.
Cf. Felix Sparka, p. 145
794
industrys choice of arbitration is the free selection of arbitrators with maritime expertise,
technical skills and knowledge. Another reason for arbitration being increasingly chosen
for settling shipping disputes is the simplicity and clearness of the applicable rules and
regulations, particularly the GMAA Rules. The GMAA Rules are specifically designed to
offer a brief but nonetheless complete set of rules for expeditious and cost-effective dispute
resolution which both lawyers and businessmen from the shipping community can easily
understand.
Trade Arbitration in Germany

Rainer Karstaedt / Christian Graf
Short Bibliography: Ogilvie, Institutions and European Trade: Merchant Guilds, 1000-1800, Cambridge University Press, pg. 253 of 493 (2011); Tackaberry/Wood/Bernstein, Bernsteins Handbook
of Arbitration and Dispute Resolution Practice, 4th edn, London 2003; Freytag (ed.), Fr die Freiheit des Welthandels in aller Welt: 100 Jahre Warenverein der Hamburger Brse e.V. 1900-2000,
Hamburg 2000; Korte, Die Hamburger freundschaftliche Arbitrage ein berblick anlsslich des
100-jhrigen Jubilums des 20 Platzusancen fr den hamburgischen Warenhandel, SchiedsVZ
2004, 240; Schoser, Die Industrie- und Handelskammern und ihre Rolle in der Schiedsgerichtsbarkeit, in: Plantey/Bckstiegel/Bredow (eds), FS-Glossner, 1994, p.311; Strothe, 125 Jahre Verein der
Getreidehndler der Hamburger Brse e.V.: 1868-1993, Pinneberg 1993; Schtze (ed.), Institutionelle Schiedsgerichtsbarkeit, Kln 2006.
Para.
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A. Commodity Trade and
Commercial Arbitration:
Historical Background and
Modern Development . . . . . . . . . . . . . . . 1
1. The Beginnings of Commercial
Arbitration. . . . . . . . . . . . . . . . . . . . . . . . 1
2. Standardisation of Trade Terms. . . . 2
3. Quality and Technical Arbitrations 6
B. General Publication of Awards. . . . . . . . 9
C. The Vast Experience of Trade
Associations and Chambers . . . . . . . . . 10
II. Characteristics of Trade Arbitration . . . . . 11
A. The Arbitration Agreement . . . . . . . . . . 11
B. String Arbitration . . . . . . . . . . . . . . . . . . . 20
C. Two-tiered Arbitration . . . . . . . . . . . . . . 23
III. The Principal Trade Institutions . . . . . . . . . 26
A. Court of Arbitration of the
Hamburg Chamber of Commerce
Arbitration (Schiedsgericht der
Handelskammer Hamburg) . . . . . . . . . . 26
1. Arbitration Agreement and Rules . 27
2. Commencement and
Composition of the Tribunal . . . . . 28
3. Arbitral Proceedings . . . . . . . . . . . . . 29
4. Award and Costs . . . . . . . . . . . . . . . . . 31
B. Hamburg Amicable Arbitration
(Hamburger freundschaftliche
Arbitrage) . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
1. Arbitration Agreement . . . . . . . . . . . 35
2. Composition of the Arbitral
Tribunal and Award . . . . . . . . . . . . . . 36
C. Logistics Court of Arbitration at the
Hamburg Chamber of Commerce . . . 38
I.
Para.
D. Arbitration Services by Other
German Chambers of Industry and
Commerce . . . . . . . . . . . . . . . . . . . . . . . . . 39
IV. Principal Commodity Trade
Associations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
A. Association of Graintraders of the
Hamburg Exchange (Schiedsgericht
des Vereins der Getreidehndler der
Hamburger Brse e.V.) . . . . . . . . . . . . . . . 41
2. Commencement and
4. Award and Costs . . . . . . . . . . . . . . . . . 58
B. Merchandise Association of the
Hamburg Exchange (Schiedsgericht
des Warenvereins der Hamburger
Brse e.V). . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
2. Commencement and
4. Award and Costs . . . . . . . . . . . . . . . . . 75
C. German Coffee Association
(Schiedsgericht des Deutschen
Kaffeeverbandes e.V.). . . . . . . . . . . . . . . . . 80
2. Commencement and
4. Award and Costs . . . . . . . . . . . . . . . . . 89
D. Bremen Cotton Exchange (Bremer
Baumwollbrse). . . . . . . . . . . . . . . . . . . . . . 93
796
Para.
2. Commencement and
3. Arbitral Proceedings . . . . . . . . . . . .102
Para.
4. Award and Costs . . . . . . . . . . . . . . . .106
E. Other German Product
Associations . . . . . . . . . . . . . . . . . . . . . . .111
I.
Introduction
A.
Commodity Trade and Commercial Arbitration: Historical Background and Modern

Development
1.
The Beginnings of Commercial Arbitration
1 Commercial and commodity arbitration have a long history in northern Germany, due to
its sea ports and international trading community. The establishment of merchant guilds
and hanses1 not only paved the way for rapid economic development in the early Middle
Ages, but these associations also offered dispute settlement mechanisms as early as 1359
in Germany.2 Instances of dispute settlement mechanisms that bear strong resemblance to
modern-day commercial arbitrations can be seen in the northern town of Lbeck in the
middle of the 14th century.3 Around the middle of the 19th century, the modern-day trade
associations had also established arbitration mechanisms for their members.4 The establishment of arbitral mechanisms amongst these associations occurred long before both national
and international chambers of commerce even provided arbitration services for the general
commercial public.5
2.
Standardisation of Trade Terms
2 With the development of uniform trade customs and standard form contracts6 in international
business, trade associations took a special interest in ensuring conformity in the commercial
use of standard form contracts and terms. The associations usually in agreement with all
parties involved in the business, like producers, shippers, brokers, traders, manufacturers,
ship-owners, bankers and insurers issued standard form contracts and general conditions,
encouraged their use in the trade and kept the contract forms and conditions under review.
Today, all of these interest groups regularly meet in committees where they discuss the various sets of rules and, when necessary, revise them.
3 Transaction agreements now almost invariably contain an arbitration clause in the form
recommended by the relevant association. The trade associations, as will be seen below, also
established arbitration systems with arbitration rules and panels of qualified arbitrators.
1
4
5
6
Encyclopedia Britannica, Hanseatic League: Hanses were organizations founded by German merchant
communities and trading towns in Northern Germany, with the purpose of protecting the mutual trading
interests of the participating merchants.
Sheila Ogilvie, Institutions and European Trade: Merchant Guilds, 1000-1800, Cambridge University
Press, pg. 253 of 493 (2011).
See Sheila Ogilvie, pg. 251 (2011) discussing guild courts: Guild courts had greater commercial expertise
than public courts, it is claimed, because they were manned by professional merchants better able to
judge the business matters than judges appointed by princes, nobles, clergy or even towns.
For the grain trade see Strothe (1993), p.31.
The ICC International Court of Arbitration e.g. was founded in 1923.
Standard form contracts are printed contract forms with blank spaces for the parties to fill in their names
and express terms.
Trade Arbitration in Germany Karstaedt/Graf
797
Due to the quite democratic mode of formation of trade forms and terms, controversy exists 4
as to whether they can be regarded as standard terms and conditions in the sense of 305
et seq. Civil Code (Brgerliches Gesetzbuch BGB). However, in a case before the Higher
Regional Court (Oberlandesgericht OLG) Bremen, the court held that as long as there is
not a disproportionate advantage to one of the parties over the other, such terms and conditions should be upheld.7 Even if it is assumed that standard forms and trade conditions are
standard terms and conditions in the sense of the German Civil Code, there is no doubt
that the arbitration rules contained or referred to therein are incorporated in the contract
when merchants do business on such forms and terms (1031 (3) Code of Civil Procedure (Zivilprozessordnung ZPO), 310 (1) BGB).8 One can state, almost as a general rule,
that the usual way the relevant trade circles refer to the respective arbitration institutions
and their rules satisfies the requirements of 1031 (3) ZPO and thus does not contravene
307 BGB. Even a letter of confirmation which is not objected to would suffice, 1031 (2)
ZPO.9 In a recent case before the OLG Hamburg, the court was faced with an arbitration
award issued by the Association of Graintraders of the Hamburg Exchange (Schiedsgericht
des Vereins der Getreidehndler der Hamburger Brsee.V. Getreideverein), where the court
considered that silence or lack of objection by one party could be deemed to operate as a
form of confirmation.10
Commodity traders are specialists and normally conduct their business customarily and 5
exclusively on their particular terms; as such, these arbitration rules may be implied by custom.11 The number of participants in the different trade sectors has been reduced considerably over the last three decades, such that almost all trading houses have for quite some time
conducted business together and the customary arbitration rules may even be implied as a
consequence of their long standing business relationship.12 In summary, there is hardly any
element of surprise, ambush or inappropriate disadvantage in the types of contracts used
between merchants participating in the commodity trade that would justify an annulment
in accordance with 307 BGB. Therefore, everybody participating in the trade must, as a
responsible merchant, be deemed to be cognisant of the details of the rules. 13
3.
Quality and Technical Arbitrations
In the beginning, trade-related arbitrations were primarily concerned with the quality and 6
condition of the commodities. Bulk cargoes from distant ports of shipment could not easily
be sent back if the buyer had a complaint. Subsequently, each trade had to have experts available who were able to assess whether the goods conformed to the contract and to what extent
deficiencies should be compensated by allowances based on the prevailing market price.
7
8
9
10
11
12
13
OLG Bremen 28.06.2006 2 Sch 03/06.

In general see Schwab/Walter (2005), Chap. 5 paras9 et seq.
See OLG Hamburg, 15.03.2012 6 Sch 13/11; The court eventually overturned the award because
material terms (price) varied so greatly between the contract and the confirmation letter that the seller
could not in good faith rely on the silence of the other party as a tacit form of acceptance. However, the
reasoning of the court regarding silence and lack of objection can be interpreted as an understanding that
future courts may deem such action (or lack thereof) as valid confirmation.
Schwab/Walter (2005), Chap. 5 paras13 and 14.
798
7 Quality control has very much improved and claims for defective quality have considerably
decreased. Whereas some 20 years ago about 50% or more of trade disputes concerned
quality, nowadays, with the exception of the Arbitration Court of the Bremen Cotton Exchange (Schiedsgericht der Bremer Baumwollbrse Bremer Baumwollbrse hereinafter) (see
infra II. D.), the so-called technical (or in the coffee trade: principal) arbitrations prevail.
As opposed to the rather simple quality arbitration where arbitrators mainly focus on the
physical appearance and other quality parameters of the goods in dispute and then assess
an allowance, technical arbitration comprises the whole variety of contract problems which
can arise in international transactions.14 For example, issues such as straightforward defaults
of shipment or delivery, prevention of performance and frustration by force majeure events,
prohibition of export, restriction of import, insurance, letters of credit, bankruptcies and
disputes under loading or discharging provisions of the sale and the related maritime contracts arise frequently in technical arbitrations. It requires experienced trade arbitrators to
adequately deal with such cases and come to decisions which are commercially reasonable
while at the same time in accordance with the law.
8 Quality claims can, of course, still be brought under the general arbitration rules of an association, e.g. when they form part of a more complex contract dispute. Nevertheless, the
associations distinguish between quality arbitrations conducted under special rules 1) where
quality complaints experts specialized in the particular commodity assess the condition of
the goods in accordance with the specifications issued by the relevant association committees and 2) arbitrations in respect to other contract disputes.15 The former is a fact finding
procedure and a narrow field for highly specialised commodity and technical experts. This
falls outside the scope of this chapter, which deals with arbitration in general as a process
intended to produce a conclusive decision based on factual and legal considerations like an
action in court.16 As such, this chapter focuses on arbitration in the broader sense.
B.
General Publication of Awards
9 Awards may be published, but only with the consent of the parties. However, whereas a
trade association would normally be required to obtain the parties consent to publish the
award, e.g. 88 of the Conditions of the Trade with Raw Cotton of the Bremer Baumwollbrse
expressly authorizes the Bremer Baumwollbrse (the Bremen Cotton Exchange) to publish
awards without naming parties and arbitrators. In cooperation with the Hamburg Chamber
of Commerce, the trade associations have since 1975 collected a substantial body of exemplary awards. These are available in the arbitration law report Rechtsprechung kaufmnnischer
Schiedsgerichte RKS (formally Handelsrechtliche Schiedsgerichtspraxis).17
C.
The Vast Experience of Trade Associations and Chambers
10 The wide variety of members of the principal trade associations and the related chambers
of commerce which include every type of enterprise from traders to transporters, bankers
14
15
16
17
Tackaberry/Wood/Bernstein (2003), para.16-006.

See e.g. Rules of Procedure for Experts of the Warenverein der Hamburger Brse e.V. and Rules of the
Bremer Baumwollbrse for the Trade in Raw Cotton, Cotton Waste, Linters and Waste from Man-made
Fibres or Bibre Blends Section VI.
See Schwab/Walter (2005), Chap. 2 paras18-22a for the definition and details of the legal nature of quality arbitration in the strict sense.
Since 1999 online at <www.hk24.de/schiedssprche>.
799
and underwriters show that vast commercial and legal experience in international transactions exists at the German sea ports and trading centres. A potential user of commercial
arbitration cannot only rely solely on expertise in commodities; the user must also recognize
the fundamental importance of finance, logistics, risk management and even manufacture
of machinery and construction. Associations and chambers of commerce provide a wellestablished network of arbitration systems with approved rules, a reasonable cost structure
and experienced arbitrators from all sectors of the industry, the legal profession and the judiciary. Advice as to the drafting of suitable arbitration clauses can be readily obtained from the
chambers and the associations either individually or through contract forms and standard
trade terms. If parties use the wording recommended by the associations, their agreements
stand the best chance of being upheld in court. Additionally, those rules modelled on the
German arbitration legislation contain excellent safeguards to facilitate fair proceedings and
the production of just results.
II.
Characteristics of Trade Arbitration
A.
The Arbitration Agreement
As mentioned above, general trade terms or standard form contracts issued by trade as- 11
sociations always contain provisions that disputes shall be decided by arbitration under
the arbitration rules of the relevant association. Usually, it is not mandatory for the official
forms to be used or the general terms to be incorporated into the contracts. However, it can
be stated that all participants of the respective trades, whether formally members of the
association or not, refer to the official terms or forms of the association in their agreements.
In the rare case where there is no such reference, trade arbitrators tend to imply such conditions if they are satisfied that the incorporation was within the contemplation of the parties.
It should be borne in mind that the users of trade arbitrations are experienced commercial
actors who trade large volumes and are thoroughly knowledgeable of the form contracts
and arbitration rules they use in business. This is reflected in the way contracts are usually
concluded in the commodity trade. Negotiations are normally conducted through brokers.
In such negotiations, individual terms and the most suitable standard contract form with
the respective arbitration clause are orally agreed over the telephone. Afterwards, the broker
confirms the details of the transaction and includes the arbitration clause in writing to both
parties.
These are typical examples of how contracting parties in the international commodity trade 12
incorporate standard institutional terms and the respective arbitration rules:
Other Terms
All other terms and conditions not in conflict with the terms and conditions of this
contract shall be as per GAFTA contract No. 100 currently in force. Buyer and seller
both agree with the familiarity of the text of the said GAFTA contract.
Arbitration
Should any dispute arise between the contracting parties to which no agreement can
be reached, these disputes shall be settled by arbitration, which shall take place in
London under English law in GAFTA (Grain and Feed Trade Association) as per
GAFTA 125. The award given by the organization concerned shall be final and binding upon both parties. The fees for the arbitration shall be borne by the losing party.
800
13 Or shorter:
All other terms and conditions as per GAFTA 48 with arbitration GAFTA 125.
Arbitration in London.
14 German courts have recognised similarly short references, e.g. TERMS AS PER: European
Contract on Spot Coffee in combination with the words Arbitration: Hamburg.18
15 Not infrequently, the parties will also exchange contract confirmations. In this respect, all
Getreideverein standard forms and conditions provide:
If contracts or confirmations are exchanged or given out by one party to the contract
or by an agent, all previous agreements are deemed cancelled if they have not been
included in the contract or brokers confirmation. Contracts or confirmations against
which no immediate protest in written form is made are deemed approved.
16 The parties thus contractually define what they consider a commercial letter of confirmation.
When the confirmations exchanged contain an express arbitration clause, the requirements
of 1031 (1), (2) ZPO are met. When they refer to a standard form contract that includes
an arbitration clause (e.g. Grain and Feed Trade Association (GAFTA) 48 with arbitration
GAFTA 125), 1031 (3) ZPO applies. As such, they constitute an agreement in writing
contained in an exchange of letters or telegrams as required by Article II (2) of the New York
Convention 1958.19
17 In recent arbitrations, the author has witnessed an increase of negotiations and conclusions
of contracts via e-mail, which falls under the requirement of evidence of other forms of communication in the sense of 1031 (1) ZPO.20
18 It is accepted that with the use or incorporation of a standard form contract and the respective
arbitration clause, the arbitration rules of the relevant trade association form part of the contract, bind the parties in the arbitration and supersede the non-mandatory ZPO provisions.21
19 Today, commodity trade arbitration clauses are so elaborate that, if the parties use them
as recommended, any attempt to challenge the tribunals jurisdiction before the courts is
usually doomed to fail. The author has witnessed numerous cases where a party has unsuccessfully applied to have one of the customary institutional clauses annulled. Additionally,
current legal practice conveys a desire on the part of the courts to uphold even ambiguous
arbitration clauses.22 In a recent case that was before the OLG Frankfurt, the court upheld a
simple clause stating Rules/Arbitration: International Cotton Association Rules and Arbitration. According to OLG Frankfurt, this clause was found to be adequate in binding the
parties to arbitration under the International Cotton Association. In its reasoning, the court
stated that not only should ambiguous arbitration clauses be generously construed in favour
of an arbitration agreement, but that the content of the arbitration clause left no room for
doubt amongst experienced cotton traders that disputes would be held under the rules of the
International Cotton Association.23
18
19
20
21
22
23
OLG Hamburg 24.02.2003, RKS A4b No. 33.

See OLG Frankfurt, 27.08.2009 26 SchH 03/09.
See generally OLG Frankfurt, 27.08.2009 26 SchH 03/09.
B.
801
String Arbitration
Commodities are often traded through a string of intermediate traders and the contracts may 20
contain materially identical terms. For such cases, when the dispute concerns the quality or
condition of the goods, some international arbitration rules provide for a single arbitration to
be held between the first seller and the last buyer, with binding effect on all intermediate parties. In cases involving the same technical points, the parties may agree to concurrent arbitral
proceedings and hearings (see e.g. GAFTA Form No. 125 Arbitration Rules, Section 7).
In Germany, some arbitration rules provide for the consolidation of arbitrations (see infra, 21
paras 41 et seq., paras 58 et seq.) or third party notice (infra, paras 41 et seq., paras 73 et seq.
and paras 88 et seq.) to deal with problems arising under string or multi-party situations. Such
terms are valid under German law on the condition that all parties involved agree.24
A practical solution where the parties do not invoke these provisions or where the rules do 22
not cover the actual position is for the association to seek to appoint the same chairman in all
arbitrations so as to ensure consistency in the awards.
C.
Two-tiered Arbitration
Whereas arbitration usually consists of one arbitral process leading to a final award, the 23
two-tier system is a traditional feature of the international commodity trade, e.g. as can be
found both in Germany and in the UK. A very good example25 is Londons Grain and Feed
Trade Association, one of the leading trade associations with more than 200 standard form
contracts and general conditions, handling about 300 arbitrations and 70 appeals per year.26
In a single-tier arbitration in Germany, recourse against the final award is only available 24
through the state courts in accordance with 1059 ZPO.
In Germany, Warenverein, Getreideverein and Bremer Baumwollbrse have installed two-tier 25
arbitration, a system approved by the German courts.27 In a two-tier system, the first instance
award may, depending on the terms of the arbitration agreement, be challenged in all respects. This includes factual and legal aspects challenged before a panel of appeal arbitrators,
where even totally new issues can be raised.28 There is no direct appeal to the courts from
the first award, but it is possible to challenge an appeal award that decided upon procedural
points of law.29
III. The Principal Trade Institutions

A.
Court of Arbitration of the Hamburg Chamber of Commerce Arbitration (Schiedsgericht der Handelskammer Hamburg)
Quite distinct from the Hamburger freundschaftliche Arbitrage dealt with hereafter, the Court 26
of Arbitration is an institutional arbitration administered by the Hamburg Chamber of
24
25
26
27
28
29
Schwab/Walter (2005), Chap. 7 para.23 and Chap. 16 paras18, 19.

See Schwab/Walter (2005), Chap. 22 footnote 2 for more examples.
See <www.gafta.com>.
OLG Hamburg 04.09.1998, NJW-RR 2000, 806.
802
Commerce.30 The Court handles between 5 to10 cases a year in the long-term average, most
of them with small and medium enterprises as parties.
1.
Arbitration Agreement and Rules
27 The current version of the rules, the Regulativ des Schiedsgerichtes der Handelskammer Hamburg (Regulativ) dated 12 December 2003, reflects the changes induced by the Model Law.
This arbitration is intended for all types of disputes, in particular those involving commercial
parties (1.1 Regulativ). Unlike commodity associations, the Hamburg Chamber of Commerce neither issues nor recommends any standard form contracts or conditions of business.
Therefore, express agreements to apply the rules are required. A reference to HandelskammerArbitrage (Chamber of Commerce Arbitration) would usually constitute jurisdiction ( 1.2
Regulativ) and the Hamburg Chamber of Commerce recommends the following wording:
Any dispute arising in connection with the present contract (details) or with respect
to its validity shall be finally settled by the Court of Arbitration of the Hamburg
Chamber of Commerce, to the exclusion of the ordinary courts of law. The substantive law of shall be applicable to such dispute.
2.
Commencement and Composition of the Tribunal
28 Arbitration under the Regulativ des Schiedsgerichtes der Handelskammer Hamburg commences when the claimant submits a concise statement of his claim to the Hamburg Chamber
of Commerce ( 10, 12 Regulativ). Additionally, arbitration also commences when the
Hamburg Chamber of Commerce on application appoints a sole arbitrator, an arbitrator on
a defaulting defendants behalf or the presiding arbitrator (9 Regulativ). Unless the parties
have agreed on a sole arbitrator or the amount in dispute does not exceed EUR 25,000, the
tribunal consists of three arbitrators (2Regulativ) who must expressly accept their appointment and confirm that they have the qualifications agreed by the parties. Any circumstances
likely to give rise to justifiable doubts as to the impartiality or independence of the arbitrators
might result in a removal (7 Regulativ) and must be disclosed at any time (6Regulativ).
Applications for removal are submitted to the Hamburg Chamber of Commerce and if rejected, an appeal may be brought before the OLG Hamburg (7.3 Regulativ).
3.
29 The legal counsel of the Chamber attends the proceedings in an advisory capacity and
administers the arbitration in compliance with the chairmans instructions (4 Regulativ).
The Chamber further supports proceedings by supplying conference rooms and technical
facilities in its building located in the centre of Hamburg, as well as experts from its official
list, if demanded by the arbitrators. The arbitrators also have the commercial and statistical
know how of the Chamber, as well as its research resources at their disposal, to support their
decision finding.
30 Unless otherwise agreed, the arbitrations are conducted in German (15Regulativ). The
arbitrators have discretion to determine the procedure in accordance with the Regulativ, the
arbitration agreement and German arbitration law (17 Regulativ) and to take interim measures (18 Regulativ). They are obliged to hold a hearing (22Regulativ) and to encourage
settlement where appropriate (23 Regulativ).
30
See <www.hk24.de>.
4.
803
Award and Costs
Decisions are by majority and must be in writing and fully reasoned (24Regulativ). The 31
tribunal will apply the substantive law most closely connected with the subject of the arbitration, taking into account trade usages (16 Regulativ).
Along with his claim submissions, the claimant must deposit the prospective fees of the 32
arbitration in conformity with a schedule (13, 25 Regulativ) fixed by the Hamburg Chamber of Commerce. The fees vary in proportion to the amount in dispute and are based on a
percentage of the total claim, with the percentage declining as the total amount of the claim
increases. They are in general substantially lower compared to other German or international
arbitration institutions outside of the trade arbitration scene, as the Hamburg Chamber of
Commerce sees it as its traditional task to provide arbitration services especially for small
and medium enterprises.
The tribunal must determine and apportion the fees between the parties, with recoverable 33
costs available via the award (as the tribunal finds it fit, considering the circumstances of the
case (26, 27 Regulativ)).
B.
Hamburg Amicable Arbitration (Hamburger freundschaftliche Arbitrage)
Contrary to certain widely-held beliefs, the Hamburg Amicable Arbitration (Hamburger 34

freundschaftliche Arbitrage)31 is only a set of a few ad hoc arbitration rules. For a considerable
time, these rules had been observed as customs of the trade before it was issued in writing by
the Hamburg Chamber of Commerce in 1904 as 20 der Platzusancen fr den hamburgischen
Warenhandel (20 of the local usages of the Hamburg commodity trade).32 The present version came into force on 4 September 1958 and consists of seven subsections. Hamburger
freundschaftliche Arbitrage is generally intended for commercial disputes (20 (1) Hamburg
Amicable Arbitration Rules). It appears that recently only very few cases had been handled
under 20 der Platzusancen fr den hamburgischen Warenhandel. RKS reports one case in
1996, one in 1998 and one in 2002. There may have been more but as arbitrations are confidential, details are difficult to discern and it is not known what types of parties have agreed
on these rules and what the costs of the arbitrations were.
1.
In the absence of standard contract forms anticipating the application of Hamburger freund- 35
schaftliche Arbitrage, the rules must be agreed individually and the terms freundschaftliche
Arbitrage, Privatarbitrage or Hamburger Arbitrage (in principle) are considered sufficient to
establish the tribunals jurisdiction ( 20 (2) Hamburg Amicable Arbitration Rules).
2.
Composition of the Arbitral Tribunal and Award
The tribunal consists of two arbitrators. This is in accordance with the provision of 1034 36
(1) ZPO, which leaves the number of arbitrators to the parties agreement. Although not
necessarily of German nationality, the arbitrators must reside in Germany and are to be appointed by the parties within short time limits. Failing that, on application by the other party
the Chamber will appoint an arbitrator on behalf of the defaulting party ( 20 (2) Hamburg
Amicable Arbitration Rules). If the arbitrators disagree, they must appoint an umpire or, if
31
32
<www.hk24.de>.
Korte, SchiedsVZ 2004, 240.
804
they are unable, the Chamber will do so and the award will be made in writing by majority (
20 (4) Hamburg Amicable Arbitration Rules).
37 It should be carefully noted that 20 der Platzusancen fr den hamburgischen Warenhandel
only covers very few of the usual details contained in institutional arbitration rules. As
such, the agreement must make up for the deficiencies. Where the parties have not made
any agreement, the ZPO will apply and regulate the details of the arbitral proceedings
(10421050 ZPO) or the award with the applicable law and termination of the proceedings (10511058 ZPO).
C.
Logistics Court of Arbitration at the Hamburg Chamber of Commerce
38 The Hamburg Chamber recently instituted a Logistics Arbitration Court for all types and
combinations of transport contracts. The rules consist of the Rules of the Court of Arbitration
of the Hamburg Chamber of Commerce (Regulativ des Schiedsgerichtes der Handelskammer
Hamburg) and the very short supplemental rules (Zusatzregulativ fr das Logistik-Schiedsgericht an der Handelskammer Hamburg).33 To date, no cases have been reported and there exist
no standard form contracts or general conditions in the sector. Neither the Regulativ nor the
Zusatzregulativ contain any rules concerning chain contracts.
D.
Arbitration Services by Other German Chambers of Industry and Commerce
39 The prominent position of the Hamburg Chamber of Commerce as regards arbitration experience is due to a long standing tradition of chamber arbitration in Hamburg since the 17th
century and its close and long standing cooperation with the adjoining commodity trade
associations.34 A number of Chambers of Commerce have their arbitrations administered by
the German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS)
under the DIS Arbitration Rules. According to DIS statistics, between 7 and 14 cases per year
have been filed since 2007.35 Some Chambers of Commerce have their own arbitration rules,
but no statistics are officially published.
IV. Principal Commodity Trade Associations

40 The structure and sequence of the following institutional arbitration rules also provide a
fair picture of the typical course of an arbitration proceeding, as arbitrators make a point of
meticulously observing the provisions. As is evident from the rules, the associations revised
the provisions when the Model Law was incorporated into the ZPO so as to ensure compatibility. It will, therefore, also be seen that the rules not only very much resemble each other,
but they also keep well within the limits devised by the ZPO.
A.
Association of Graintraders of the Hamburg Exchange (Schiedsgericht des Vereins

der Getreidehndler der Hamburger Brsee.V.)
41 Grain arbitrations have been conducted since 186336 and the Association of Graintraders
of the Hamburg Exchange (Schiedsgericht des Vereins der Getreidehndler der Hamburger
Brsee.V. Getreideverein) was established 1868, with the express objective of administering
33
34
35
36
See <www.hk24.de/logistikschiedsgericht>.
Schoser, FS-Glossner (1994), p.311 (312).
Strothe (2001), p.31.
805
arbitrations. Nowadays, Getreideverein contains over 140 member companies and with an
average annual caseload of 70-80 arbitrations, it is a well-respected international arbitration
institution.37
1.
Arbitration Agreements and Rules
Getreideverein has issued some 30 standard contract forms and general conditions of busi- 42
ness for all types of characteristic transactions. These include various CIF and FOB inland
continuation contracts linked to a preceding overseas sale under international terms or ex
store, FCA, CIF or other delivery terms spot contracts.
The standard form contracts generally include a Schiedsgericht des Vereins der Getreidehndler 43
der Hamburger Brse e.V. arbitration clause subjecting all disputes arising out of or in connection with the contract to the jurisdiction of Getreideverein. Creditors of undisputed claims,
cheque and bills of exchange claims and of claims for the purchase price may choose between
arbitration and an action in court. The clause reads:
The parties to this contract submit to the following conditions and to the arbitration rules of the Verein der Getreidehndler der Hamburger Brse e.V. in force on
the date the claim is submitted. All disputes relating to this contract and any further
agreements connected with it are to be settled by the court of arbitration of the Verein der Getreidehndler der Hamburger Brse e.V., not only disputes between buyer
and seller but also between the parties to the contract and intermediaries. The agreement of the court of arbitration applies also to any decision regarding the validity of
the transaction if, for any reason, one party to the contract challenges this. Creditors
have the option to put recognised claims, claims arising from cheques and bills of
exchange as well as claims on the purchase price, which despite reminder have not
been settled, before either a court of law or the court of arbitration.
The arbitration clause of the Unified Contract Terms for the German Cereals Trade (Ein- 44
heitsbedingungen im Deutschen Getreidehandel) (i.e. for contracts for the sale of agricultural
products and manufactured goods produced from these products, etc.38) contains a number
of options if the parties are members of different product exchanges. The clause reads as
follows:
1. All disputes arising from contracts named in the introduction as well as any further
agreements made in connection with them shall be settled by a court of arbitration
appointed by a German exchange for cereals and products (commodity exchange or
exchange association), without recourse to an ordinary court of law.
2. Creditors have the option to bring before an ordinary court of law claims arising
from bills of exchange and cheques, as well as monetary claims against which no appeal has been made up to the day the action is initiated.
3. The Court of Arbitration which has been agreed upon between the parties has
jurisdiction. If no agreement has been reached, the following is to apply:
37
38
See <www.vdg-ev.de>.
Other examples include, inter alia, contracts for the sale of feeding stuffs and fertilisers, contracts related
to the packing, transport, insurance and storage of the above-mentioned products and commission and
brokerage contracts.
806
a) If both parties belong to the same cereals and product exchange (commodity
exchange or exchange association), then the court of arbitration of this institution has jurisdiction;
b) If the parties belong to several cereals and product exchanges (commodity
exchanges or exchange associations), then the seller has the right to determine
the court of arbitration of one of these institutions;
c) In all other cases the Seller has the right to determine the court of arbitration of a
cereals and product exchange (commodity exchange or exchange association).
If the seller does not exercise his rights to determine the court of arbitration according to section 3. b) or c) within three business days of the seller calling upon him to
do so, then this right passes to the buyer. If the buyer does not exercise this option
within three business days, then the previous situation shall apply again.
4. The proceedings of the court of arbitration are governed by the rules of arbitration
in their form current on the day the action is submitted of the court of arbitration
which has jurisdiction.
5. The above regulations apply with appropriate amendments in the case of disputes
between brokers and between brokers and contract parties.
45 One of the international standard forms, the German-Dutch contract (Deutsch-Niederlndischer Vertrag) No. 7 affords the claimant the option to arbitrate in Germany, the Netherlands
or France. It reads as follows (in the authors translation):
1 Arbitration
1. All disputes relating to this contract and any further agreements connected with it
are to be settled by the court of arbitration agreed upon, including not only disputes
between buyer and seller but also between the parties to the contract and intermediaries. The agreement of the court of arbitration applies also to any decision regarding
the validity of the transaction if, for any reason, one party to the contract challenges
this.
2. Creditors have the option to put recognised claims, claims arising from cheques
and bills of exchange as well as claims on the purchase price, which despite reminder
have not been settled, before either a court of law or the court of arbitration.
3. Arbitrations may be held by
a.) Chambre Arbitral de Paris
b.) Koninklijke Vereniging Het Comit van Granhandelaren, Rotterdam
c.) Verein der Getreidehndler der Hamburger Brse e.V.
d.) Vereniging Amsterdamse Graanhandel
If no court of arbitration has been agreed, the claimant has the right to choose.
4. The arbitral proceedings are governed by the rules of the relevant court of arbitration in the version current at the time when the claim of arbitration is submitted.
46 It should be noted that all Getreideverein arbitration clauses involve third parties, namely
brokers and intermediaries. These arbitration clauses also provide the creditor of undisputed
807
claims, claims arising under cheques and bills of exchange and claims for the purchase price
the option to either bring such claims in court or arbitral proceedings.39
It is also noteworthy that the Unified Contract Terms for the German Cereals Trade provides 47
the seller with an option to select the venue in cases where there are multiple possibilities,
with the option only passing to the buyer if the seller does not exercise this option within a
specified time limit.
Under the German-Dutch contract No. 7, it is the claimant who has the option to choose the 48
venue, irrespective of whether he is the seller or the buyer.
The current Arbitration Rules (Schiedsgerichtsordnung) are dated 1 March 2002.
2.
49
Proceedings under the Schiedsgerichtsordnung (SchiedsO) commence when the claimant 50

submits his claim for arbitration to the Secretariat. This procedure, as will be seen below, is
followed by all trade associations and slightly deviates from the non-mandatory concept of
1044 ZPO, which requires receipt of the claim for arbitration by the defendant. The claim
submissions shall name the parties, contain a concise statement of the claimants case (with
supporting evidence) and nominate an arbitrator (6 SchiedsO).
Getreideverein employs a two-tier arbitral system (27 SchiedsO) with a permanent Secre- 51
tariat (6, 7, 10, 14 SchiedsO). The first-tier tribunal consists of two arbitrators appointed
by the parties. The third and presiding arbitrator is appointed by the association (2 SchiedsO). The appeal tribunal comprises three arbitrators appointed by the association. When a
non-member party is involved, either party may apply for the appointment of the complete
appeal board by the Hamburg Chamber of Commerce (29 SchiedsO).
Failure to appoint an arbitrator entails an appointment on behalf of the defaulting party by 52
the Getreideverein or the Hamburg Chamber of Commerce if a non-member party is at default (2 SchiedsO). It is recommended to nominate an arbitrator from the lists of arbitrators
kept by the Getreideverein and the Chamber of Commerce. Arbitrators must in any event be
owners, directors, general managers, full partners, chief executives, etc. of businesses entered
with German registers of enterprises (2 SchiedsO). The rationale behind these provisions
evidently is to have experienced and responsible arbitrators on the tribunals who make sure
that the complex business issues are understood and that the customs of the respective trade
are properly observed.
The appointment can be challenged on grounds similar to the Model Law. 4SchiedsO 53
(almost verbatim quoting 1036 ZPO) provides that any circumstances likely to give rise
to justifiable doubts as to the impartiality or independence of the arbitrators might result
in a removal and must be disclosed at any time. In the very rare event that an arbitrator is
challenged, the tribunal (with the exclusion of the challenged arbitrator) will consider the
application. 4 SchiedsO expressly reserves for the parties the right to apply to the court in
accordance with 1037 (3) and 1062 (1) No. 1 ZPO.
39
This type of unilateral option in favour of the seller has met with the approval of the German Courts
(OLG Bremen 28.06.2006, SchiedsVZ 2007, 51) provided the seller has a legitimate interest (late or
none-payment of the price) and the buyer is in the position to avoid the exercise of the option e.g. by
compliance with his obligations.
808
3.
54 Under the chairmans direction, the tribunal has the discretion to determine the proceedings
(5 SchiedsO). The parties, similar to the non-mandatory procedure envisaged by 1046
ZPO, exchange written statements of claim, defence and counter-claim or set-off and further
submissions as directed by the tribunal (6-10 SchiedsO).
55 Getreideverein arbitrators may also consult the manager of the association or an assessor at any
stage of the proceedings. This is a well-established feature of international trade arbitrations
(see e.g. s. 37 (1)(a)(i) of the UK Arbitration Act 1996) for which the ZPO or the Model
Law have no equivalent. The arbitrators, who themselves are usually commercial people, are
thereby able to draw on external expertise, both legal or otherwise. This practice has been
met with the approval of the courts and legal literature, provided it is in accordance with the
parties agreement.40 Since Getreideverein contracts always incorporate the Schiedsgerichtsordnung, this practice is covered by the parties agreement.
56 The proceedings are conducted in German, they require a hearing and Getreideverein arbitrators are empowered to investigate the facts they consider relevant (5 SchiedsO).
57 Third party notice is available ( 11 SchiedsO) and the arbitrators may, on application,
consolidate arbitrations if they have jurisdiction in all cases and thereby render simultaneous decisions (12 SchiedsO). In practice, multi-party arbitrations do not present a great
problem. If there is a string of contracts involving technical points and neither consolidation
nor third party notice is employed, Getreideverein, like the other trade associations, will seek
to appoint the same chairman in all cases so as to ensure conforming decisions.
4.
Award and Costs
58 Following the ZPO model (1052 (1), 1054 (1), (2) ZPO), decisions are made by majority, must be in writing, signed by all arbitrators and contain the reasoning for the decision
(20, 22 SchiedsO). The Getreideverein standard forms and business conditions usually
have a German choice of law clause that excludes the application of the United Nations Convention on Contracts for the International Sale of Goods (CISG). It reads:
The contract is governed by German Law. The United Nations Convention on Contracts for the International Sale of Goods does not apply.
59 According to 14 (4) SchiedsO, the Secretariat may request the claimant to deposit the
prospective costs of the arbitration (and in practice, will always do so).
60 Similar to 1057 ZPO, the arbitrators must determine and apportion the arbitration fees
and other costs of the parties as it sees fit. Fees are assessed according to a schedule, fixed
in proportion to the amount in dispute with reference to reducing percentages applying to
successive claim layers. Other costs follow the event unless determined otherwise by the
arbitrators (34, 35SchiedsO).
61 Getreideverein awards can as a matter of course be appealed within ten days from receipt of
the award (27, 28 SchiedsO). Appeal from the first-tier award is to the arbitral appeal
tribunal and not to the court, and the first decision cannot be enforced independently.41
40
41

B.
809
Merchandise Association of the Hamburg Exchange (Schiedsgericht des Warenvereins der Hamburger Brse e.V.)
The Merchandise Association of the Hamburg Exchange (Schiedsgericht des Warenvereins 62

der Hamburger Brse e.V. Warenverein) was founded in 1900 with the purpose of handling
arbitrations. Today, the Warenverein represents over 160 member companies including all
leading merchants, brokers, bankers, wharfingers and ship-owners. The trade covers a wide
variety of food products and the association administers about 50 arbitrations a year, which
by international standards is also quite significant.42
1.
Warenverein has not issued a standard contract for each typical form of international sale 63
transactions. Business in this sector is usually conducted on the business conditions (Warenvereinsbedingungen) that consists of one uniform body of terms with different chapters
containing the most frequent overseas sales variations, e.g. shipment, import, ex quai and ex
store clauses.
The parties incorporate the Warenvereinsbedingungen in their contract by express reference.
64
30 Warenvereinsbedingungen provides for the jurisdiction of the Schiedsgericht des Warenver- 65

eins der Hamburger Brse e.V. and the application of the Schiedsgerichtsordnung (SchiedsO),
which was last revised on 1 May 2005.43 30 Warenvereinsbedingungen reads as follows:
(1) All disputes arising out of a contract concluded subject to these Conditions of
Business or with a Waren-Verein Arbitration clause shall be decided by an Arbitral
Tribunal; no action may be brought in a court of law. This arbitration clause also binds
the personally liable partners of the contracting parties. The Arbitral Tribunal alone
is competent to determine the validity of the main contract; it is also competent to
determine the applicability of the arbitration clause. The Arbitration Rules drawn
up by the Members Assembly of the Waren-Verein der Hamburger Brse e.V. shall
govern the organisation of this Arbitral Tribunal, the procedure to be observed by it,
the costs of the proceedings, the competence of ordinary courts (1062 ZPO) and
the responsibility of the Waren-Verein der Hamburger Brse e.V., its bodies and its
staff including its advisor; for each act of the procedure the latest edition is applicable.
(2) If an arbitration award is annulled or an application for a declaration of enforceability of an award is rejected by the ordinary court for reasons other than the lack of
a valid arbitration agreement, the arbitration agreement shall not be exhausted.
(3) Subsections 1 and 2 apply also to the relationship between one contracting party
and a broker who has negotiated the contract or an agent who has negotiated or
concluded the contract, as well as to the relationship between several participating
brokers or agents.
The courts have approved the incorporation of 30 Warenvereinsbedingungen in commercial 66
contracts.44
42
43
44
Freytag (ed.), 100th Anniversary Publication, Hamburg 2000, p.60.

See <www.waren-verein.de>.
OLG Hamburg 04.09.1998, RKS A4b No. 21.
810
2.
67 According to 18 SchiedsO, proceedings commence when the claimant provides to the

Secretariat a concise statement of his case and claim, which must also contain the names of
the parties, the arbitrators and must refer to the arbitration agreement.
68 This is a two-tier arbitral system (1 SchiedsO) with a permanent secretariat (3SchiedsO).
The tribunals at both tiers consist of two arbitrators appointed by the parties and the presiding arbitrator elected by the arbitrators (4, 5, 13, 32SchiedsO).
69 Failure to appoint an arbitrator or to agree on the third arbitrator leads to an appointment
on behalf of the defaulting party (or party appointed arbitrators) by the Warenverein; in cases
where one of the parties is not a member, the Hamburg Chamber of Commerce will make
the appointment (4, 5, 9, 10, 13 SchiedsO).
70 The arbitrators are to be owners, directors, general managers, full partners, chief executives
and the like of businesses that specialize in trade with commodities or the mediation and
conclusion of commodity contracts. These businesses must be entered with the German
registers of enterprises (4 SchiedsO). This provision is intended to ensure sufficient trade
expertise on the tribunal.
71 A complaint may be made to the Board of Directors of the Warenverein if there are circumstances likely to give rise to justifiable doubts as to an arbitrators impartiality or independence. Thereafter, an application in accordance with 1037, 1062 ZPO lies with the
applicable court (4, 16 SchiedsO).
3.
72 Not unlike the 1046 ZPO procedure, the parties typically exchange written statements
of claim, defence and counter-claim or set-off and further submissions as directed by the
tribunal (18, 19 SchiedsO). Warenverein arbitrations must be monitored and attended by
legal advisers (7 SchiedsO). This mechanism helps ensure that the proceedings and award
accord with the law. Additionally, it accounts for the fact that a substantial part of the fees
goes to the institution to cover the costs of the adviser.
73 The proceedings are conducted in German, but Warenverein arbitrators may determine
otherwise for all or part of the arbitration (12 SchiedsO). They must hold an oral hearing
( 21 SchiedsO). Warenverein arbitrators, in their absolute discretion, may take evidence
(22 SchiedsO) and have the express authority upon application to give directions regarding interim measures (17a SchiedsO), a power derived from 1041 (1) ZPO.
74 Also upon application, the arbitrators may consolidate arbitrations if they have jurisdiction in
all cases and may render simultaneous decisions (14 SchiedsO).
4.
Award and Costs
75 Pursuant to the concept found in 1052 (1), 1054 (1), (2) ZPO, decisions are by majority,
must be in writing, signed by all arbitrators and contain reasons (23 (1), (2) SchiedsO).
76 All transactions are subject to the provisions of the first section (1 Warenvereinsbedingungen). According to 2 Warenvereinsbedingungen, German law and the current International
Commercial Terms (INCOTERMS) apply in supplementation to the Warenvereinsbedingungen, with the CISG excluded.
811
The Secretariat may require the parties to deposit the prospective costs of the arbitration 77
(34 (5) SchiedsO) and will in practice usually do so.
The arbitrators must determine and apportion the arbitration fees and other costs of the 78
parties as it sees fit. Fees and disbursements of arbitrations are assessed according to a fee
schedule that is fixed in proportion to the amount in dispute, once again with reference to
reducing percentages that apply to successive claim layers (34SchiedsO). Unless otherwise
agreed, each party is to bear its own costs (35SchiedsO). This is a modification of the
non-mandatory 1057 ZPO, which provides for the outcome of the arbitration to be taken
into account.
In Warenverein arbitrations, a right of appeal from first-tier awards arises if the value at stake 79
exceeds EUR 50,000 (28 SchiedsO). As mentioned above (I. E.), the two-tier system is
acknowledged by the courts.
C.
German Coffee Association (Schiedsgericht des Deutschen Kaffeeverbandes e.V.)
The German Coffee Association (Schiedsgericht des Deutschen Kaffeeverbandes e.V. Kaffee- 80
verband)45 was founded in 1969 and its 140 member companies and organizations include
all leading roasters, processors, merchants, and brokers. Since 1 January 2006, the Kaffeeverband single-tier arbitration system has been administered by the Hamburg Chamber of
Commerce.46 Between 3 and 20 arbitrations are handled per year since 2006, very much
depending on the market volatility in the coffee trade.
1.
The Kaffeeverband recommends that parties contract on one of four standard coffee forms 81
issued by the European Coffee Federation (ECF) in Amsterdam for the prevailing types
of transactions: the European Contract for Coffee (ECC), the European Contract for Spot
Coffee (ECSC), the European Delivery Contract for Coffee (EDCC) and the European Free
Carrier Contract for Coffee (EFCACC).
The arbitration clauses of the recommended forms are essentially identical and provide for 82
arbitration before the coffee trade arbitral body stated in the contract47 The ECC clause e.g.
states:
(a) Any dispute which the parties are unable to resolve amicably shall be determined
by arbitration at the place stated in the contract and under the rules and customs
of the arbitral body for the coffee trade there established or recognized by the local
coffee trade organization.
In cases where the parties agree on Hamburg, the Schiedsgerichtsordnung (SchiedsO) of 83
1January 2006 applies.48 1 SchiedsO stipulates:
In accordance with the following regulations, these Arbitration Rules shall apply to
disputes which do not concern the execution of a quality arbitration, provided that
the Arbitration Board of the Association is appealed to and that it is competent in
accordance with 2. The Arbitration Rules are supplemented by the provisions of
45
46
47
48
See <www.kaffeeverband.de>.
See <www.hk24.de>.
See <www.ecf-coffee.org>.
For cases filed after 1 June 2014, a new and slightly different set of rules applies.
812
the ZPO regarding arbitration proceedings unless said Arbitration Rules contain
regulations to the contrary.
84 The Higher Regional Court (Oberlandesgericht OLG) Hamburg has held that this clause
is sufficiently certain and neither unusual nor surprising to establish the jurisdiction of the
Schiedsgericht des Deutschen Kaffeeverbandes e.V.49
2.
85 Unless an enlargement to five arbitrators is requested by the parties for special reasons (7
SchiedsO), the tribunal consists of two party-appointed arbitrators who must agree on
the chairman. If one party fails to appoint an arbitrator or the arbitrators cannot agree on a
chairman, the Hamburg Chamber of Commerce will make the appointment. Only owners,
directors, general managers, full partners, chief executives and the like of businesses entered
with German registers of enterprises can be appointed as arbitrators (5 SchiedsO).
86 Proceedings begin with the claimants delivery to the Secretariat of a concise statement of his
claim, together with evidence of the arbitration agreement. It must also contain the arbitrators name and address, as well as his or her written consent (5 SchiedsO).
3.
87 The chairman conducts the process at his absolute discretion (10 SchiedsO). The parties
may exchange written statements of claim, defence and counter-claim or set-off and further
submissions as directed by the tribunal ( 6, 10 SchiedsO). Additionally, the arbitration
must be monitored and attended by a legal adviser from the Hamburg Chamber of Commerce (11 SchiedsO).
88 The proceedings are conducted in German, but the arbitrators may determine otherwise
for all or part of the arbitration. A hearing is mandatory and the arbitrators (again in their
absolute discretion) may take evidence (10 SchiedsO). 9SchiedsO provides for third
party notice.
4.
Award and Costs
89 Decisions are by majority, must be in writing, must be signed by all arbitrators and contain
reasoning (12 (6) SchiedsO).The ECF standard form jurisdiction clauses (Article 25 ECC,
Article 22 ECSC, Article 20 EDCC, Article 24 EFCACC) provide for the law of the place
of arbitration to govern the contract and excludes the application of the CISG. It reads in
relevant part:
Whatever the residence of the parties concerned, they agree that in the event of arbitration or Court proceedings or any other dispute resolution procedure the contract
shall be interpreted according to the law in force in the country in which the parties
have stated in the contract the arbitration is to be held.
90 Hence, in an arbitration held in Hamburg, German substantive law would apply.
91 The claimant must pay a deposit covering the prospective costs of the arbitration (15 (7)
SchiedsO).
49
OLG Hamburg 24.01.2003, RKS A 4b No. 33.
813
The arbitrators must determine and apportion the arbitration fees and other costs of the par- 92
ties as seen fit. Fees and disbursements are assessed according to a fee schedule that is fixed
in proportion to the amount in dispute, with reference to reducing percentages applying to
successive claim layers (15 SchiedsO). Unless otherwise agreed, each party bears its own
costs (15 (11) SchiedsO).
D.
Bremen Cotton Exchange (Bremer Baumwollbrse)
The Bremen Cotton Exchange (Bremer Baumwollbrse) was established in 1872 and its 225 93
members include traders, brokers, bankers, ship-owners, forwarders, spinning mills and
underwriters.50 Between 2001 and 2005, the Bremer Baumwollbrse administered a yearly
average of 25 quality arbitrations. The number of technical arbitrations has ranged between
two and eight per year.
1.
The September 2006 version of the Rules of the Bremer Baumwollbrse for the Trade in 94
Raw Cotton, Cotton Waste, Linters and Waste from Man-made Fibres or Fibre Blends
(Baumwollbrse Rules) comprises the general trade terms as well as the arbitration rules. 1
Baumwollbrse Rules (in translation by the author) provides as follows:
The Rules of the Bremer Baumwollbrse for the Trade in Raw Cotton, Cotton
Waste, Linters and Waste from Man-made Fibres or Fibre Blends as in force at the
time of the contract shall apply to all contracts between the parties concerned which
have been concluded subject to these rules or with the clause Bremen arbitration or
with any similar clause unless otherwise specifically agreed.
Section VI of the Baumwollbrse Rules in 71-93 contains the arbitration rules. 71 Baum- 95
wollbrse Rules reads:
All legal disputes over technical matters shall be decided by the Court of Arbitration
of the Bremer Baumwollbrse to the exclusion of the ordinary courts of law, save
where both parties agree in writing to a decision by the ordinary courts of law.
As opposed to the other trade arbitration rules, 72 Baumwollbrse Rules provides for the 96
possibility of a decision by the Bremen Regional Court (Landgericht) if the evidential proceedings required are exceptional, difficult or not suited for arbitration. Applications can be
made at any time during the arbitration by either party or the arbitrators to the presidents of
the Bremer Baumwollbrse. However, the presidents decision cannot be appealed.
2.
The proceedings commence with the claim for arbitration, with the claimant submitting 97
a statement of the case with supporting documentation and evidence to the Office of the
Court of Arbitration. The claim must name the parties, the claimants arbitrator with the
request to the defendant to name his arbitrator in his reply and contain evidence that the
dispute is subject to Rules of the Bremer Baumwollbrse.
The Bremer Baumwollbrse has installed a two-tier arbitral system (80, 82 Baumwollbrse 98
Rules) with a permanent Office of the Court of Arbitration (71 (3) Baumwollbrse Rules).
50
See <www.baumwollboerse.de>.
814
99 At first-tier, each party appoints an arbitrator who in turn must appoint an umpire if the
two cannot agree on an award (74 (1), (2) Baumwollbrse Rules). This provision is in
compliance with 1034 (1)ZPO, which leaves the number of the arbitrators to the parties
agreement. If the defendant does not appoint an arbitrator within the time determined by
the Office of the Court of Arbitration, the Committee for the nomination of Appeal Judges
and Arbitrators will appoint an arbitrator on his behalf (80 (3) Baumwollbrse Rules).
100 At appeal, the Committee for the nomination of Appeal Judges and Arbitrators will appoint
two appeal arbitrators and a presiding judge of a commercial chamber of the Bremen Regional Court (Landgericht) to act as chairman ( 74 (3) Baumwollbrse Rules). Upon application,
the two arbitrators can be appointed by the Bremen Chamber of Commerce.
101 The arbitrators must be owners, directors, general managers, full partners, chief executives
and the like of member firms or individual members of the Bremer Baumwollbrse. In cases
of disputes between members and non-members, expert representatives of non-member
firms who are active in the cotton trade and have been entered with a German register of
enterprises may be appointed. The rules are silent on the challenge of arbitrators, so 1036,
1037, 1062 ZPO would apply in cases of doubt as to the impartiality or independence of an
arbitrator.
3.
102 The tribunal may determine the proceedings in its absolute discretion, hear and weigh evidence, and request further information from the parties. However, each party must be given
reasonable opportunity to present its case (75 (1) Baumwollbrse Rules).
103 In contrast to the rules of the other trade associations that require an oral hearing, the Bremer
Baumwollbrse proceedings (in principle) are conducted by way of written submissions. The
tribunal has discretion to hold a hearing, which is to be granted if requested by one of the
parties (75 (2) Baumwollbrse Rules). This procedure is more in line with the informal
model of 1047 ZPO, whereas the other rules follow the stricter court pattern.
104 The arbitrators may consult with the adviser of the Bremer Baumwollbrse at both tiers (87
(3) Baumwollbrse Rules).
105 Third party notice (77 Baumwollbrse Rules), set-off (78 Baumwollbrse Rules), amendment of claim and counter-claim (81 Baumwollbrse Rules) are also possible.
4.
Award and Costs
106 Decisions are by majority, must be in writing, signed by all arbitrators and contain reasoning
(87, 88, 89 Baumwollbrse Rules). German law applies with the exclusion of the CISG
(1 Baumwollbrse Rules) where the rules do not make express provision otherwise.
107 The Office of the Court of Arbitration may request the claimant or appellant to deposit a sum
covering the prospective costs of the proceedings (93 (2) Baumwollbrse Rules).
108 The arbitrators must assess, determine and apportion the arbitration fees and other costs of
the parties as they consider appropriate (90, 91 Baumwollbrse Rules).
109 Fees are directed to the account of the losing party and must be assessed in accordance with
the fee scale attached to the rules. The arbitrators will decide whether expenses were necessary and recoverable ( 91 (1), 92 (1) Baumwollbrse Rules). If the claim only succeeds in
part, the fees are divided proportionately ( 92 (2) Baumwollbrse Rules).
815
The award may be appealed in writing to the Office of the Court of Arbitration within 14 110
days (82 (1) Baumwollbrse Rules), with supporting submissions following within an additional 14 days (83 (1) Baumwollbrse Rules).
E.
Other German Product Associations
Oil and fat are important commodities and traded on conditions issued by the related as- 111
sociation German Wholesalers Federation for Oil, Fat and Oil Raw Materials (Grofor).51
Grofor also conducts arbitrations, administered by the Getreideverein under rules almost
identical with that of the Schiedsgerichtsordnung of the Schiedsgericht des Vereins der Getreidehndler der Hamburger Brse e.V.
In respect to other agricultural products, the arbitration services of the Bavarian,52 Rhine,53 112
Central German54 and Southwest German55 Product Exchanges are noteworthy, although
their activity is usually limited to trade in the respective region. Unfortunately, there are no
records of the number of cases that have been administered.
Other associations also have dispute resolution mechanisms available though in practice 113
hardly any arbitrations appear to take place. Here, the associations for the trade of books
(Brsenverein des deutschen Buchhandels),56 fruit (Deutscher Fruchthandelsverband e.V.),57 rubber (Verein der Kautschukhandel beteiligten Firmen)58 and drugs and chemicals (Vereinigung
der am Drogen- und Chemikalien- Gro- und Auenhandel beteiligten Firmen e.V.)59 should be
mentioned for the sake of completeness.
51
52
53
54
55
56
57
58
59
See <www.grofor.de>.
See <www.bwab.de>.
See <www.ihk-koeln.de>.
See <www.mpb-online.com>.
See <www.warenboersen-suedwest.de>.
See <www.boersenverein-nord.de>.
See <www.dfhv.de>.
Verein der am Kautschukhandel beteiligten Firmen e.V., Kajen 2, 20459 Hamburg.
See <www.wga-hh.de>.
Arbitration of Disputes from

Commercial Representation in Germany
David Quinke
Short Bibliography: Dathe, Abdingbarkeit des Ausgleichsanspruchs eines in der EU ttigen Handelsvertreters nach der Ingmar-Entscheidung des EuGH, NJOZ 2010, 2196; Ebenroth/Boujong/
Joost/Strohn, HGB, Mnchen 2013; Eilmannsberger, Die Bedeutung der Art. 81 und 82 EG fr
Schiedsverfahren, SchiedsVZ 2006, 5; Elsing, Die ex-officio Anwendung drittstaatlicher Eingriffsnormen (insbesondere des Kartellrechts) in internationalen Schiedsverfahren, in: FS-Mailnder,
2006, p.87); Heinicke, Stolpersteine im grenzberschreitenden Handelsvertreterrecht, ZVertriebsR
2013, 275; Horn, Zwingendes Recht in der internationalen Schiedsgerichtsbarkeit, SchiedsVZ
2008, 209; Kleinheisterkamp, The Impact of Internationally Mandatory Laws on the Enforceability
of Arbitration agreements, World Arbitration & Mediation Review 2009, 91; Lew/Mistelis/Krll,
Comparative International Commercial Arbitration, Hague/London/New York 2003; Loewenheim/Meessen/Riesenkampff, Kartellrecht, Mnchen 2009; Mistelis/Brekoulakis (eds), Arbitrability:
International & Comparative Perspectives, 2009; Martinek/Semler/Habermeier/Flohr (eds), Vertriebsrecht, Mnchen 2010; McGuire, Grenzen der Rechtswahlfreiheit im Schiedsverfahrensrecht?,
SchiedsVZ 2011, 257; Niedermaier, Schieds- und Schiedsverfahrensvereinbarungen in strukturellen
Ungleichgewichtslagen, Tbingen 2013; Quinke, Schiedsvereinbarungen und Eingriffsnormen,
SchiedsVZ 2007, 246; Redfern/Hunter et al. (eds), Redfern and Hunter on International Arbitration,
Oxford 2009; Risse/Spehl, Zehn Ratschlge fr internationale Schiedsverfahren im Vertriebsrecht,
ZVertriebsR 2013, 151; Rhl, Die Wirksamkeit von Gerichtsstands- und Schiedsvereinbarungen
im Lichte der Ingmar-Entscheidung des EuGH, IPRax 2007, 294; Sachs/Niedermaier, Overriding
Mandatory Provisions Before Arbitral Tribunals Some Observations, in: FS-Hoffmann, 2011,
p.1051; Schmidt-Ahrendts/Httler, Anwendbares Recht bei Schiedsverfahren mit Sitz in Deutschland, SchiedsVZ 2011, 267; Schulz/Niedermaier, Unwirksame Schiedsklausel in Franchisevertrgen
durch Wahl des Tagungsortes im Ausland? SchiedsVZ 2009, 196; Semler, in: Becksches Rechtsanwalts-Handbuch, Mnchen 2011; Wolff (ed.), New York Convention, Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 Commentary, Mnchen Oxford
Baden-Baden 2012.
I.
II.
Para.
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A. Practical Significance . . . . . . . . . . . . . . . . . 1
B. Why Particular Rules? . . . . . . . . . . . . . . . . 3
Enforcement of the Arbitration
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
A. Types of Commercial Representation. 9
1. Commercial Agents
(Handelsvertreter) . . . . . . . . . . . . . . 11
2. Authorised Dealers
(Vertragshndler) . . . . . . . . . . . . . . . 12
3. Commercial Brokers
(Handelsmakler) . . . . . . . . . . . . . . . 13
4. Commission Merchants
(Kommissionre) . . . . . . . . . . . . . . . 14
Para.
5. Commission Agents
(Kommissionsagenten) . . . . . . . . . . 15
6. Franchisee (Franchisenehmer). . . 16
B. Overview of the Restrictions of
Party Autonomy . . . . . . . . . . . . . . . . . . . . 17
C. Arbitrability . . . . . . . . . . . . . . . . . . . . . . . . 21
D. Prospective Waiver Doctrine . . . . . . . . 24
1. Prospective Waiver Doctrine
Acknowledged in German
Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2. The Current Status of the Law . . . . 30
3. Practical Suggestion . . . . . . . . . . . . . . 32
III. Application of Mandatory Laws
Ex Officio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
IV. Action by Stages . . . . . . . . . . . . . . . . . . . . . . . . 36
818
I.
Introduction1
A.
Practical Significance
1 Disputes arising out of commercial representation play a significant role in arbitral practice
in Germany. Typical examples are disputes regarding the representatives claim for the payment of commission including his entitlement to an excerpt of the principals commercial
books,2 disputes regarding the representatives claim for compensation after termination of
the agreement,3 disputes about any claims for payment the principal may have,4 and disputes
regarding mutual rights and obligations arising out of non-compete clauses.
2 The notion commercial representation is used hereinafter for all different types in which
commercial representation can be organized and thus encompasses commercial agents, authorised dealers, commercial brokers, commission merchants, commission agents, and franchisees. Not all of these different types of representation involve procedural particularities in
arbitration, which is why particular care must be exercised in the individual case to carefully
distinguish between them (cf. section II. below).
B.
Why Particular Rules?
3 In Germany, like in numerous countries, the legal relationship between the principal and the
commercial representative is subject to particular rules intending to protect the representative. As the principal generally has an interest to base the relationship with the representative
on a model contract in order to keep transaction costs low in terms of negotiating and managing the often voluminous contracts, the representative is usually considered to have the
option of either accepting the contract for representation as proposed or losing the business.5
Against this background it does not come as a great surprise that there is a perceived necessity
to protect commercial representatives against their principal because of (real or perceived)
unequal bargaining power.
4 Regarding commercial agents, the Council Directive on the Coordination of the Laws of
the Member States Relating to Self-Employed Commercial Agents (hereinafter the Commercial Agents Directive)6 defines the minimum standard of protection that Member States
must grant. The Commercial Agents Directive stipulates certain inalienable rights of the
commercial agent, one of the most important being the principals obligation to provide the
agent with all information the agent needs in order to determine the amount of his commission, in particular by way of an excerpt of the principals books (Article 12 (2) Commercial
Agents Directive). Another key element in the minimum standard protection constitutes the
agents entitlement to a compensation payment after the termination of the agency contract
(Articles 17, 18 Commercial Agents Directive). These minimum standards are mandatory,
1
2
3
4
5
6
Cf. the disputes underlying the decisions of BGH 23.05.1960, NJW 1960, 1462; OLG Mnchen
01.02.2008, SchiedsVZ 2008, 151; and of OLG Mnchen 08.12.2011.
Cf. the dispute underlying the decision of OLG Mnchen 15.05.2006, WM 2006, 1556.
Cf. the disputes underlying the decisions of OLG Mnchen 25.03.2013, SchiedsVZ 2013, 230; OLG
Dresden 07.12.2007, OLG Bremen 06.10.2008 and OLG Celle 04.12.2008, the latter three commented by
Schulz/Niedermaier, SchiedsVZ 2009, 196.
Cf. Krll, in: Mistelis/Brekoulakis (2009), para. 16-3.
Council Directive 86/653/EEC, OJ 31.12.1986, L 382/17.
Arbitration of Disputes from Commercial Representation in Germany Quinke
819
i.e. the agent and the principal cannot derogate from them to the detriment of the agent (cf.
Articles 12 (3) and 19).
In its Ingmar-decision,7 the ECJ ruled that the principal is not allowed to avoid his obligation 5
to pay compensation by submitting the contract to the law of a country that is not a Member
State and does not provide for such compensation, even when the principal is located in that
country. In the opinion of the Court, the principal cannot evade those provisions by the
simple expedient of a choice of law clause. The purpose served by those provisions in question
would require that they be applied where the situation is closely connected with the Community,
in particular where the commercial agent carries on his activity in the territory of a Member State,
irrespective of the law by which the parties intended the contract to be governed.8 In light of these
considerations, the Court held that Articles 17 and 18 of the Commercial Agents Directive
must always be applied where the commercial agent carries on his activity in a Member State,
even if the principal is established in a non-Member State and the contract stipulates that it is
governed by the law of the non-Member State.9
Ingmar thus qualifies the rights stipulated in Articles 17 and 18 of the Commercial Agents 6
Directive and as transformed in the national laws of the Member States as (internationally)
mandatory provisions in the sense of Article 9 (1) of the EC Regulation on the Law Applicable to Contractual Obligations (hereinafter the Rome I Regulation),10 which apply even
where the parties chose another law as applicable to the contract (Article 9 (2) of the Rome I
Regulation). It is common opinion that this applies mutatis mutandis to the other mandatory
provisions stipulated in the Commercial Agents Directive, even if the ECJ has thus far not
ruled directly upon this issue.11
II.
Enforcement of the Arbitration Agreement
Cross-border contracts for commercial representation often contain arbitration clauses to 7

avoid the home court advantage of the courts of either party and to ensure the enforceability of any resulting award.12 The Commercial Agents Directive does not explicitly rule out
such arbitration clauses, as it does not provide any provisions on the procedural protection
that Member States must grant to commercial representatives. At first sight, this allows the
principal to combine a choice of law clause electing a non-Member State law with a choice of
forum clause or an arbitration agreement in favour of a non-Member State country or place
of arbitration such country, simply to circumvent the (internationally) mandatory provisions
under the Commercial Agents Directive.
The reaction of the German courts has been to invalidate such agreements. As a consequence, 8
the procedural autonomy of parties to choose their applicable law and dispute resolution
7
8
9
10
11
12
ECJ, Ingmar Gb Ltd v Eaton Leonard Technologies Inc., (2000) ECR I-9305 = NJW 2001, 2007.
ECJ, (2000) ECR I-9305, ECJ = NJW 2001, 2007 (2008).
ECJ, (2000) ECR I-9305, ECJ = NJW 2001, 2007 (2008). Cf. ECJ 17.10.2013, Unamar v Navigation
Maritime Bulgare, EuZW 2013, 956 with note Grfe/Giesa, ZVertriebsR 2014, 29 for a choice-of-law
clause in favour of a Member State where the forum is a Member State that offers a higher level offer
protection, i.e. where the forum state grants a higher protection to the agent than the Commercial Agents
Directive requires.
Cf. OLG Stuttgart 29.12.2011, BeckRS 2012, 18825 (regarding Article 34 EGBGB, the predecessor to
Article 9 Rome I); MnchKommBGB-Martiny (2010), VO (EG) 593/2008, Art. 9 para. 29.
Cf. Horn, SchiedsVZ 2008, 209 (211, 214, 217); Reich, EuZW 2001, 50 (52).
Krll, in: Mistelis/Brekoulakis (2009), para. 16-3; Risse/Spehl, ZVertriebsR 2013, 151 (152).
820
mechanisms is limited so as to create a level playing field, similar to labour and consumer
laws.13
A.
Types of Commercial Representation
9 In order to determine whether an arbitration agreement in a contract on commercial representation is enforceable, one must determine which type of commercial representation
is at issue. Of interest for this chapter are only those types of commercial representatives
subject to (internationally) mandatory laws granting the representatives particular protection. Where there is no such protection, i.e. where parties can freely derogate from the laws
governing their relation, arbitrating rights and duties arising out of these contracts do not
raise any particular procedural issues.14
10 There are numerous ways in which commercial representation can be organised; however, as
will be seen below, not all involve (internationally) mandatory laws.
1.
Commercial Agents (Handelsvertreter)
11 The commercial agent is defined in 84 (1) HGB as a person who is permanently engaged
by another person (the principal) to act either as an intermediary or in the principals name
for the purposes of the principals mercantile trade, without being an employee in the principals establishment. The commercial agent is essentially characterised by the fact that he
is permanently engaged in acting in the interests of the principal. As noted before, the Commercial Agents Directive stipulates certain inalienable rights of the commercial agent, such as
the agents claim for an excerpt of the principals books and the agents entitlement to a compensation payment after the termination of the agency contract, which the German legislator
implemented in 84 et seq. HGB. These rights are (internationally) mandatory, unless the
commercial agent acts outside the European Communities and the European Economic
Area ( 92c (1) HGB). Commercial agents are thus subject to the procedural restrictions of
party autonomy described further below (cf. sections II.C. and II.D. as well as III.).
2.
Authorised Dealers (Vertragshndler)
12 Authorised dealers have a contract with the principal to buy and sell the principals goods in
their own (i.e. the authorised dealers) name and for their own account to their customers.
The essential difference to the commercial agent is that the authorised dealer sells the goods
in his own name, whereas the commercial agent acts on behalf of the principal and for the
principals account. In this respect, the authorised dealer does not fall within the scope of the
statutory definition set forth in 84 (1) HGB. Nevertheless, insofar as the rights and duties
of an authorised dealer are similar to that of a commercial agent, some of the statutory provisions dealing with commercial agents are applied to authorised dealers by way of analogy.15
Insofar, authorised dealers are also subject to the procedural restrictions of party autonomy
described further below.
13
14
15
Krll, in: Mistelis/Brekoulakis (2009), paras 16-5, 16-9.

Krll, in: Mistelis/Brekoulakis (2009), para. 16-18.
BGH 13.01.2010, NJW-RR 2010, 1263 (1264). Cf. the arbitral award at issue in the proceedings of OLG
Mnchen 25.03.2013, SchiedsVZ 2013, 230 (234) for an example of analogous application from arbitral
practice.
3.
821
Commercial Brokers (Handelsmakler)
Commercial brokers are persons who, in the regular course of their business, act as interme- 13
diaries in the formation of contracts relating, inter alia, to the purchase or sale of goods or negotiable instruments. In this respect, the commercial broker acts on behalf of other persons
but without being in any continuous contractual relation with them ( 93 (1) HGB). As the
commercial broker is not under a permanent contractual obligation vis--vis the principal,
the statutory provisions dealing with commercial agents do not apply by way of analogy,16
and neither do the procedural restrictions of party autonomy.
4.
Commission Merchants (Kommissionre)
A commission merchant is a person who, in the regular course of his trade, undertakes to buy 14
or sell goods or negotiable instruments in his own name upon the instructions of the principal, and for the principals account ( 383 HGB). As the commission merchant is not under a
permanent contractual obligation vis--vis the principal, here as well the statutory provisions
dealing with commercial agents do not apply by way of analogy,17 and again neither do the
procedural restrictions of party autonomy.
5.
Commission Agents (Kommissionsagenten)
The commission agent acts essentially in the same way as the commission merchant, but is 15
contractually obligated to act on behalf of the principal. Since he does not act in the principals, but in his own name, the commission agent does not fall within the scope of 84 (1)
HGB and, accordingly, 84 et. seq. HGB do not directly apply. However, as the commission
agent is under a permanent contractual obligation vis--vis the principal, the statutory provisions dealing with commercial agents in some cases do apply by way of analogy.18 Insofar,
commission agents are as well subject to the procedural restrictions of party autonomy
described further below.
6.
Franchisees (Franchisenehmer)
A franchisee uses the commodities, brands, and marketing methods of the franchisor and 16
is entitled to permanently and exclusively sell the franchisors goods or services, acting in
his (i.e. the franchisees) own name and for his own account. The franchisee is thus not a
commercial agent in terms of 84 (1) HGB. He nevertheless has a similar position as the
authorised dealer and the commercial agent. Since the franchisee is contractually obliged
to buy the products and use the system of the franchisor and is therefore integrated into the
business of the franchisor, some of the provisions regarding commercial agents apply by way
of analogy.19 Again, franchisees are insofar also subject to the procedural restrictions of party
autonomy described further below.
16
17
18
19
BGH 09.03.1977, NJW 1977, 1586; OLG Dsseldorf 22.12.2011, BeckRS 2012, 00828.
Cf. Ebenroth/Boujong/Joost/Strohn-Krger (2013), 383 para. 9.
Cf. MnchKommHGB-Huser (2013), 406 paras 23 et seq.; MnchKommHGB-vonHoyningen-Huene
(2010), 89b para. 25.
BGH 17.07.2002, NJW-RR 2002, 1554 (1555). Cf. Martinek/Semler/Habermeier/Flohr (2010), 27
paras 55 et seq.; MnchKommHGB-vonHoyningen-Huene (2010), 89b para. 24.
822
B.
Overview of the Restrictions of Party Autonomy
17 Once the legal framework applicable to the relationship between the representative and principal has been determined, the procedural implications for the enforcement of the arbitration
agreement can be assessed. Typically, legislators and/or courts adopt one of three different
approaches to the arbitration of disputes from commercial representation.20
18 At one end of the spectrum are countries that do not restrict the enforceability of arbitration agreements at all, but limit the procedural protection conferred to the commercial
representative to the public policy control at the enforcement stage of any resulting award
(the so called second look doctrine). A well-known example is the jurisprudence of the U.S.
Supreme Court in its Mitsubishi v. Soler decision, in which the court considered the arbitrability of antitrust claims in a dispute arising out of a distribution agreement in the car industry.21
This approach is ultimately based upon the assumption that the arbitral tribunal will apply
the mandatory U.S. antitrust laws, but that in any event the courts will have the opportunity
at the award enforcement stage to ensure that the legitimate interest in the enforcement of
the antitrust laws has been addressed.22
19 At the other end of the spectrum, there are countries that restrict the objective arbitrability of
these disputes, i.e. these disputes are to a certain extent per se excluded from arbitration.
A well-known example is Belgium, where distributors are considered to be in a particularly
weak bargaining position due to the small size of the Belgian market.23
20 German law adopts a middle way: while disputes arising out of commercial representation
are usually arbitrable (cf. below II.C.), German courts will not give effect to an arbitration
agreement in the event it operates in tandem with a choice of law clause as a prospective
waiver of the commercial representatives (internationally) mandatory remedies (cf. below
II.D.).
C.
Arbitrability
21 1030 (1) ZPO extends arbitrability to all claims involving an economic interest. The
notion of arbitrability is sometimes also used in a broader sense to cover the entire issue
of an arbitral tribunals jurisdiction, including the validity of the arbitration agreement and
its scope.24 Under German law, in line with the prevailing international view,25 arbitrability
refers only to the restrictions imposed upon the parties freedom to submit certain types of
disputes to the jurisdiction of an arbitral tribunal.26 As far as disputes arising from contracts
for commercial representation involve an economic interest, these disputes are arbitrable
under German law.27
20
21
22
23
24
25
26
27
Krll, in: Mistelis/Brekoulakis (2009), paras 16-23 et seq.

Mitsubishi Motors Corp. v Soler Chrysler-Plymouth, Inc., 473 U.S. 614.
Mitsubishi Motors Corp. v Soler Chrysler-Plymouth, Inc., 473 U.S. 614.
Cour de Cassation 28.06.1979, Yearbook V (1980) 257; Cour de Cassation 15.10.2004, Yearbook XXXI
(2006) 593; cf. also Krll, in: Mistelis/Brekoulakis (2009), para. 16-5 with fn. 4, 16-33.
This is particularly true for the US, cf.Shorel, in: Mistelis/Brekoulakis (2009), paras 4-1 et seq.; Park, Arb.
Int. 1995, 137 et seq.
Lew/Mistelis/Krll (2003), para. 9-4; Redfern/Hunter (2009), para. 2111.
Wolff-Quinke (2012), Art. V para. 418.
823
Arbitrability is not excluded by the fact that some of the rules about commercial representa- 22
tives are of (internationally) mandatory nature.28 Rather and as a general rule, German courts
consider the public policy exception in Article V(2)(b) New York Convention sufficient to
secure the application of the mandatory laws.29 Nor is arbitrability excluded by the fact that
antitrust issues may arise in arbitrating these disputes. Antitrust law disputes are generally
considered to be arbitrable in Germany, including those governed by EU law.30 The early
non-arbitrability doctrine is nowadays confined to those matters for which regulatory bodies
have been assigned exclusive jurisdiction, such as the approval of mergers and acquisitions or
the granting of exemptions from antitrust laws.
The only exception of the rule that disputes arising out of commercial representation are 23
freely arbitrable concerns disputes between dependent commercial agents (i.e. who are
employed) and their principal. According to 101 et seq. of the German Law on the Labour
Judiciary (Arbeitsgerichtsgesetz), the provisions about arbitration in the German arbitration
law as codified in 1025 et seq. ZPO are inapplicable here and replaced by provisions that
stipulate an arbitration regime specifically tailored to those kinds of disputes, requiring, inter
alia, that the arbitral tribunal consists of an equal number of employees and employers; additionally, impartial judges may join.
D.
Prospective Waiver Doctrine
It has been a global phenomenon that courts indicated in the past that they would not give 24
effect to an arbitration agreement in the event that a choice of law and choice of forum clause
operated in tandem as a prospective waiver of a partys right to pursue statutory remedies, as
the U.S. Supreme Court held in an obiter dictum in Mitsubishi v. Soler in the antitrust context.31 A typical scenario for this so-called prospective waiver doctrine is the combination
of an arbitration agreement calling for arbitration in a non-Member State and a choice of
law clause calling for the application of a non-Member State law. In this setting, the application of internationally mandatory rules, i.e. those norms that must be applied even if the
parties submit their dispute to a foreign law,32 which exist in one of the parties country of
origin depends upon whether the arbitral tribunal considers these rules as applicable to the
28
29
30
31
32

BGH 29.03.1996, NJW 1996, 1753 (1754) (in the context of arbitrating disputes about a shareholders
resolution).
BGH 25.10.1966, NJW 1967, 1178; ECJ, Eco Swiss China Time Ltd. v. Benetton International N.V., (1999)
ECR I3055 = Yearbook XXIVa (1999), 629. See Wolff-Quinke (2012), Art. V paras 455 et seq. for further
details.
So e.g. the US Supreme Court in its famous footnote 19 in Mitsubishi Motors Corp v. Soler Chrysler Plymouth Inc., 473 U.S. 614 (637) = Yearbook XI (1986), 555 (564) in the antitrust context: At oral argument,
however, counsel for Mitsubishi conceded that American law applied to the antitrust claims, and represented that
the claims had been submitted to the arbitration panel in Japan on that basis. We therefore have no occasion
to speculate on this matter at this stage in the proceedings, when Mitsubishi seeks to enforce the agreement to
arbitrate, not to enforce an award. Nor need we consider now the effect of an arbitral tribunals failure to take
cognizance of the statutory cause of action on the claimants capacity to reinitiate suit in federal court. We merely
note that, in the event the choice-of-forum and choice-of-law clauses operated in tandem as a prospective waiver of
a partys right to pursue statutory remedies for antitrust violations, we would have little hesitation in condemning
the agreement as against public policy.
See e.g. Article 9 of the Regulation (EC) No. 593/2008 of the European Parliament and the Council:
Overriding mandatory provisions are provisions the respect for which is regarded as crucial by a country for
safeguarding its public interests, such as its political, social or economic organisation, to such an extent that
824
dispute. Since the court referring the parties to arbitration has no influence upon the arbitral
tribunals decision in this regard and therefore may not be able to ensure application and
enforcement of the relevant mandatory law, it is not surprising that courts are sometimes
cautious to recognize these kinds of arbitration agreements.33
25 This jurisprudence has not been confined to the antitrust and securities contexts, in which it
has been discussed most often, but can be found as well in the context of commercial representation both in courts abroad34 and also in Germany.
1.
Prospective Waiver Doctrine Acknowledged in German Courts
26 German courts have been discussing the prospective waiver doctrine for a long time. As early
as 1961, the BGH reasoned that parties to a contract concerning commercial agency would
not be able to validly stipulate the exclusive jurisdiction of a foreign court if they could not
validly stipulate the foreign courts substantive laws as applicable to the contract.35 However,
pre-Ingmar the provisions on commercial agency were not considered to be internationally
mandatory, and as such the BGH held that the (at that time, nationally) mandatory character
of the provisions with respect to the commercial agents compensation claim would not
exclude the stipulation of a foreign law as applicable to the contract and the stipulation of the
jurisdiction of foreign courts.36
27 Until very recently, courts never had an opportunity to actually invalidate such in-tandem
clauses in commercial agency contracts. This changed in 2006, when the OLG Mnchen
refused to enforce an arbitration agreement between a German commercial agent and an
American principal in a dispute concerning the agents claim for compensation.37 It held that
the choice of Californian law in-tandem with an arbitral tribunal established under the rules
of the American Arbitration Association posed a reasonable threat that the German law on
the agents claim for compensation in 89b HGB would not be applied. The internationally
mandatory application of this provision could only be ensured if the arbitration agreement
was not enforced. The OLG Mnchen thus based its denial of enforcement on the null and
void, inoperative or incapable of being performed exemption in Article II (3) of the New York
Convention, found in the corresponding 1032 (1) ZPO.
28 A couple of years later in 2011, the OLG Stuttgart confirmed the OLG Mnchens ruling
in a dispute between a foreign principal and a German commercial agent concerning the
agents claim for provisions and compensation. The parties had agreed upon the applicability
of Virginia law (that did not stipulate a claim for compensation) and by way of precaution
explicitly excluded any claim for compensation, and had agreed upon the exclusive jurisdiction of certain U.S. courts. As this choice of forum clause in tandem with the choice of law
33
34
35
36
37
they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the
contract under this Regulation.
Wolff-Quinke (2012), Art. V para. 434.
See e.g. Accentuate Ltd v Asigra Inc [2009] EWHC 2655 (QB), where Tugendhat J considered an arbitration clause in a commercial agent agreement between an English agent and a Canadian principal calling
for arbitration in Toronto upon Canadian and Ontarian law to be null and void, relying upon Ingmar.
BGH 30.01.1961, NJW 1961, 1061 (1062). The BGH confirmed this obiter dictum in subsequent decisions, cf. BGH 15.06.1987, NJW 1987, 3193 = Yearbook XIX (1994) 653 and BGH 06.06.1991, NJW
1991, 2215 in the securities context.
BGH 30.01.1961, NJW 1961, 1061.
OLG Mnchen 17.05.2006, WM 2006, 1556.
825
clause would have had the consequence that the foreign courts would not apply the German
provisions about the (internationally) mandatory claim for compensation, the OLG Stuttgart
invalidated the choice of forum clause, referring to the BGHs 1961 decision together with
the Ingmar-judgement.38
The principal appealed the decision to the BGH, which did not allow the appeal. In its (short) 29
reasoning, the BGH acknowledged that the invalidation of the choice of forum clause would
safeguard the application of the internationally mandatory provisions in Articles 17 and 18
of the Commercial Agents Directive, which would be in line with the directives purpose to
provide protection of the sales agent.39 There is little reason to assume that the BGH will hold
differently in cases where an arbitration agreement is at issue. Accordingly, German legal
practitioners should work on the assumption that German courts will not enforce arbitration
agreements in these in-tandem cases. What remains to be seen is how German courts will
deal with those cases the ECJ had to decide upon in Unamar. There, the contract contained
a choice-of-law-clause in favour of a European Member State and the forum was a Member
State that offers a higher level offer protection, i.e. the forum grants a higher protection to the
agent than the Commercial Agents Directive requires.40 Given that the BGH in its decision
referred to both the protection afforded by the Commercial Agents Directive and German
law, it may very well be that it will invalidate arbitration agreements in these cases as well.41
2.
The Current Status of the Law
The decision of the OLG Mnchen has been subject of substantial critique,42 and it is likely 30
that the corresponding decision of the OLG Stuttgart/BGH will suffer the same fate. The
crucial question is exactly when a possible non-application of internationally mandatory provisions by the arbitral tribunal allows the courts to refuse to enforce an arbitration agreement.
While the OLG Mnchen considered the reasonable threat of non-application sufficient,43
others are in favour of restricting the non-enforcement to cases where it is obvious that the
party drafting the agreement intended to circumvent the application of mandatory norms by
arbitration.44 As the latter will most likely be difficult to prove, the more convincing standard
for refusing enforcement of the arbitration agreement is reasonable certainty that the arbitral
tribunal will not apply the internationally mandatory provisions.45 This seems to have been
38
39
40
41
42
43
44
45
OLG Stuttgart 29.12.2011, BeckRS 2012, 18825 and OLG Stuttgart 16.01.2012, BeckRS 18704 with
note Ayad/Schnell in BB 2012, 3103.
BGH 05.09.2012, BeckRS 2012, 20587 = ZVertriebsR 2013, 89: Mit der Versagung der Anerkennung
der Gerichtsstandsvereinbarung wird der international zwingende Anwendungsbereich der Art. 17 und 18 der
Richtlinie 86/653/EWG zugunsten des Handelsvertreters, dessen Schutz die genannten Richtlinienbestimmungen bezwecken, zustndigkeitshalber abgesichert und damit die Geltung der genannten Richtlinienbestimmungen gestrkt.
Cf. above fn. 9.
Cf. BGH 05.09.2012, BeckRS 2012, 20587 = ZVertriebsR 2013, 89: einer Gerichtsstandsvereinbarung
die Anerkennung zu versagen, wenn das von den Parteien gewhlte Recht keinen zwingenden Ausgleichsanspruch des Handelsvertreters nach Vertragsbeendigung kennt und das Gericht des Drittstaates das zwingende
europische und nationale Recht eines Mitgliedstaates nicht zur Anwendung bringen und die Klage auf den
Ausgleichsanspruch abweisen wird.
Cf. Quinke, SchiedsVZ 2007, 246; Rhl, IPrax 2007, 294. For a comprehensive review of this decision and
the substantial literature dealing with it cf. Niedermaier (2013), pp. 306 et seq.
OLG Mnchen 17.05.2006, WM 2006, 1556 (nahe liegende Gefahr).
Horn, SchiedsVZ 2008, 2009, 218.
Cf. Wolff-Quinke (2012), Art. V para. 436; Quinke, SchiedsVZ 2007, 246 (248).
826
the standard applied by the OLG Stuttgart when holding that due to the explicit exclusion
of the claim for compensation in the contract, it was safe to expect that the internationally
mandatory provisions on compensation would not be applied,46 and of the BGH when holding that it was certain that the commercial agent would not obtain compensation.47
31 However, at least where the contract does not provide for such an explicit exclusion of the
internationally mandatory provision, the appropriate course should usually be to refer the
parties to arbitration in line with Article II New York Convention.48 Following the rendering
of an award by the arbitral tribunal, if any, the court may review the arbitral tribunals application of the mandatory laws in the exequatur or annulment proceedings. Whilst this may not
be said to be the most cost effective or expeditious approach, it does ensure compliance with
both the New York Convention and international mandatory rules. Whether German courts
will indeed pursue this path, remains to be seen.
3.
Practical Suggestion
32 In daily practice, a suggestion of Kleinheisterkamp may be of help to solve what he appropriately calls the courts dilemma between respecting the parties original intention to
arbitrate and the legislators intention to protect specific public interests.49 He recommends
the party requesting the referral to arbitration to explicitly state that it expects and accepts
that the arbitral tribunal will apply the relevant and applicable internationally mandatory
rules, specifically the internationally mandatory provisions of the relevant national law that
implement the Commercial Agents Directive. The court can then record this acceptance
and take it (the consent of the party resisting arbitration presumed) as a new choice of law
agreement that is specifically concluded for, and limited to, the question of the application
of the internationally mandatory rules. This allows the court to conclude that the application
of internationally mandatory rules is not imperilled by the choice of arbitration and enables
the court to refer the parties to arbitration in accordance with its duty to do so under Article
II New York Convention.50
III. Application of Mandatory Laws Ex Officio

33 As noted above (paras 5 et seq.), the ECJs Ingmar decision confirmed that the purpose of
Articles 17 to 19 of the Commercial Agents Directive is to protect commercial agents and
that the regime established for that purpose is internationally mandatory. An arbitral tribunal
that does not apply these (internationally) mandatory provisions will find that any award it
renders will most likely be refused recognition and enforcement in Germany.
34 If the parties to the arbitration ask the arbitral tribunal to decide upon the dispute without
consideration of these (internationally) mandatory provisions, the question arises whether
the arbitral tribunal is under a duty to apply these provisions ex officio. In the antitrust
46
47
48
49
50
OLG Stuttgart 29.12.2011, BeckRS 2012, 18825 (sicher zu erwarten).

BGH 05.09.2012, BeckRS 2012, 20587 = ZVertriebsR 2013, 89 (wenn wie hier feststeht, dass das Gericht
des Drittstaates dem Handelsvertreter keinen Ausgleichsanspruch gewhren wird).
Similar Krll, in: Mistelis/Brekoulakis (2009), paras 16-75 et seq.
Kleinheisterkamp, World Arbitration & Mediation Review 2009, 91 (116). See Wolff-Quinke (2012), Art.
V para. 437 for further details.
Kleinheisterkamp, World Arbitration & Mediation Review 2009, 91 (116).
827
context, the prevailing opinion in Germany51 seems to acknowledge the general existence
of such duty as flowing from the ECJs Eco Swiss case law,52 similar to France.53 It remains yet
to be seen whether the same applies to the context of commercial representation, where this
issue is rarely discussed. While in the antitrust context the internationally mandatory provisions protect the interests of third parties (competitors, consumers, etc.), in the context of
commercial representation the internationally mandatory provisions protect at least at first
sight only the interests of the commercial representative. This might argue against a duty of
an application ex officio. However, as the ECJs Ingmar-decision stresses that the purpose of
the regime established in Articles 17 to 19 of the Commercial Agents Directive is to protect,
for all commercial agents, freedom of establishment and the operation of undistorted competition
in the internal market,54 the differences between the antitrust and commercial agent contexts
are less significant than they appear at first sight, since aspects of competition are involved in
both contexts. It therefore seems to be a safe guess that here as well, the prevailing opinion
will acknowledge the general existence of a duty to apply the internationally mandatory
provision ex officio.
Even where arbitral tribunals have to apply (internationally) mandatory provisions of 35
European origin ex officio, they are not a court or tribunal of a Member State in the sense
of Article 267 of the Treaty on the Functioning of the European Union55 and are therefore
neither entitled nor obligated to seek preliminary rulings of the ECJ regarding the validity
and interpretation of European Union law. The arbitral tribunal thus has to decide upon the
mandatory provisions without having the benefit of guidance by the ECJ. This might at times
be unfortunate; however it is in in line with the principle that arbitration proceedings are
conducted confidentially outside the court rooms.
IV. Action by Stages

As earlier stated (para. 1), typical examples of disputes before an arbitral tribunal are the 36
commercial representatives claims against the principal for commission or compensation.
To quantify such claims, the commercial representative often relies on information from
the principal. German law provides the commercial representative with several grounds
for requesting this information. By way of example, 87c(2)HGB entitles the commercial
agent to demand an excerpt of the principals commercial books to quantify the claim for
commission, and 242 BGB entitles the commercial agent to demand information about the
51
52
53
54
55
Cf. Messen, in: Loewenheim/Meessen/Riesenkampff (2009), paras 146, 147; Horn, SchiedsVZ 2008,
209 (212); Eilmannsberger, SchiedsVZ 2006, 5 (10); Elsing, FS-Mailnder (2006), p. 87 (97); SchmidtAhrendts/Httler, SchiedsVZ 2011, 267 (271); Sachs/Niedermaier, FS Hoffmann (2011), p. 1058.
ECJ, (1999) ECR I-3055 = Yearbook XXIVa (1999) 629.
Cf. France Blanke, 23(3) J. Intl Arb. (2006), 249 (252) with respect to the decision of the Cour dAppel
Paris 18.11.2004 in Thals Air Defence v GIE Euromissile et al: a careful reading of the decision reveals
that the Paris Court of Appeal does not question the general existence of an implied ex officio duty to raise EC
competition law issues as flowing from the European Court of Justices (ECJ) Eco Swiss case law. On the contrary,
it actually confirms the existence of such a duty and proceeds to define the parameters to be applied by a French
court in order to decide whether an award is unenforceable at the national level due to the arbitrators breach of
that duty.
ECJ, Ingmar Gb Ltd v Eaton Leonard Technologies Inc., (2000) ECR I-9305 = NJW 2001, 2007 at para. 24.
ECJ, (1999) ECR I3055 = Yearbook XXIVa (1999) 629.
828
commissions paid within the last five years in order to quantify the claim for compensation.56
The commercial representative may combine this claim for information with his claim for
payment in a single arbitral action by stages (Stufenklage). Such an action by stages enables
him e.g. to request the necessary information to quantify his claim (first stage), to demand
that the principal affirms in lieu of an oath that the information provided is correct (second
stage), to request the correction respectively amendment of an earlier account statement
issued by the principal according to the information provided (third stage), and to claim payment of the outstanding commission respectively compensation (fourth stage).57
37 If the arbitral tribunal usually by way of a partial award grants the commercial representatives first stage request for information and forces the principal e.g. to provide an excerpt from
his books, the commercial representative may ask the competent Higher Regional Court to
declare this partial award enforceable ( 1061, 1062 ZPO) without having to first provide
the principal an opportunity to deliberately fulfil his obligation.58 The purpose of this declaration of enforceability is usually to put additional pressure upon the principal to deliberately
fulfil the partial award. If the award is declared enforceable and the principal nevertheless
does not comply with it, the commercial representative may request the enforcement of the
award pursuant to 887, 888 ZPO.59 Hereafter, the Higher Regional Court may authorise the commercial representative e.g. to have the book excerpt be compiled by a certified
accountant at the expense of the principal and at the principals premises.60 If the principal
denies access thereto, the commercial representative may ensure the access e.g. with the help
of a bailiff ( 892 ZPO). If the principal has fulfilled the obligation to provide a book excerpt
after the issuance of the partial award, he may raise this fulfilment objection both in the
proceedings to declare the award enforceable ( 1061, 1062 ZPO) and in the enforcement
proceedings ( 887, 888 ZPO), unless which is not often the case the arbitral tribunal
is competent to also hear disputes in connection with the enforcement of awards.61 In these
cases, the principal would have to call upon the tribunal to have his objection be considered
there.
38 Once the commercial representative has obtained the information necessary to calculate
his claim, he is in a position to specify his request and to pursue his claim for payment on
the last stage. If he is successful with this request, the arbitral tribunal will render the final
award, which will also contain a decision on costs for all stages. The value in dispute of the
proceedings is usually determined in analogy to 44 of the German Court Fees Act (Gerichtskostengesetz) by the stage with the highest amount at dispute, which is in most cases the
claim for payment, as the claims for information and for the rendering of account are usually
valued at about 10 to 25 % of the payment claim.62
56
57
58
59
60
61
62
Cf. Martinek/Habermeier, in: Martinek/Semler/Habermeier/Flohr (2010), 79 paras 19 et seq. as well as

Baumbach/Hopt-Hopt (2012), 87c paras 13 et seq., 89b paras 82 et seq. for further references.
Cf. Semler (2011), 42 paras 92 et seq. as well as Martinek/Habermeier, in:Martinek/Semler/Habermeier/Flohr (2010), 79 paras 19 et seq. for further details and suggestions for how to draft the claims.
OLG Mnchen 08.12.2011. Cf. also BGH 26.04.2007, NJW-RR 2007, 1475, 1476 (for documents located
in Germany) and BGH 13.08.2009, NJW-RR 2010, 279 (for documents located outside Germany).
Cf. BGH 06.06.2013, NJW-RR 2013, 1336 (deviating from the lower instance OLG Mnchen 18.06.2012,
SchiedsVZ 2012, 342).
Cf. Martinek/Habermeier, in: Martinek/Semler/Habermeier/Flohr (2010), 79 paras 12, 13.
Construction Arbitration
Christoph Benedict
Short Bibliography: Acker, Schiedsgutachten im Bau- und Anlagenbauvertrag: Grenzen und
Mglichkeiten, SchiedsVZ 2003, 256; Behle-Cordes, Die Schlichtungs- und Schiedsvereinbarung
nach der SOBau der ARGE Baurecht im DAV Ausweg aus dem Dilemma des Bauprozesses?,
Bonn 2005, Bietz, Baustreitigkeiten vor dem Schiedsgericht, NZBau 2003, 177; Bombe, Streitigkeiten in Bausachen Empfiehlt sich eine Schiedsgerichtsvereinbarung?, IBR 2006, 1142; Drabek,
Schiedsverfahren: Bautrgervertrag, Gemeinschaftsordnung, in: ESW (Hrsg.), Bautrgervertrag,
Teilungserklrung und Gemeinschaftsordnung, Kln 2004, p. 223; Englert, Streitlsung ohne Gericht: Schlichtung, Schiedsverfahren und Mediation in Bausachen, Neuwied 2005; Franke/Englert
et al. (eds), Kommentar zur SL-Bau, Dsseldorf 2011; Franke/Horst et al. (eds), Kommentar zur
Steitlsungsordnung fr das Bauwesen (SL Bau), Kln 2011; Garbe-Emden, Nachteile von Schiedsverfahren, BauR 2012, 1035; Hauschka, Bauprojekte im Ausland: Durchsetzung der Ansprche des
Bauunternehmers gegen den Staat vor ICSID-Schiedsgerichten, BauR 2005, 1550; Heiermann/Kullack/Bayer, Kommentar zur Schiedsgerichtsordnung fr das Bauwesen einschlielich Anlagenbau
(SGO Bau), Braunschweig 2002; Hk, Die UNCITRAL-Schiedsregelungen 2010 in baurechtlichen
Schiedsverfahren, NZBau 2011, 385; Hk, Handbuch des internationalen und auslndischen Baurechts, Heidelberg 2012; Lembcke, Handbuch Baukonfliktmanagement Mediation, Schlichtung,
Adjudikation, Schiedsgutachten, Kln 2013; Lgering, Die Eignung schiedsgerichtlicher Verfahren
zur Lsung baurechtlicher Konflikte, ZfBau 2010, 14; Mandelkow, Chancen und Probleme des
Schiedsgerichtsverfahrens in Bausachen, Dsseldorf 1995; Moehren, Schiedsgerichtsbarkeit in
Bausachen, BuB 2004, 274; Markfort, Mehrparteien-Schiedsgerichtsbarkeit im deutschen und
auslndischen Recht, Kln/Berlin/Bonn/Mnchen 1994; Nicklisch, Mehrparteienschiedsgerichtsbarkeit Streitbeilegung bei Groprojekten, in: FS-Glossner, Heidelberg 1994; Oppler, SOBau: Ihr
Werkzeug fr die wirtschaftliche Lsung von Baustreitigkeiten, Berlin 2004; Quack, Warum sich
in Bausachen die Schiedsgerichtsabrede empfiehlt und nach welchen Gesichtspunkten Schiedsgerichtsordnungen zu beurteilen sind: Ein Beitrag auch zu den Vorzgen der SGO Bau der Deutschen
Gesellschaft fr Baurecht und des Deutschen Beton- und Bautechnikvereins, ZfBR 2003, 211;
Roquette, Schiedsgerichtsbarkeit ein Glaubensbekenntnis?: Pro und Contra von Schiedsgerichten
im Bauwesen, insbesondere solchen nach der SGO Bau und der SOBau, JB 2004, 269; Roquette/
Otto, Vertragsbuch Privates Baurecht Kommentierte Vertragsmuster, Munich 2011; Rothhaupt,
Die auergerichtliche Streitbeilegung durch Entscheidung eines neutralen Dritten zur bertragbarkeit der im internationalen Anlagengeschft etablierten Verfahren auf das private Baurecht,
Hamburg 2008; Scheef, Ablauf von Schiedsverfahren nach der SGO Bau, BauRB 2004, 350; Schramke, Hans-Jrgen, Neue Formen des Streitmanagements im Bau und Anlagenbau Dispute Review
Boards und Adjudication, NZBau 2002, 409; Schwab, Mehrparteienschiedsgerichtsbarkeit und
Streitgenossenschaft, in: FS-Habscheid, Bielefeld 1989, p 291; Schwab/Walter, Schiedsgerichtsbarkeit, Mnchen 2005; Vygen/Joussen, Bauvertragsrecht nach VOB und BGB: Handbuch des privaten
Baurechts, Kln 2013; Wagner, Schiedsgutachterregelungen in Bautrgervertrgen?, BTR 2004, 69;
Wagner, Schiedsgerichtsbarkeit, Schiedsgutachten, Schlichtung, Dispute Adjudication, Mediation:
Mglichkeiten der alternativen Konfliktlsung im Baurecht, NZBau 2001, 169; Wietersheim, Das
Schiedsgutachten: Instrument zur Streitschlichtung am Bau, Der Bausachverstndige 2005, 39;
Zerhusen, Der Dritte im baurechtlichen Schiedsverfahren, in: FS-Thode, Mnchen 2005, p. 355;
Zerhusen, Alternative Streitbeilegung im Bauwesen: Streitvermeidung, Schlichtung, Mediation,
Schiedsverfahren, Kln 2005.
830
Para.
General Considerations . . . . . . . . . . . . . . . . . . 1
A. The Nature of Construction Disputes . 2
1. Technical Complexity . . . . . . . . . . . . . 3
2. Organisational Complexity . . . . . . . . 4
3. Legal Complexity . . . . . . . . . . . . . . . . . 5
4. Language Issues the Babel Effect . 6
B. Advantages of Settling Out of Court . . 7
1. Quality Issues in the Court
System. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2. Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3. Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
C. Means to Settle Out of Court . . . . . . . . 13
1. Means other than Arbitration. . . . . 14
2. Arbitration. . . . . . . . . . . . . . . . . . . . . . . 19
II. Sector Specific Arbitration Rules
SLBau, SGO Bau and SOBau . . . . . . . . . . . 24
A. SL Bau and SGO Bau . . . . . . . . . . . . . . . 24
B. The SOBau . . . . . . . . . . . . . . . . . . . . . . . . . 35
III. Sector Specific Procedural Issues . . . . . . . . 42
I.
I.
Para.
A. Arbitration Agreement . . . . . . . . . . . . . . 42
1. Arbitrability . . . . . . . . . . . . . . . . . . . . . 42
2. Specificity . . . . . . . . . . . . . . . . . . . . . . . 43
3. Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4. Choice of Arbitrator. . . . . . . . . . . . . . 52
B. Involvement of Third Parties/
Multi-Party Proceedings. . . . . . . . . . . . . 54
1. Guarantees . . . . . . . . . . . . . . . . . . . . . . 59
2. Joint and Several Liability . . . . . . . . 60
3. Third Party Notices
(Streitverkndung) . . . . . . . . . . . . . . . 61
4. Consortia . . . . . . . . . . . . . . . . . . . . . . . . 63
C. Interlocutory Proceedings . . . . . . . . . . . 65
D. Preservation of Evidence . . . . . . . . . . . . 67
E. Taking of Evidence . . . . . . . . . . . . . . . . . . 69
F. Set-off and Counterclaims . . . . . . . . . . . 73
G. Partial Awards . . . . . . . . . . . . . . . . . . . . . . 78
H. Applicable Law . . . . . . . . . . . . . . . . . . . . . 80
IV. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
General Considerations1
1 Disputes in the fields of construction and plant engineering pose specific challenges (A).
German Courts may have difficulties addressing such challenges successfully (B). Thus, a
longstanding tradition in the German construction sector sees these disputes as particularly
suited for out-of-court settlement. Various means for Alternative Dispute Resolution are
frequently used (C).
A.
The Nature of Construction Disputes
2 Construction Disputes differ from others in factual and legal complexity.2 Furthermore, they
are particularly prone to amplification through interface miscommunication.
1.
Technical Complexity
3 Disputes in the fields of construction almost always involve quite complex facts. A whole
host of individual items and quite an array of diverse technical issues are of common occurrence. More often than not, sets and subsets of technical facts are interdependent or even
interchangeable. As a rule, they are difficult to establish and sometimes the very question of
how to establish them may be in dispute. Usually, though not necessarily, the bigger a project,
the more complex it is technically.
2.
Organisational Complexity
4 Just as the technical complexity of a project may generate particularly entangled disputes,
so may the complexity to organise and manage the number of different actors contributing
to the execution of a given project. Their respective spheres of action and responsibility are
interdependent in practice. Of course, participants should take great care in trying to define
1
2
Lembcke (2013), pp. 11 et seq.
Construction Arbitration Benedict
831
and delineate such spheres contractually. However, they fight an unequal battle against the
sheer multitude of possible interactions and interfaces. Even where they succeed on paper,
the reality of a construction site is stark. If a problem in fact occurs on site, the actors factual
contribution to its causation is quite often unclear and usually remains unclear for longer
than the project execution can wait, sometimes forever.
3.
Legal Complexity
Legal reasoning being dependent on the factual findings, the factual complexity in technical 5
and organisational terms obliges the lawyer involved in such disputes to deal with multiple
alternative factual bases, and thus with alternative, often contradictory legal reasonings.
Moreover, big projects with multiple actors entail a multitude of contractual parties and contractual documents. They should in principle, but in practice are not necessarily in tune with
each other. Overlapping spheres of contractual responsibility, incongruent or conflicting
documents, unclear hierarchies and conflicts between legal systems may add another layer
of analytical challenge.
4.
Language Issues the Babel Effect
The bible takes a big construction project to illustrate discord brought about by misunder- 6
standings. Indeed, language issues play a role that is often underestimated. Quite frequently
in big projects, the actors are coming from different regions or nations and bring along diverse understandings of contractual clauses, which may lie undetected until a dispute arises.
Legal regimes and languages of contractual documents may differ and jurisdictional questions, if addressed incoherently by contractual stipulations, may create additional confusion.
Another language barrier is persistent even between fellow nationals: engineers and lawyers
need quite some experience and training to get to understand each other. Many a dispute has
been aggravated by engineers and lawyers working together thinking they understand each
other, while they effectively did not.
B.
Advantages of Settling Out of Court
1.
Quality Issues in the Court System
Satisfactory handling of court proceedings in construction and engineering affairs requires a 7

lot of time and effort to address the specific complexities inherent in such disputes. In multinational projects, it presupposes language proficiency and experience with conflict of law
issues. Most importantly, it requires a profound understanding of the mindset and habits of
project engineers, which may be, and usually are, quite remote from a judges. Such understanding cannot be expected to exist where experience in such litigation is lacking.
The German Court System is highly developed and modern, but not always necessarily 8
geared towards assuring such prerequisites.3 Most such proceedings will start in the regional
courts (Landgericht LG), where usually a single judge would have to deal with the affair.4
Generally, the ZPO allows for a single judge sitting alone in the regional courts, thus derogating from a more general requirement to have three judges deciding. True enough, 348
(1), sentence 2, No. 2 (c) ZPO makes no such provision for construction disputes; thus in
principle a special chamber for construction disputes composed of three judges would have
3
4
Hk (2012), pp. 739 et seq.

Bombe, IBR 2006, 1142.
832
to decide. However, things usually work differently in practice. There are scarcely any special
chambers for construction disputes at the regional courts and due to 348 (a) ZPO, the legal
dispute still comes back to a judge sitting alone in the end. Thus, at courts of first instance,
single judges decide for whom construction litigation is yet another different (and particularly onerous) field of law among many others. To make things worse, it is not uncommon
that judges are substituted during the course of the trial.5
9 At the appeal stage, before the higher regional courts (Oberlandesgericht OLG) specialisation takes place on a significantly larger scale, and the increased workload involved can also
be taken into account through the division of responsibilities. Judges here are generally more
specialised and have quite a fair understanding of technical issues in those areas that make up
the bulk of litigation, namely the building of houses and office buildings. They will, however,
rarely be confronted with issues of plant and process engineering or the building of infrastructure or other instances of heavy civil engineering.
10 184 et seq. GVG stipulate that proceedings are to be held in German. It is thus necessary to
to translate any and all documents into German, even if the contracts and the parties were,
e.g. English, and even if the judge himself were proficient in English. This stipulation is mandatory.6 It contrasts with 1045 ZPO, which allows parties to freely chose their language in
an arbitration.
2.
Time
11 German Courts are generally swift in rendering justice. However, the system foresees a
two-tier appeal mechanism. To make things worse, in certain instances, the highest court
of appeal may decide to send the matter back to the lower courts for further factual inquiry.
Thus, if avenues of appeal are exhausted, construction litigation may last three to six years
before state courts, sometimes longer for big and complex projects. There is no denying that
arbitral proceedings, too, may often last longer than the parties concerned had assumed. Still,
the chances that arbitration in construction and engineering matters proves to be faster than
court proceedings are high.
3.
Cost
12 German Court Fees are calculated per a fraction of the amount at issue. For certain and
rather exceptional cases of disputes involving very high project values, this may turn out to be
prohibitive. Apart from these, however, arbitration may not as a rule be expected to present
significant cost savings as compared to court proceedings.
C.
Means to Settle Out of Court
13 Although this has been changing lately, project engineers in Germany traditionally display a
remarkable reluctance to involve lawyers in their disputes. They have developed a number of
means to settle disputes out of court and without arbitration.7 Where these fail, they tend to
rely on arbitration where possible and appropriate.8
5
6
7
8
Bombe, IBR 2006, 1142.

BSG 22.10.1986, MDR1987, 436-437.
Englert (2005), pp. 21 et seq.; Zerhusen (2005), pp. 32 et seq.
Mandelkow (1995), pp. 14 et seq., Moehren, BuB 2004, 274 et seq.
1.
833
Means other than Arbitration
Rare indeed are the projects that are executed one hundred per cent as they were planned. 14
Deviations and change orders occur and parties need to find ways to agree on the allocation
of cost and time impacts. Dispute resolution by negotiation is therefore a natural phenomenon throughout the execution of any project of a certain size.
Where negotiation fails to resolve the issue, the parties may ask for the non-binding good 15
offices of a respected, neutral third party to help them through conciliation (Schlichtung),
provided they can agree on such a conciliator (Schlichter). This traditional instrument, which
is most prominently stipulated in the SL Bau and its predecessor, the SOBau (infra II B),
has in recent times found a parallel in the more modern instrument of mediation, which is
increasingly, albeit in some quarters still hesitantly, used by the construction community. The
lines between mediation and conciliation are blurred. The conciliator however, especially
the one under the SOBau, has far more investigative powers and goes deeper into the subject
matter of the dispute than a mediator, as a mere servant of the parties, would.
For disputes regarding primarily a technical question, it is common to ask a respected techni- 16
cal expert for a technical expertise (Gutachten). This may be done in a simple, non-binding
form or with the parties committing themselves beforehand to respect the findings of the
expert (Schiedsgutachten).9
Starting in the late Nineties, Dispute Resolution Boards (DRBs) or Dispute Adjudication 17
Boards (DABs) had been proposed and sometimes established.10 They try to avoid escalation of disputes by creating project-specific, stand-by dispute resolution mechanisms. These
boards, which in practice may also be manned by a single person, are usually created in the
project contract for the duration of project execution (or certain critical phases thereof).
They have powers to bring about decisions on any dispute relating to the project within
short notice. Such decisions are binding, but usually reviewable in later court or arbitral
proceedings.
Where they have been used, experiences with DAB/DRBs are on balance positive.11 Regret- 18
tably, they have not yet found general application in the German construction sector, at least
not yet.12 In recent years, however, a number of German arbitration rules have been following
the example of the 2004 ICC Dispute Board Rules and were amended to include adjudication provisions which the parties may adopt, if they choose to do so.13
2.
Arbitration
Where the aforementioned means are not successful or not tried, parties would, in the ab- 19
sence of a valid arbitration agreement, have to resort to court proceedings. However, with
regard to the shortcomings of the court system (supra B), it is common practice in Germany
10
11
12
13
Acker, SchiedsVZ 2003, 256 et seq., Wagner, Bautrger, pp. 17 et seq.; Wietersheim, Bausachverstndige, 5 et
seq.
Schramke, NZBau 2002, 409 et seq.
Wagner, NZBau 2001, 169 et seq.; Schramke, NZBau 2002, 409 et seq.
For a detailed analysis see Rothhaupt (2008), pp. 7 et seq.
22 -29 of the SL Bau of 1st January 2010; the Schiedsgutachtenordnung of the Deutsche Institution fr
Schiedsgerichtsbarkeit, see for both Aldinger/Mahnken, in: Roquette/Otto, D.IV.Adjudikation, margin
notes 23-45.
834
to establish arbitration clauses in almost all contracts for big projects.14 This is different for
smaller projects and where consumers are clients. Also, there is a general tendency to agree to
arbitration for multinational projects or those involving property developers (Bautrger),15
while disputes stemming from strictly German projects and those having simpler project
structures are more often left to the courts. Institutional lenders and complex project financing structures are other drivers towards increased use of arbitration.
20 a. Multinational projects16: For projects involving parties from different countries, it may safely
be said that ICC and UNCITRAL are the most commonly used arbitration rules, with the
younger DIS rules gaining ground quickly.17 Parties are under German law free to submit
the proceedings to a set of institutional or ad hoc arbitration rules. In light of the wide space
given to party autonomy, none of the frequently used arbitration rules pose any problems
under German law.18 Ad hoc arbitration based on the ZPO may also occur. Recently, ICSIDarbitration has been discovered as an additional means in cases where the purchaser is a state
organisation.19
21 Where venue is agreed to be in Germany, Hamburg, Frankfurt, Munich and Dsseldorf are
among the most widely chosen locations, as they can be most easily reached by plane and
train and they all have a rich arbitration infrastructure. Pursuant to 1043 (1), the parties are
completely free to select the place of arbitration.
22 The same applies also in relation to the choice of the language for the proceedings.20 English
language is standard both for contracts and arbitration proceedings.21
23 b. German projects: It has already been stated that disputes on projects involving only German
participants are often left for the courts to decide. Where parties agree on arbitration, however, they quite often agree on one of the sets of rules that have been drafted by professional
organisations in the construction sector:22 The SL Bau, the SGO Bau or the SOBau.
II.
Sector Specific Arbitration Rules SL Bau, SGO Bau and SOBau
A.
SL Bau and SGO Bau
24 As early as 1909, the German Society for Concrete Technology (Deutscher Betonverein,
DBV)23 published its Arbitration Code for Construction (Schiedsgerichtsordnung fr das
Bauwesen).24 In 1974, it joined forces with the German Association for Construction Law
14
15
16
17
18
19
20
21
22
23
24
Bietz, NZBau 2003, 177 et seq.; Lgering, ZfBR 2010, 14 et seq.; Hk, NZBau, 385 et seq.; critically: GarbeEmden, BauR 2012, 438 et seq.
ESW-Drabek (2004), pp. 223 et seq.
Nicklisch, Aktuelle Entwicklungen der internationalen Schiedsgerichtsbarkeit fr Bau, Anlagenbau und
Konsortialvertrge, BB 2001, 789 et seq.
Hk (2012), pp. 646 et seq.
For the specifics of ICC Arbitration, see supra, Khner/Flecke-Giammarco, ICC Arbitration in Germany.
Hauschka, BauR 2005, 1500 et seq.
See 1045 ZPO and the commentary thereto.
That is one of the reasons why the German language SGO Bau and SOBau (infra B) are rather seldom
agreed for these projects.
Roquette, JB 2004, 269 et seq.
Nowadays named Deutscher Beton- und Bautechnikverein (German Society for Concrete and Construction Technology).
Schiedsgerichts-Ordnung fr das Bauwesen, beschlossen in der Hauptversammlung des Deutschen
Betonvereins e.V. vom 11. Mrz 1909 unter Mitwirkung von Vertretern deutscher Bundesstaaten.
835
(Deutsche Gesellschaft fr Baurecht) to publish a modern version of these rules, which, commonly abbreviated as SGO Bau, came to be well established in the sector. 25 It was developed
and amended for 35 years,26 by editions in 1980, 1990, 2000 and 2005, until it was replaced
on 1 January 1 2010, by the Streitlsungsordnung fr das Bauwesen, abbreviated as SL Bau.
The SL Bau is heavily inspired by the SGO Bau, but integrates conciliation and mediation
rules, which had formerly been the subject matter of separate codes.27 It also integrates a new
adjudication procedure.28 It has been subject to revision and the latest edition dates from
1July 2013.29
Although the SGO Bau has been replaced by the SL Bau, many parties still agree on the old 25
SGO Bau. Also, since it often takes a few years for a dispute to arise, many of todays disputes
are still governed by the SGO Bau. It is as yet unsure when the SL Bau will have fully replaced
the SGO Bau.
Generally speaking, the provisions of the SL Bau and its predecessor, the SGO Bau, are 26
heavily based on the ZPO. In some cases, they reproduce the wording of provisions of the
ZPO verbatim. Thus, the initiation of proceedings30 corresponds closely to the ZPO.31 Furthermore, the provisions of the ZPO apply to the proceedings, wherever the SL Bau or the
SGO Bau are silent.32
The sole arbitrator and, if several arbitrators are nominated, the chairman must be a German 27
qualified lawyer.33 He or she should further have special experience in the subject matter of
the dispute.34 The parties are free to formulate further criteria, such as specific experience in a
given trade or certain language proficiency.35 On the other hand, they may also consensually
derogate from a criterion defined earlier. Such derogation may be done explicitly or, more
frequently, implicitly by nominating an arbitrator who does not fulfil the criterion and the
other party accepting the nomination.36 Absent such consent, either party is free to challenge
a non-qualified arbitrator according to 1036 (2) ZPO.37
The drafters have instituted the German Concrete and Construction Engineering Associa- 28
tion (Deutsche Beton- und Bautechnikverein e.V.)38 as Appointing Authority, in case substitute
25
26
27
28
29
30
31
32
33
34
35
36
37
38
Quack, ZfBR 2003, 211 et seq.; Vygen/Joussen (2013), margin notes 3470 et seq.
The SGO came to be renamed Arbitration Code for Construction, including Plant Engineering (Schiedsgerichtsordnung fr das Bauwesen, einschlielich Anlagenbau).
Schlichtungsordnung fr Bausachen SchliO Bau version dated 1 July 2005, Mediationsordnung fr
Bausachen MedO Bau version dated 1 July 2005.
Aldinger/Mahnken, in: Roquette/Otto (2011), D.IV.Adjudikation, margin notes 2331.
Available at http://dg-baurecht.de/sl-bau/sl-bau-in-der-fassung-vom-1-juli-2013.html.
31 of the SL Bau; 2 of the SGO Bau.
1044 ZPO.
30 (3) of the SL Bau; 1 (2) of the SGO Bau.
30 (4) 1st sentence of the SL Bau; 6 (1) of the SGO Bau; Kuffer, in: Franke (2011), margin note 383,
Heiermann (2002), 6 margin note 1.
30 (4) 2nd sentence of the SL Bau; 6 (2) of the SGO Bau.
Kuffer, in: Franke (2011), margin note 383; Heiermann (2002), 6 para. 7.
Kuffer, in: Franke (2011), margin note 383, Heiermann (2002), 6 para. 1.
See the commentary on 1036 ZPO.
http://www.betonverein.de/.
836
appointment of a sole arbitrator or the members of a three-person arbitral tribunal or its

chairman should become necessary.39
29 The SGO Bau contains very few stipulations as to how the proceedings are effectively conducted. It foresees that, as a rule, an oral hearing should take place and that such hearing is to
be prepared through parties briefs.40 It goes on to state that a partys silence or failure to show
may be interpreted by the arbitral tribunal as an admission of facts.41
30 The SL Bau likewise endorses the principle that the oral hearing shall be prepared by parties
briefs, but foresees only one round of written pleadings.42 To further speed up proceedings,43
it foresees that wherever possible the dispute shall be dealt with in one oral hearing only.44
31 Surprisingly for some, but mirroring court proceedings under the ZPO, the SL Bau and its
predecessor, the SGO Bau forbid the plaintiff to withdraw the legal action unless the defendant consents.45
32 The taking of evidence is regulated only very loosely in the SGO Bau. 13 (9) puts it entirely
to the discretion of the arbitral tribunal. It thus mirrors 1042 (4) ZPO, which likewise puts
the rules of proceeding to the wide discretion of the arbitral tribunal. The SL Bau, while mirroring this approach, is somewhat more explicit in that the tribunal is specifically vested with
wide powers to prepare the hearing by asking the parties to appear in person, by summoning
witnesses and ask for any other evidence to be produced, including the power to inspect the
site.46
33 The SGO Bau, starting with its 2000 version, contained an explicit authorisation for the tribunal not to admit into evidence facts or submissions it regards as irrelevant or obstructive.47
This provision has been dropped from the SL Bau, but 1042 (4) and 1046 (2) ZPO give
the tribunal the same powers.
34 The SL Bau and its predecessor, the SGO Bau further contain certain provisions concerning
set-off and partial awards, which shall be discussed in context infra III. F. and G. respectively.
B.
The SOBau
35 The German Bar Associations Working Group on Construction and Real Estate Law
(Arbeitsgemeinschaft Bau- und Immobilienrecht im Deutschen Anwaltverein, short ARGE
Baurecht) in 1998 drafted their own Conciliation and Arbitration Code for Construction
Disputes (Schlichtungs- und Schiedsordnung fr Baustreitigkeiten), commonly referred to as
SOBau. 48 It has been amended several times and the latest version dates from September
2009.
39
40
41
42
43
44
45
46
47
48
32 (2) and (4) and 33 (3) of the SL Bau; 7 (4) and 8 (4) of the SGO Bau; Kuffer, in: Franke
(2011), margin notes 393, 396 and 401; Heiermann (2002), 7, margin note 11.
15 (1) and (2) of the SGO Bau; Heiermann (2002), 15, margin note 4 et seq.
15 (3) of the SGO Bau; Heiermann (2002), 15, margin note 8 et seq.
35 (2) and (3) of the SL Bau.
3 (1) of the SL Bau specifically calls on the parties to conduct the process speedily.
35 (4) 1st sentence of the SL Bau.
37 (2) of the SL Bau; 18 (2) of the SGO Bau; Kuffer in: Franke (2011), margin note 432; Heiermann
(2002), 18, margin note 8 et seq.
35 (4) 2nd sentence of the SL Bau; absent this provision, such powers would flow directly from 1042
(4) ZPO.
13 (9) of the SGO Bau; Heiermann (2002), 13, margin note 10.
Behle-Cordes (2005).
837
It can be found for download on the website of the ARGE Baurecht.49 Like the SL Bau and 36
the SGO Bau, it is based on and inspired by the ZPO and foresees its subsidiary application.50
A core difference from the SGO Bau is its insistence on Conciliation (Schlichtung) and on 37
preservation of evidence by the Conciliator (Schlichter). The drafters meant the SOBau to
ensure that problems are solved between the parties during the construction process and,
wherever possible, preferably without the need for litigation or arbitration.51 The SL Bau now
mirrors this approach to a certain extent.
The SOBau foresees conciliation as a rule. Thus, arbitration proceedings can only be started 38
once conciliation has failed, or in cases where conciliation was not agreed in the first place.52
The conciliator is supposed to be nominated beforehand in the conciliation and arbitration
agreement. Where he is not, the President of the German Bar Association shall, in the absence of parties consent, act as Appointing Authority.53
The conciliator is usually, though not necessarily, a German qualified lawyer.54 He or she is 39
given much room for conciliation without any notable formal requirements. The conciliator
can arrange any necessary courses of action, such as carrying out a mediation hearing and/or
a local inspection, making preliminary findings and putting forward a conciliation proposal.55
He is not allowed to act as a witness56 nor, without the consent of both parties, as an arbitrator
in subsequent arbitration proceedings.57
The conciliator has wide powers in the field of evidence. Upon a motion by one of the par- 40
ties, he may order the preservation of evidence (isoliertes Beweisverfahren), which offers the
possibility of determining facts at short notice if disruptions occur during the construction
process. The motion interrupts any prescription period.58 The conciliator can order an appraisal by an expert to determine the situation and the status of the projects progress, any
deficiency, its causes and the cost of remediation, as well as the impediment and delay.59 The
factual findings made are binding for the subsequent arbitral proceedings.60
The arbitral proceedings, which follow failure61 of the conciliation process, are modelled on 41
the ZPO. Wherever the SOBau is silent, 1042 (4) ZPO, which puts the rules of proceedings into the wide discretion of the arbitral tribunal, applies.62 Again, the President of the
German Bar Association shall act as Appointing Authority, should the parties not concur.63
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
www.arge-baurecht.com.
16 (5) of the SOBau.
Oppler (2004), 11 et seq.
8 (1) sentence 2 of the SOBau.
8 (2) of the SOBau.
9 (2) of the SOBau.
8 (6) of the SOBau.
8 (5) of the SOBau.
Failure is deemed to have occurred if a Party refuses to conciliate, refuses the Conciliators proposal or
does not show up for Conciliation hearings, 10 (2) and (3) of the SOBau.
15 (3), (4) and (5) of the SOBau.
838
III. Sector Specific Procedural Issues

A.
1.
Arbitrability
42 Claims in the construction sector virtually exclusively involve pecuniary interests. Such
claims can be the subject of an arbitration agreement pursuant to 1030 (1), sentence 1
ZPO.64 Thus, arbitrability is not usually an issue in the construction sector.
2.
Specificity
43 Future legal circumstances, if forming the subject of an arbitration agreement, must be specified in concrete terms and not just according to the type of circumstances. A wording like, All
disputes arising from the business connection would not be sufficiently precise. The minimum content of an arbitration agreement for ad hoc proceedings could, for instance, be as
follows: All disputes arising from or in connection with this contract shall be decided by an
arbitral tribunal. 1034 et seq. ZPO would then apply as subsidiary law and fill in the gaps.65
44 A typical arbitration clause in a German spoken contract, foreseeing application of the SGO
Bau, might be phrased as follows:
Alle Streitigkeiten, die sich ber Auslegung und Gltigkeit dieses Vertrages, einschlielich dieser Schiedsklausel, oder sonst im Zusammenhang mit diesem Vertrag
ergeben, werden nach der Schiedsgerichtsordnung fr das Bauwesen, einschlielich
Anlagenbau unter Ausschluss des ordentlichen Rechtsweges endgltig entschieden.
Meaning: All disputes regarding interpretation or validity of the present agreement,
including this arbitration clause, or arising otherwise in the context of the present
agreement, shall finally and exclusively be decided in accordance with the rules of the
Arbitration Code for Construction, including Plant Engineering.
45 The parties may wish to supplement such a clause by provisions determining the number of
arbitrators, the venue and language of the arbitration and the applicable law. Model arbitration clauses for parties wishing to subject their disputes to DIS Arbitration may be found on
the DIS website.66
46 In international projects, parties will typically resort to English as a contract language and
either UNCITRAL or ICC rules. Often, Swiss or English law is chosen instead of German
law.
47 Also, an attempt at amicable settlement is required more often than in strictly German projects. A typical clause might look like this:
Either party may give the other party prior written notice of any dispute arising out
of or in connection with this Contract and not resolved in the normal course of business. The parties shall attempt in good faith to resolve such dispute promptly: a) by
negotiations between executives who have authority to settle the dispute, or b) in
accordance with the ICC ADR Rules of the International Chamber of Commerce
(ICC). If the matter has not been resolved within thirty (30) calendar days after
64
65
66
See commentary to 1030.1 supra, Trittmann/Hanefeld, 1030.

See supra, Trittmann/Hanefeld, 1034 et seq.
http://www.dis-arb.de under SchO for the German version and under Rules for an English version.
839
the notice has been given, then either party shall have the right to submit the dispute
to arbitration as set forth below. After the lapse of thirty (30) days after the notice has
been given, no party shall be heard with the argument that any attempt to resolve the
dispute in accordance with the foregoing sentence was not conducted in good faith
or otherwise not in accordance with the foregoing sentence or otherwise flawed.
All disputes arising out of or in connection with the Contract shall be finally settled
under the Rules of Arbitration of the International Chamber of Commerce by three
arbitrators appointed in accordance with the said rules. The language to be used in
arbitration shall be English. The seat of arbitration shall be Zurich, Switzerland. The
procedural law of this place shall apply where the Rules are silent.
This Contract, or its subject matter, shall be subject to the substantive laws of Switzerland. The application of the UN Convention on Contracts for the International Sale
of Goods (CISG) shall be excluded.
Care should be taken that clauses foreseeing amicable settlement attempts or ADR before 48
going to arbitration should be drafted in such a way that they do not present arguments
for jurisdictional challenges on the grounds that attempts to resolve the dispute were not
conducted in good faith or otherwise flawed. It is good practice to include a time limit after
which arbitration is admissible in any event.
In this context, it is important to note, that the SL Bau prevents the parties in principle67 from 49
going to either court or arbitration for as long as they conduct a conciliation, mediation or
adjudication under the SL Bau.68 In the same vein, the SOBau prevents arbitration for as long
as conciliation lasts.69
3.
Form
1031 ZPO provides certain alternatives for the form of the agreement.70
50
For certain parts of the construction sector, 1031 (5) ZPO is of particular interest. Where a 51
consumer is involved, as is the case in much of the construction of private homes, a separate
document is needed in order for the arbitration agreement to be valid. This agreement may
not contain any other agreements and must be separately signed. A breach of this requirement leads in principle to the invalidity of the arbitration agreement. However, pursuant to
1031 (6) ZPO, any non-compliance with form requirements will be cured retrospectively by
a party appearing at an arbitral hearing. This can be assumed to have happened if the action is
brought before an arbitral tribunal and the defendant has entered a plea regarding the validity
of the procedural claim. A written submission may also suffice.71
4.
Choice of Arbitrator
The parties are, of course, free to lay down the procedure for choosing the members of the 52
arbitral tribunal in the arbitration agreement. Where the agreement is silent, the ZPO fills in
67
68
69
70
71
Injunctive relief and motions to secure evidence remain admissible.

7 (1) of the SL Bau; Halstenberg, in: Franke/Englert (2010), margin note 113 et seq.
See supra, Trittmann/Hanefeld, 1031.
Schwab/Walter (2005), ch. 5, para. 5.
840
the gaps,72 or, if the parties agreed on the application of either the SOBau or the SGO, so do
the respective provisions of these.73
53 When it comes to actually choosing the appropriate persons to man the arbitration tribunal,
there are several institutions which publicise lists of arbitrators with special experience in
the field, the most renowned list being that of The German Society for Construction Law
(Deutsche Gesellschaft fr Baurecht).74
B.
Involvement of Third Parties / Multiparty Proceedings
54 An arbitration agreement is only effective amongst the parties privy to the agreement. In a
number of cases it also, however, extends to third parties by operation of law. These cases
are of considerable importance for the multi-actor environments that are so typical for the
construction industry.75 In general, it can be said that a third party will be bound to the
agreement if a settlement between the parties would also bind it, or those parties could or do
derive rights from an agreement in favour of a third party.
55 Nominating arbitrators in multiparty proceedings may present considerable difficulties.76
Two preconditions are generally recognised:77 there has to be a contractual basis for the
introduction of multiparty proceedings and all parties must be in a position to equally influence the nomination process. The absence of one of the conditions renders multiparty
proceedings impossible. Multiparty proceedings which have been conducted nonetheless
shall most probably face difficulties upon their recognition and enforcement.
56 The principle of party equality in the nomination process has even been held by the French
Cour de Cassation to form part of the international ordre public,78 with restrictions on the
nomination power of any party leading to the general inadmissibility of multiparty proceedings, even where parties would be prepared to agree otherwise.
57 In any event, the advantages and disadvantages of including language addressing multiparty
proceedings in an arbitration clause have to be assessed carefully for each project. Too often
the inclusion of several parties into an already complex two-party setting may have the effect
of prolonging the proceedings very significantly.
58 Cases relevant to the construction sector include:
72
73
74
75
76
77
78
See Nacimiento/Abt/Stein, 1035.

See above II.
The list is available for download at http://www.baurecht-ges.de/schieds.htm under Download der
Sachverstndigenliste.
Zerhusen, FS-Thode, pp. 355 et seq.
Berger, Schiedsrichterbestellung in Mehrparteienschiedsverfahren, RIW 1993, 703; Delvolv, Final report
on multi-party arbitrations ICC Bulletin, May 1995, p. 27; Laschet, Die Mehrparteienschiedsgerichtsbarkeit, FS-Blow (1981), pp. 107 et seq.; Markfort (1994), p.105.
Koussoulis, Fragen zur Mehrparteienschiedsgerichtsbarkeit, insbesondere zur Bestellung der Schiedsrichter ZZP 1994, 197; Nicklisch (1994), p. 223; Schwab, FS-Habscheid, Bielefeld 1989, pp. 291 et seq.;
Schwab/Walter (2005), chap. 10 para. 10.
Cour de Cassation, 7. 1. 1992, Socit Siemens AG et BKMI v. Socit Dutco Construction, Socit Industrieanlagenbau GmbH v. Socit Siemens AG, RdA 1992, 470; for the background of the proceedings see
Berger RIW 1993, 704 et seq.
1.
841
Guarantees
Bank Guarantees and/or Parent Company Guarantees are virtually the norm in big construc- 59
tion contracts. The arbitration agreement does not normally apply to sureties and guarantors,
nor in cases of assumption of debt.79
2.
Joint and Several Liability
A joint and several debtor will not be made subject to arbitral proceedings through the 60
arbitration agreement of his co-debtors. Where there is a compulsory joinder of parties,
state courts must decide the case if not all of the joined parties are parties to the arbitration
agreement, as it is not possible to separate proceedings where several joint litigants have to
sue or be sued together.80
3.
Third Party Notices (Streitverkndung)
Service of a third-party notice on a third party (Streitverkndung) cannot bind it to an arbitra- 61

tion agreement unless it is already bound by the arbitration agreement, by a special contract
or by appearing in the proceedings.81 It may thus be wise to foresee this already in the arbitration agreement. A model clause could be:
Ist eine der Vertragsparteien an einem Schiedsverfahren oder einem ordentlichen
Gerichtsverfahren beteiligt, das im Zusammenhang mit dem Bauvorhaben steht, fr
das der Auftragnehmer Lieferungen und Leistungen erbracht hat, so kann sie der
jeweils anderen Vertragspartei im Schiedsverfahren bzw. im ordentlichen Gerichtsverfahren den Streit verknden.
Meaning: Whenever one of the parties to this agreement is party to court or arbitration proceedings which are connected to the construction project, for which the
Employer has provided works or services, such party is entitled to give third-party
notice to the other party to this agreement.
The SL Bau foresees a model clause82 allowing third parties to join the arbitral proceedings 62
and specific provisions addressing this situation.83
4.
Consortia
Consortia, which under German law are partnerships (Gesellschaft brgerlichen Rechts), fre- 63
quently appear as parties in construction contracts. All consortium partners are usually bound
by an arbitration agreement.84
79
80
81
82
83
84
Schwab/Walter (2005), ch. 7, para. 33; OLG Hamburg, 08.11.2001 6 Sch 04/01.
Schwab/Walter (2005), ch. 7, para. 27.
Baumbach/Lauterbach-Hartmann (2014), 1029, para. 23.
Die Parteien vereinbaren, dass Dritte, die ein rechtliches Interesse am Obsiegen einer Partei haben,
dem Verfahren zur Untersttzung dieser Partei beitreten knnen. Hat eine Partei die SL Bau mit Dritten
vereinbart, ist sie berechtigt, diesen den Streit zu verknden. / The parties agree that third parties, which
have a legal interest in the success of one party, may join the proceedings in order to support that party.
Where one party has concluded an arbitration agreement under the SL Bau with third parties, it has the
right to serve a third-Party notice on these third parties.
44-46 of the SL Bau.
Baumbach/Lauterbach-Albers (2014), 1029, para. 25; differently however Schwab/Walter (2005), ch. 7,
para. 35.
842
C.
Interlocutory Proceedings
64 Interim measures are may often be necessary to protect the interests of parties to a construction dispute. 1041 ZPO establishes competence on the part of the arbitral tribunal to order
an injunction unless the parties have agreed otherwise. Arbitrators may order protective
measures, regulatory measures and performance measures. However, the arbitral tribunal is
restricted to ordering measures of protection; execution of such orders is the sole responsibility of the state courts, which would mean extra proceedings.85
65 Therefore, it is usually better to go straight to an ordinary court for interlocutory proceedings.
This will in any case be necessary where the arbitral tribunal has not yet been constituted. If
the arbitral tribunal has already been constituted, competition will in theory exist between
the arbitral tribunal and the state court.86 For practical purposes, however, the state court is
the preferred forum.
66 The main claim, however, will still have to be brought before the arbitral tribunal. Even an
order of the state court to lodge the main claim within a specific period of time (as foreseen
by 962 ZPO) does not change the fact that it has to be lodged before the arbitral tribunal.
D.
Preservation of Evidence
67 The preservation of evidence is key in the context of project disputes. 485 et seq. ZPO
address this need by providing for the independent procedure of taking evidence (selbstndiges Beweisverfahren). A state court may order measures to preserve evidence, as long
as the arbitral tribunal has not been constituted.87 Such a procedure would in theory also be
admissible before an arbitral tribunal if the main action is already pending before the arbitral
tribunal and it has already been constituted or can be constituted quickly.88 Thus, the party
has the right to choose between an arbitral tribunal and a state court. In practice, parties will
almost always go directly to court, as only the court can enforce an eventual order.
68 The selbstndiges Beweisverfahren has to be distinguished from the isoliertes Beweisverfahren
under 11, 13 of the SOBau. The latter expressly stipulates isolated proceedings for the
introduction of evidence within the framework of which an expert report can be obtained by
an arbitrator at the request of a party. The findings in the report are then binding for arbitral
proceedings (supra II.B.).
E.
Taking of Evidence
69 Given the factual complexity of construction disputes, the hearing of evidence is a particularly important aspect in almost all construction litigation. Arbitral proceedings offer a few
advantages in this respect.
70 1042 (4) Sentence 2 ZPO is the basic provision for the hearing of evidence. 13 (9) of the
SGO Bau and 27.1 of the DIS Arbitration Rules contain similar provisions. The arbitral
tribunal has to determine the facts of the case within the realms of necessity on its own initiative. It generally has more freedom to hear evidence than a court. As construction disputes
usually revolve around technical questions, expert witnesses tend to play a predominant role.
85
86
87
88
1041 (2), sentence 1 ZPO.

Schwab/Walter (2005), ch. 17 (a), para. 24, Baumbach/Lauterbach-Albers (2014), 1041, para. 2.
OLG Koblenz 15.07.1998, OLGR Koblenz1999, 163 et seq., 1033 ZPO.
Baumbach/Lauterbach-Albers (2014), 1042, para. 10; Schwab/Walter (2005), ch. 15, para. 27.
843
The arbitral tribunal may decide to hear witnesses named by either party or ask the parties
to agree on a common technical expert or may itself name an expert. A prudent tribunal will
give either party all reasonable opportunity to present its case and avoid any appearance of
bias. It may thus be advisable to let the parties present their experts first and see afterwards
whether further clarification is needed. However, court-appointed experts are common in
the German state court system and arbitrators with a background as a judge may feel tempted
to go ahead and appoint an expert.
Submission of evidence by one of the parties is not absolutely necessary; evidence can be 71
heard without having to follow the rules for the taking of evidence in the ZPO and insofar
as the arbitral tribunal considers it necessary. The tribunal may thus, of its own initiative,
initiate the taking of evidence. Again, a prudent tribunal will give either party all reasonable
opportunity to present its case and avoid any appearance of bias.
If the arbitral tribunal possesses the necessary expertise in the person(s) of its member(s), 72
it may decide that it is unnecessary to obtain an expert opinion. If a sole arbitrator is an
expert, this person may in principle render the judgment without hearing other experts.
This may appear adequate as the parties have nominated the person jointly and might even
have chosen the person because of his or her qualifications. However, if such an intention of
the parties is not apparent from the documents or clearly stated during the proceedings, a
prudent tribunal, to give either party all reasonable opportunity to present its case and avoid
all appearance of bias, shall usually notify the parties beforehand of its intention to proceed
without expert witnesses and hear their opinions on the subject.
F.
Set-off and Counterclaims
Construction claims are typically ridden with counterclaims, which the defendant seeks to 73
set off from the original claim.
The introduction of counterclaims in litigation by means of set-off often leads to considerable 74
delays, as the counterclaim may take a long time to be ascertained. In principle, the arbitral
tribunal could avoid this by passing a provisional arbitral award. It is however questionable
whether this achieves very much. Even if the arbitral tribunal itself can and wants to decide
on the counterclaim, a provisional arbitral award cannot be declared enforceable, as it does
not conclude the proceedings, but rather leaves open the possibility of cancelling or amending the decision rendered.89
Intricate issues may arise, if the counterclaim stems from a relationship that is not covered by 75
the arbitration agreement. Whether or not an arbitral tribunal is allowed to make a decision
in arbitral proceedings on the setting off of a counterclaim that is not subject to an arbitration
agreement is open to dispute. Some affirm the admissibility of a set-off by reasoning that a
person who transfers the decision concerning a claim to an arbitral tribunal also relinquishes
the decision concerning any objections raised.90 Others argue that an arbitration agreement includes an agreement that no set-off will be allowed in respect of a claim brought in
arbitral proceedings.91 According to the SL Bau and its predecessor the SGO Bau, the arbitral
89
90
91
Schwab/Walter (2005), ch. 18, para. 7; for details concerning the enforcement of provisional award and
for further interpretation of this provision, cf. supra, Part II, Krll, 1060.
Schwab/Walter (2005), ch. 3, para. 12, Baumbach/Lauterbach-Albers (2014), 1029, para. 22.
Zller-Geimer (2014), 1029, para. 73 (a).
844
tribunal can only decide on a set-off claim which is not subject to the arbitration agreement
if the parties both consent.92
76 If, on the other hand, one party seeks to set off a claim covered by an arbitration agreement
before a state court, the other party may plead that the arbitration agreement applies and that
the state court may not take the set-off into account.93 This may lead to the situation that the
set-off is deemed inadmissible in both proceedings.
77 In both cases, it is possible that the arbitral tribunal or the state court may pass a provisional
judgment.94 Should the arbitral tribunal make use thereof and restrict itself to ruling on the
plaintiffs claim, then the court must declare the arbitral award unconditional or cancel it and
reject the claim.95 In the opposite case, the state court may also pass a provisional judgment
limited to the plaintiffs claim. Then the arbitral tribunal has to make a decision on the set-off
claim, although it will not have the power to cancel the provisional judgment of the state
court if it admits the set-off.96 Cancellation can only be carried out by the state court itself in
subsequent proceedings. One option would be to bring an action opposing judicial enforcement (Vollstreckungsabwehrklage, 767 ZPO) or possibly to lodge an objection as part of a
declaration of enforceability pursuant to 1060 or 1061 ZPO.
G.
Partial Awards
78 Construction litigation is renowned for its tendency towards drawn-out proceedings. The
contractor typically has an obligation to perform in advance. Both these factors combined
with deplorable customer paying habits cause large outstanding debts over long periods for
contractors, which has put businesses at risk or even destroyed them. 301 (1) first sentence
ZPO thus obligates state courts to pass a partial judgment whenever possible.
79 In the arbitral proceedings, a partial arbitral award is also possible, although there is no
obligation to do so, as 1042 (4), Sentence 1 ZPO gives the arbitral tribunal the power to
determine the proceedings at its own discretion. Partial Awards in arbitration tend to be
rather exceptional. Under 20a of the SGO Bau, in its 2005 version, however, the arbitral
tribunal is expressly required to review at each stage of the proceedings the pronouncement
of a partial arbitral award ( 301 ZPO ) and a provisional arbitral award. It is unclear whether
this obligation to review the possibility of a partial award has in fact led to a higher number of
partial awards being rendered in proceedings under the SGO Bau. The provision has subsequently been dropped in the SL Bau.
H.
Applicable Law
80 It is not uncommon in the construction sector to settle disputes out of court without paying
too much attention to applicable laws or contractual provisions. Business considerations and
technical possibilities may often turn out to be stronger drivers than black letter law.
81 In cases, however, where formal arbitration proceedings are being started, references to lex
mercatoria or empowerments to decide ex aequo et bono are rather rare. Usually parties will
92
93
94
95
96
38 (2) SL Bau, 19 (3) of the SGO Bau.

Zller-Geimer (2014), 1029, para. 74, Schwab/Walter (2005), ch. 3, para. 13.
302 ZPO, see Zller-Geimer (2014), 1029, para. 74; Schwab/Walter (2005), ch. 3, para. 13.
Baumbach/Lauterbach-Albers (2014), 1029, para. 22; Schwab/Walter (2005), ch. 3, para. 14.
Schwab/Walter (2005), ch. 3, para. 14; dissenting: Zller-Geimer (2014), 1029, para. 74 (a).
845
expect the arbitrators to decide according to the chosen law.97 Such choice of law, however,
may sometimes be unclear, as not all project contracts will necessary contain a proper choice
of law clause. If they do, some of the many different contracts, which together make up the
project framework, may foresee different legal regimes. Here, only diligent contracting can
help avoid significant losses in time and money.
IV. Conclusion
The German arbitration laws give parties involved in construction projects great leeway to ad- 82
dress all sector specific issues in specific arbitration clauses and to select the arbitration rules,
venue and language of their choice. A good arbitration clause in this context will ideally make
sure that it is applicable to all contractual arrangements surrounding a given project, such that
a split of forum may be avoided. It should in most cases foresee a stipulation on third-party
notices. The advantages and disadvantages of language addressing multiparty proceedings
have to be assessed on a case-by-case basis. Where the parties choose not to address specific
issues, the ZPO and any applicable arbitration rules provide workable solutions for most
questions. A construction arbitration in Germany is embedded in the context of a generally
swift, affordable and reliable state court system, which may, if need be, intervene to safeguard
the rights and positions of parties.
97
It is admissible and binding on the arbitrators for the parties to expressly forbid decisions ex aequo et bono,
Arbitration in Germany in the Energy Sector*

Peter Kraft / Mrton Hagner
Short Bibliography: Britz/Hellermann/Hermes, EnWG Energiewirtschaftsgesetz, 2nd edn,
Mnchen 2010; Bauer, Die Aufwertung der Clearingstelle im EEG 2012, ZUR 2012, 39; Chatzinerantzis/Fach, Aufwertung der Clearingstelle EEG durch das EEG 2012, EnWZ 2012, 19; Cummins/
Giaretta, Investment Treaty Arbitration, in: King (ed.), Dispute Resolution in the Energy Sector,
London 2012, p. 225; Dickel/Konoplyanik/Selivanova, Gas Pricing Continental Europe, in: Energy Charter Secretariat (ed.), Putting a Price on Energy International Pricing Mechanisms for Oil
and Gas, Brussels 2007, p. 143; Fried, Rechtliche Bewltigung des OTC-Handels, in Schwintowski
(ed.), Handbuch Energiehandel, Berlin 2006, p. 141; Greeno/Kehoe, Contract Pricing Disputes, in:
King (ed.), Dispute Resolution in the Energy Sector, London 2012, p. 109; Hanefeld/Wittinghofer,
Schiedsklauseln in Allgemeinen Geschftsbedingungen, SchiedsVZ 2005, 217; Happ, Dispute
Settlement under the Energy Charter Treaty, German Yearbook of International Law 2002, 331;
Holland/Ashley, Natural Gas Price Reviews: Past, Present and Future, (30) Journal of Energy & Natural Resources Law 2012, 29; Isermann/Berlin, Auergerichtliche Streitbeilegung in Verbraucherangelegenheiten Bestandsaufnahme und Manahmenpaket der EU fr 2014/2015, VuR 2012,
47; Krll, Die schiedsrechtliche Rechtsprechung 2004, SchiedsVZ 2005, 139; Liesenhoff, Kapitel 10:
Die EFET-Rahmenvertrge fr den Physischen Handel mit Strom und Gas, in: Horstmann/Cieslarczyk, Energiehandel Ein Praxishandbuch, Kln 2006, p. 463; Petkovich, International Boundary
Disputes, in: King (ed.), Dispute Resolution in the Energy Sector, London 2012, p. 245; Prnbacher/
Duncker/Baur, Gaspreisanpassungs-Schiedsverfahren Hintergrnde und prozessuale Besonderheiten, SchiedsVZ 2012, 289; Prtting, Die rechtliche Stellung des Schiedsrichters, SchiedsVZ 2011,
233; Salje, EEG 2012 Gesetz fr den Vorrang Erneuerbarer Energien, 6th edn, Kln 2012; Schill,
Internationales Investitionsschutzrecht und Vergleichendes ffentliches Recht: Grundlagen und
Methode eines ffentlich-rechtlichen Leitbildes fr die Investitionsschiedsgerichtsbarkeit, ZaRV
2011, 247; id., ffentlich-rechtliche Schiedsverfahren zwischen Risikobewltigung und Rechtsrisiko, DV 2010, 1013; Schorkopf, Transparenz im Toll-Haus Anmerkungen zur Vertraulichkeit
des Maut-Konzessionsvertrages aus staatsrechtlicher Perspektive, NVwZ 2003, 1471; Trappe,
Richter/Schiedsrichter als Schlichter?, SchiedsVZ 2012, 79; Spicker, Formen des OTC-Handels, in:
Schwintowski (ed.), Handbuch Energiehandel, Mnchen 2006, p. 1; Wolff, Grenze der Heimlichkeit
Nicht-ffentliche Schiedsverfahren mit Beteiligung der ffentlichen Hand am Mastab des Verfassungsrechts, NVwZ 2012, 205; Wolst, Die Schlichtungsstelle Energie, EnWZ 2013, 455.
Para.
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
State State Disputes . . . . . . . . . . . . . . . . . . . . 3
A. Introduction to UNCLOS. . . . . . . . . . . . 3
B. Ad hoc Arbitration under UNCLOS . . 6
III. Investor State Disputes . . . . . . . . . . . . . . . . 13
A. The Energy Charter Treaty . . . . . . . . . . 13
B. Investment Protection under the
ECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
I.
II.
Para.
C. Dispute Settlement under Part V of
the ECT Selected Issues . . . . . . . . . . . 21
IV. Business Business (B2B) Disputes . . . . . 32
A. Arbitration in the Energy Trading
Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
1. EFET-Agreements . . . . . . . . . . . . . . . 42
2. Individual OTC-Contracts and
in particular Long Term Gas
Supply Contracts . . . . . . . . . . . . . . . . 48
The views expressed in this article are solely those of the authors and they do not reflect the position of
the E.ON SE Group.
848
Para.
B. Arbitration in the Gas Grid Sector . . . 69
C. Arbitration under the Renewable
Energy Sources Act . . . . . . . . . . . . . . . . . 74
1. The Renewable Energy Sources
Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74
2. Dispute Resolution under the
EEG the Clearing House EEG . . 78
I.
Para.
3. The Arbitration Rules of the
Clearing House EEG . . . . . . . . . . . . . 82
4. Summary . . . . . . . . . . . . . . . . . . . . . . . . 89
V. Business Consumer (B2C) Disputes. . . 92
VI. Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101
Introduction1
1 The complexity, the size and the long-term nature of energy projects have always exposed the
market players in the energy and power sector to high risks. In addition, the German energy
and power sector has been facing constant legislative and regulatory changes over the last
decade. Liberalisation has turned the sector into a very dynamic market. As a consequence,
the market players face rapid economic changes, uncertainties and increasing competition.
Where such risks materialize, disputes become inevitable. Accordingly, it is not surprising
that the sector is regularly reported to be among top users of arbitration.2 Increasing competition and decreasing profit margins have added even more pressure on the market players to
fight their conflicts out and reduce the possibilities for and the likelihood of an amicable
dispute settlement.
2 As to the actors involved on claimants and/or respondents side in arbitral proceedings, one
may essentially distinguish four major categories of disputes in the energy sector. They are:
State State Disputes: This category of disputes usually results from undelimited land
and/or maritime boundaries. Such disputes involve sovereign states, both on Claimants
and Respondents side, and they fall within the area of public international law. Usually,
such disputes relate also to the control over natural resources. Even in todays world, they
are less exotic as one may think and do not only take place in the Arctic or Antarctic.3
The United Nations Convention on the Law of the Sea (UNCLOS) is the main source
of law for delimiting maritime boundaries, as it has been ratified by most of the worlds
states. Under UNCLOS, the International Tribunal for the Law of the Sea (ITLOS) has
been established in Hamburg, Germany.4
Investor State Disputes: Such disputes may arise in particular when governments unilaterally alter the terms and conditions of an existing contract or expropriate an investment in order to nationalize it. They may originate either from (i) investment contracts
1
2
Cases without further citations are available for free on the DIS Database, <http://www.dis-arb.de>.
Cf. e.g. Chart 33: Respondents by Industry of the 2010 International Arbitration Survey: Choices in
International Arbitration, available at <http://www.whitecase.com/files/upload/fileRepository/2010International-Arbitration-Survey-Choices-International-Arbitration.PDF>; ICSID, The ICSID Caseload Statistics (Issue 2012-2) available at <https://icsid.worldbank.org/ICSID/FrontServlet?request
Type=ICSIDDocRH&actionVal=ShowDocument&CaseLoadStatistics=True&language=English32>:
25% of all state investor proceedings take place in the Oil, Gas & Mining sector and 8% in the Electric
Power and Other Energy sector.
Cf. e.g. the on-going dispute between Germany and the Netherlands on the boundary delimination in
the river mouth of the river Ems in connection with the erection of the wind farm Riffgat: <http://www.
spiegel.de/wirtschaft/unternehmen/ewe-windpark-riffgat-grenzstreit-zwischen-deutschland-undniederlande-a-839554.html>.
Cf. <http://www.itlos.org/>.
Arbitration in Germany in the Energy Sector Kraft/Hagner
849
concluded between states and private investors (e.g. production sharing contracts (PSC),
build, operate and transfer agreements (BOT), etc.); (ii) a bi- or multilateral investment
(protection or promotion) treaty (BIT / MIT) concluded between the host country, i.e.
the country in which the investment was made, and the home country of the investor; or
(iii) possibly both. While investment contract arbitration is not so much different from
commercial arbitration except for involving a sovereign state and the implications resulting thereof investment treaty arbitration is different and distinct from commercial
arbitration.5 In investment treaty arbitration, the arbitration agreement usually results
from a host state having made a unilateral offer in a BIT or MIT with the home state of
the investor to arbitrate disputes resulting under such treaty. The investor may accept
the offer by commencing arbitration. In many cases, there may not even be a contractual
relationship between the investor and the host state. The most particular and significant
multilateral investment treaty to energy industry is the Energy Charter Treaty (cf. infra
para. 13).6
Business Business (B2B) Disputes: This category of disputes is typically settled by means
of (international) commercial arbitration if an amicable settlement of the dispute fails.
They signify the majority of disputes in the energy sector and their importance to the
energy business is determined by their size, financial significance and complexity. In
this category, one may distinguish two main categories of disputes arising out of B2Bagreements, i.e. agreements on a horizontal level, e.g. amongst joint venture partners, or
on a vertical level, e.g. construction contracts and sale and purchase agreements.
Business Consumer (B2C) Disputes: Whilst German energy utilities (Energieversorgungsunternehmen EVU)7 are committed to alternative dispute resolution (Conciliation Committee Energy),8 arbitration itself is only of minor relevance in B2C disputes
in the energy sector.
II.
State State Disputes
A.
Introduction to UNCLOS
At the first glance, it seems to be slightly far-fetched to discuss arbitration arising out of the 3
United Nations Convention on the Law of the Sea (UNCLOS) in the context of Arbitration in the Energy Sector in Germany. However, the recent discussions about whether the
Riffgat Wind park has been built on German territory or (at least) partially on the territory of
the Netherlands9 gave reason to look into this area of law in the context of this chapter for two
reasons: first, under the UNCLOS, which governs border disputes like the aforementioned,
member states10 may inter alia opt for arbitration. And second, the International Tribunal
5
6
7
8
9
10
Cf. infra Escher/Nacimiento/Weissenborn, Investment Arbitration paras 1 et seq.

Cf. infra Escher/Nacimiento/Weissenborn, Investment Arbitration paras 33 et seq.
3 No. 18 Energy Industry Act (Energiewirtschaftsgesetz EnWG) defines an EVU as a natural or legal
person, delivering energy to a third party, or operating an energy distribution net or having the power of
disposition over an energy distribution net as an owner.
Cf. infra paras 93 et seq.
Cf. supra fn. 3.
Border disputes may also be brought before the Seabed Dispute Chamber of the ITLOS, not only by
member states but also by some state enterprises and natural or juridical persons referred to in Article153, paragraph2(b) UNCLOS.
850
for the Law of the Sea (ITLOS),11 being the dispute settlement body established under the
UNCLOS,12 has its seat in Hamburg and is involved to some extent in the respective arbitration proceedings at the preparatory stage.
4 Territorial disputes are likely to increase in the future,13 with more and more off-shore energy
projects seeking and competing for the best sites and smaller gas and oil fields becoming
financially attractive. Arbitration under the UNCLOS is likely to be key to the resolution of
those disputes.
5 The UNCLOS provides the legal framework for the use and utilization of the seas and its
resources. Part XV UNCLOS provides rules for the settlement of disputes arising from the
interpretation or application of the Convention between member states. Pursuant to Article
287 (1) UNCLOS, disputes can be settled either by the ITLOS, the International Court of
Justice (ICJ) or arbitration, respectively special arbitration in accordance with Annex VII
and VIII. Ideally, the preferred means of dispute resolution is chosen by the member states
when signing, ratifying or acceding to the Convention.
B.
Ad hoc Arbitration under UNCLOS
6 However, while of the more than 160 parties to the UNCLOS less than a dozen have expressly
chosen arbitration, 117 parties have omitted a declaration under Article 287 (1) UNCLOS.14
As arbitration under Annex VII UNLCOS is the default dispute resolution mechanism if no
express choice has been made by the respective party, aside from ITLOS arbitration under
Annex VII UNCLOS can in fact be regarded as the widely accepted forum for UNCLOS
disputes.
7 The arbitral tribunal constituted under the aforementioned Annex VII UNCLOS consists
of five members, one arbitrator appointed by each party and the remaining three arbitrators
either being appointed by agreement of the parties or, in the absence of such agreement, the
President of the ITLOS, in accordance with Article 3 (e) of Annex VII UNCLOS, will appoint them unless the parties have agreed on a different appointing authority. The arbitrators
appointed by the respective appointing authority shall be chosen from a list of arbitrators
maintained by the Secretary General of the United Nations.15 The ad hoc arbitration itself is
usually administered by the Permanent Court of Arbitration (PCA), based in The Hague.
8 In case an arbitral tribunal is not (yet) constituted, the ITLOS may, in accordance with Article 290 (5) UNCLOS prescribe, modify or revoke provisional measures of protection if it
considers thatprimafaciethe tribunal which is to be constituted would have jurisdiction and
that the urgency of the situation so requires.
11
12
13
14
15
It is noteworthy that while the International Tribunal for the Law of the Sea has been constituted by
the virtue of the UN Convention on the Law of the Sea in 1996, it is not an UN institution but an autonomous law finding body of international law; cf. also Talmon, Der Internationale Seegerichtshof in
Hamburg als Mittel der friedlichen Beilegung seerechtlicher Streitigkeiten, JuS 2001, 550.
UNCLOS also provides for non-binding dispute resolution in the form of mediation and conciliation.
Cf. Petkovich, in King (2012), p. 245; cf. also: Martin Dispute resolution in the international energy sector,
Journal of World Energy Law and Business 2011, 350 (354), who points out that less than half of all
existing 430 maritime boundaries have agreements addressing them.
Cf. Roach Arbitration under the Law of the Sea Convention, in: Moore (ed.), International Arbitration,
Leiden 2013, p. 135 (135).
Article 2 (1), Annex VII UNCLOS. Every state being party to UNCLOS is entitled to nominate four
arbitrators for the list.
851
Absent an agreement by the parties, the arbitral tribunal determines its own procedure; deci- 9
sions are taken by majority vote, whereas the president of the tribunal has a casting vote in
case of equality of votes.16
Article 1 of Annex VIII UNCLOS establishes a special arbitral tribunal focusing on ques- 10
tions of interpretation or application of the UNCLOS in questions of fisheries, protection
and preservation of the maritime environment, marine scientific research and navigation
(including pollution from vessels and dumping).
The major difference to Annex VII arbitration is that in Annex VIII proceedings, the arbitra- 11
tors are renowned and recognized experts in the specific jurisdictional fields mentioned in
Article 1 of Annex VIII UTCLOS.
It is noteworthy that the UNCLOS does not foresee any enforcement mechanism. It relies 12
on the obligation to comply with the respective decision as stipulated in Article 296 (1)
UNCLOS.
III. Investor State Disputes

A.
The Energy Charter Treaty
The Energy Charter Treaty (ECT) being the most significant and a multilateral invest- 13
ment treaty to energy industry entered into force in Germany in 1998 after its signing four
years earlier in 1994. Currently, forty-seven countries have ratified the ECT.17 The ECT has
its roots in the efforts after the end of the Cold War to further the co-operation between the
succession states of the former Soviet Union, other Eastern European States and Western
Europe.18 It aims to create a multilateral legal framework in order to promote long term
co-operation in the energy sector and sets out dispute resolution mechanisms in case such
co-operations fail, which is not unusual: the energy industry has the highest proportion of
ICSID disputes.19
The ECT covers four areas: (i) trade with energy and energy products, (ii) promotion of 14
energy efficiency, (iii) transit of energy, and (iv) the protection of investments.
Article 26 ECT provides for the following four dispute settlement mechanisms if a dispute 15
arises between an investor and a host state:20 (i) arbitration under the Rules of Arbitration
International Centre for the Settlement of Investment Disputes (ICSID), if the member
state and the investors state are both members of the Washington Convention21; (ii) ICSIDs
16
17
18
19
20
21
Article 8, Annex VII UNCLOS.

The ratification of the ECT is still pending in Australia, Belarus, Iceland and Norway. Russia applied the
ECT provisionally until 18.12.2009 when its provisional application terminated.
Gundel, Regionales Wirtschaftsvlkerrecht in der Entwicklung: Das Beispiel des Energiechartavertrages,
AVR 2004, 157.
Cummins/Giaretta, in: King (2012), p. 225 (227); by mid-March 2014, fifty-one cases are reported on
the website of the Energy Charter Secretariat, <http://www.encharter.org/>.
Disputes between member states are governed by Article 27 (1) ECT, according to which the states shall
endeavor to settle disputes through diplomatic channels. Article 27 (2) et seq. ECT provide for ad hoc
arbitration under the rules of Article 27 (3) ECT in case diplomatic intervention has failed.
Convention on the Settlement of Investment Disputes between States and Nationals of Other States of
1966.
852
Additional Facility Rules22 in case only the investors home state or the host state is a member
state to the Washington Convention; (iii) arbitration under the Rules of the Arbitration of
the Institute of the Stockholm Chamber of Commerce (SCC)23; and (iv) ad hoc arbitration
under the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules.24
16 Part III Investment Promotion and Protection (Articles 10 17) of the ECT provides in
particular in combination with the dispute settlement mechanisms in Article 26 ECT for a
material and procedural level of investment protection that is comparable to the level of the
German Bilateral Investment Treaties (BITs).25
B.
Investment Protection under the ECT
17 According to Article 26 (1) ECT, a dispute must relate to an investment, a term defined in
a rather broad manner in Article 1 (6) ECT: every kind of asset () associated with an Economic Activity in the Energy Sector. However, the focus of the ECT is on investments made:
pre-investment costs and development expenditures, e.g. power plants in their planning
phase do not satisfy the investment requirement.26
18 The protection standard under Article 10 (1) ECT is similar to the one found in most BITs,
i.e. the fair and equitable treatment standard (FET-Standard).27 The FET-standard has been
interpreted predominantly in the spirit of the purpose of the investment agreements, with an
aim to establish stable and favourable conditions of business for the investors.28 However, the
precise meaning remains subject to an ongoing debate in literature.29
19 Also comparable to most BITs, Article 10 (1) ECT prohibits the impairment of investments
by unreasonable or discriminatory measures. This relates to state measures which do not yet
qualify as an expropriation, i.e. situations in which the investment itself remains under control of the investor, but cannot be utilized in the manner realistically foreseen by the investor.
Therefore, the investment remains substantially behind the investors expectations regarding
usability or profitability of the investment at the time when the investment was made.
20 Finally, the ECT grants also some level of protection to investments from interference by
state owned enterprises. National companies (irrespective of whether state owned or not)
are in principle not directly bound by international covenants. Article 22 ECT establishes,
22
23
24
25
26
27
28
29
Under the Additional Facility Rules the Secretariat of ICSID can administer certain proceedings that fall
outside the scope of the ICSID Convention.
Cf. <http://www.sccinstitute.com>.
Cf. <http://www.uncitral.org>.
For a detailed description of investment arbitration and the protection level offered by German BITs cf.
infra Escher/Nacimiento/Weissenborn, Investment Arbitration paras 27 et seq.
Mihaly International Corporation v. Democratic Socialist Republic of Sri Lanka, ICSID Case ARB/00/2),
<https://icsid.worldbank.org/ICSID/>.
For a more detailed description of the fair and equitable treatment standard cf. infra Escher/Nacimiento/
Weissenborn, Investment Arbitration paras 28 et seq.
Bernasconi-Osterwalder/Hoffmann, The German Nuclear Phase-Out Put to the Test in International
Investment Arbitration?, Briefing note of the International Institute for Sustainable Development, June
2012, available at <http://www.iisd.org/pdf/2012/german_nuclear_phase_out.pdf>.
For an overview on the different positions, cf. Happ, German Yearbook of International Law 2002, 331
(349 et seq.).
853
however, some basic rules for the state regarding the conduct of its enterprises in accordance
with the states obligations under the ECT.
C.
Dispute Settlement under Part V of the ECT Selected issues
Beside the arbitration venues (cf. supra para. 15) the ECT avails to investors, it provides for 21
the option to initiate proceedings against a member state in its respective state courts. However, arbitration cannot be initiated after the case has been submitted to national courts if the
host state is listed in Annex ID referred to in Article 26 (3)(b)(i) ECT.30
Germany has not made such a reservation, which in two recent cases has led to the situation 22
of it being sued by a foreign energy utility before German administrative courts and taken to
international arbitration in parallel.31 The relationship of conflicting decisions between the
arbitral tribunal and the state courts and the question to what extent the decision of the different deciding bodies have at least indicative effect for the respective other proceedings
is still under discussion. The ongoing debate on the impact of international investment law
on national regulatory autonomy is closely linked to that question.32 It is generally accepted
that states are free to regulate their energy sector in order to achieve certain targets of public
policy and that such legitimate measures cannot open the gates for foreign investors to argue
that they are protected against all changes in law. However, it is also clear that the state must
not use regulatory measures as a fig leaf to justify actions constituting in truth a regulatory
expropriation.33
Finding the right balance between justified policy making in the public interest on the one 23
hand and fair and equitable treatment of the investor under the ECT on the other hand is a
balance act. Some authors argue that the German state should ensure that actions taken by
its government in the course of arbitral proceedings are transparent to the public, as well as
to the parliament, due to the parliaments position as the legislative and controlling body of
the executive branch.34 Against this background it has been pointed out that if arbitral proceedings are kept confidential either by individual agreement of the parties or by reference
30
31
32
33
34
States listed in Annex ID do not consent unconditionally to arbitration in cases the investor has already
submitted the dispute to a national court or tribunal or to a previously agreed dispute resolution
mechanism.
In 2009 the Swedish utility company Vattenfall initiated proceedings under Article 26 ECT against the
Federal Republic of Germany claiming damages of more than 1.4 billion EUR alleging an indirect (or an
alternatively used term: regulatory) expropriation. At that time Vattenfall was still trying to set aside the
administrative restrictions in the operation permit of its coal fired power plant in Hamburg-Moorburg
that would have allegedly limited down the operability of the plant to an extent that it could not have been
operated profitable before the national administrative courts. The case has been settled by the parties
in 2011. Cf. <http://www.encharter.org/fileadmin/user_upload/Investor-State_Disputes/VattenfallGermany_Award.pdf>. In 2012 Vattenfall initiated ICSID proceedings against Germany in the light of
the German nuclear phase out decision. According to Vattenfalls financial statement for the year 2011 the
nuclear phase out caused a damage of 1.18 billion EUR. (<http://corporate.vattenfall.com/Global/corporate/investors/interim_reports/2012/q4_report_2012.pdf>. Again, in parallel, Vattenfall launched a
constitutional complaint at the Federal Constitutional Court (Bundesverfassungsgericht BVerfG).
Schill, ZaRV 2011, 247 et seq.; Krajewski, The Impact of International Investment Agreements on Energy
Regulation, EYIEL 2013, available at SSRN: <http://ssrn.com/abstract=1855639>.
Krajewski, The Impact of International Investment Agreements on Energy Regulation, EYIEL 2013,
available at SSRN: <http://ssrn.com/abstract=1855639>.
Wolff, NVwZ 2012, 205 (207); Schorkopf, NVwZ 2003, 1471 (1473).
854
to arbitration rules35 an inherent tension is created between the interest of the parties to
the arbitral proceeding (investor/government) and the interest of the legislative power in
supervising all proceedings in which a state is involved.36
24 The view that arbitral agreements between private parties and the German state should be
considered null and void in case the publicity of the complete proceeding is not foreseen
expressly 37 is likely to be conceived by investors as outside of the equilibrium of interests.
The suggestion38 that the existence of arbitral proceedings and any arbitral award resulting
therefrom are to be made public constitutes the minimum requirement for the checks and
balances within a democracy is more in line with the current practise, e.g. ICSID.
25 While it does obviously depend on the respective case at hand, it is likely that some basic
transparency (e.g. an abstract of the award) will strengthen the public acceptance and understanding of investment arbitration. As a possible option to elude the criticism set out above,
the parties could consider in their specific case to what extent the arbitral proceedings really
need to be confidential, define these areas and leave some room for public information by an
according agreement.
26 Another current development shedding light on the relationship between investment protection under the ECT and regulatory changes driven by the European Union (EU) is worth
being reported in this chapter, because it might also gain relevance for Germany as efforts to
further align and unify the European Singly Market for energy are intensified.
27 In Electrabel S.A. (Belgium) v. Republic of Hungary,39 the arbitral tribunal had to decide on
Electrabels allegations against the Republic of Hungary regarding numerous violations
of the ECT. In the mid 90s Electrabel had acquired the majority in Dunamenti Erm Rt
(Dunamenti), a Hungarian utility that had entered a Power Purchase Agreement (PPA)
with Magyar Villamos Mvek Zrt (MVM), a state owned electricity supply company. The
PPA provided for capacity fee payments to Dunamenti until 2015. After Hungary joined
the European Union in 2004, the European Commission in 2008 issued a decision that
PPAs like the aforementioned constituted a state aid towards the Hungarian utilities and
were therefore violating EU law. Upon a respective request of the European Commission,
Hungary terminated the PPA prematurely, leading to an alleged reduction of Dunamentis
revenues of 40%.
28 As the case touched on the question of the Court of Justice of the European Union (CJEU)
judicial monopoly40 with regard to EU Law, the European Commission had a significant
interest in the proceeding and took stand as amicus curiae.41 Its argument, however, that Electrabel, being a European investor, should have brought its claim to the European courts was
35
36
37
38
39
40
41
Cf. e.g. s. 43 of the DIS Arbitration Rules.

Schill, DV 2010, 1013 (1016).
Wolff, NVwZ 2012, 205 (208).
Schill, DV 2010, 2013 (1016).
Electrabel S.A. v. Republic of Hungary, ICSID Case No. ARB/07/19, for more information including the
arbitral award cf. <https://icsid.worldbank.org/ICSID>.
Hindelang, Circumventing Primacy of EU Law and the CJEUs Judicial Monopoly by Resorting to
Dispute Mechanisms Provided for Inter-se Treaties? The Case of Intra-EU Investment Arbitration, (39)
Legal issues of Economic Integration 2012, 179 (187 seq.).
Cf. Article 37 (2) ICSID Arbitration Rules.
855
rejected. As the arbitral award points out that the proper avenue42 for Intra-EU investment
disputes does not automatically and exclusively lie with the community courts, it does to
some extent strengthen the assumption that the mere fact that EU law is involved will not be
seen by arbitral tribunals as a reason to refuse jurisdiction per se.
While in another recent case EU law has been seen as a mere fact,43 the arbitral tribunal in 29
Electrabel regarded EU law as international law and held that EU law would prevail over the
ECTs substantive protections in case the ECT and EU law remained incompatible, notwithstanding all efforts to harmonise the interpretation of the both.44
Ultimately, Hungary was held not liable by the tribunal for implementing the European 30
Commissions decision:
Where Hungary is required to act in compliance with a legally binding decision
of an EU institution, recognized as such under the ECT, it cannot (by itself) entail
international responsibility for Hungary. Under international law, Hungary can be
responsible only for its own wrongful acts. The Tribunal considers that it would be
absurd if Hungary could be liable under the ECT for doing precisely that which it was
ordered to do by a supranational authority whose decisions the ECT itself recognises
as legally binding on Hungary.45
In essence, it appears that in the future investors might face more difficulties in succeeding 31
with their claims under the ECT against an EU member if regulatory changes have been
triggered by EU law. It remains to be seen whether in the long run investors will in such cases
consider initiating arbitral proceedings against the EU under the ECT directly.
IV. Business Business (B2B) Disputes

Business to Business disputes account for the most significant and important disputes in the 32
energy sector. They include the full spectrum regarding size, complexity and financial impact
and are usually called (international) commercial disputes. On the different levels of the
value added chain in the energy sector, the nature of the transactions and any dispute arising
out of it may vary considerably. A vertically fully integrated energy utility may be engaged in
the following six levels of the value added chain:
exploration and production of fossil fuel (gas, oil, lignite) and biomass;
procurement and trade with fossil fuel (gas, oil, lignite), biomass, electricity;
generation of electricity and long distance heating (construction, operation and maintenance of large-scale power plants (fossil, nuclear, hydro, wind and biomass), decommissioning of large-scale power plants (fossil/nuclear);
transport (construction and operation of gas and electricity grid (long distance));
42
43
44
45
Cf. final arbitral award in Electrabel S.A .v. The Republic of Hungary, ICSID Case No. ARB/07/19, para.
5.37, <https://icsid.worldbank.org/ICSID>.
AES Summit Generation Limited and AES-Tisza Erm Kft. (UK) v. Republic of Hungary, ICSID Case No.
ARB/07/22, para. 7.3.4: Community law is thus merely a fact to be considered by the Tribunal .
Cf. final arbitral award in Electrabel S.A. v. The Republic of Hungary, ICSID Case No. ARB/07/19, para.
Cf. final arbitral award in Electrabel S.A. v. The Republic of Hungary, ICSID Case No. ARB/07/19, para.
856
distribution of electricity and gas (development, operation and maintenance of the

electricity and gas distribution grid); and
sale of gas and electricity to consumers, industrial customers and municipal utilities.
33 Typical types of contracts include, inter alia, agreements such as: study and bid agreements,
unitization agreements, (joint) operating agreements, farmout agreements, sale and purchase agreements, processing contracts, (long term) service agreements, front end engineering design (FEED) contracts, construction contracts (Engineering, Procurement and
Construction (EPC) contracts or (multi-) lot-contracts), charter contracts.
34 In addition to the contracts needed at the different levels of the value added chain, large-scale
projects (in particular) will often only be realized in joint ventures and with third party (project) finance. Further, the dynamic market often requires restructuring of the energy utilities.
Accordingly, joint venture agreements, merger and/or acquisition and finance agreements
are a regular occurrence in the energy sector.
35 It is fair to say that arbitration is a widely accepted and used dispute resolution method in the
German energy sector for the resolution of disputes arising in connection with most of the
aforementioned types of contracts.46 This is particularly true if a contract is placed in an international context. The reasons are well known: arbitration provides a maximum of flexibility
to the parties in how they want to resolve their dispute and has many advantages including
but not limited to: allowing the parties to choose their arbitrators; selecting and shaping the
arbitration process; choosing the venue and agreeing on the confidentiality of the arbitration proceeding. In an international context, the possibility to choose the language of the
proceeding, the forum where the arbitration will be held and the international recognition
and enforceability of arbitral awards in foreign jurisdictions are additional advantages.
36 For the sake of avoiding duplication of text, this contribution will focus on arbitration in such
commercial areas that (i) have either features that are unique to the B2B energy sector, or (ii)
have not been dealt with in other contributions in Part IV of this book.
A.
Arbitration in the Energy Trading Sector
37 For most part of the last century, the German energy sector operated in absence of competition because of the existing natural gas and electricity grid oligopolies. This oligopoly
was exempted from anti-trust provisions. As a rule, demand for and supply of energy was
re-conciliated in large, regionally dominating and vertically fully integrated energy utilities.47
38 In the late 90s, the European Union started to pass its first legal acts to create competition
within the European Single Market in the grid-bound energy supply sector.48 Competition was achieved by separating and neutralizing the grid sector, i.e. the transport and
distribution of energy, from the value added chain of energy supply. As a consequence of
46
47
48
For its acceptance in the energy sector in an international context cf. pwc 2013 International Arbitration
Survey: Corporate Choices in International Arbitration Industry perspectives at p. 7 (arbitration is
the preferred dispute resolution mechanism of the energy sector), <http://pwc.com/arbitrationstudy>.
Spicker, in: Schwintowski (2006), para. 13.
The first EU Directives date back to 1996 and 1998: Directive 96/92/EC of the European Parliament and
of the Council of 19.12.1996 concerning common rules for the internal market in electricity, <http://
eur-lex.europa.eu>; Directive 98/30/EC of the European Parliament and of the Council of 22.06.1998
concerning common rules for the internal market in natural gas, <http://eur-lex.europa.eu>.
857
non-discriminatory and efficient access to the electricity and gas grid, (wholesale) trade
developed as a new level of the value added chain in the energy sector.49
In the wholesale energy trade sector, two major means of trading may be distinguished: 39
(i) Over-the-Counter trading (OTC-Trading) trading (or off-exchange trading) and (ii)
exchange trading. While OTC-Trading is undertaken directly between two parties and is
based on contracts that are individually negotiated between those parties, exchange trading
is subject to supervision by the public authorities. While the products traded at the exchange
need to be standardized and need to match a narrow range of quantity, quality, and terms
and conditions which are defined by the exchange50 and are identical to all transactions of a
particular product OTC-Trading offers more flexibility to the parties. Both forms of trading
are signified by (i) a spot market, i.e. a market for the physical trading of energy (primarily
electricity and gas), and (ii) a futures market, i.e. a market in which forwards, options and
other structured products are traded and the fulfilment of which is either directed at a physical delivery of energy or a payment.
Whilst commodity arbitration51 and stock exchange arbitration52 have a long standing tra- 40
dition in Germany, arbitration does not play a role in the commodity (forward) exchange
trading in the energy sector. Neither the statutes53 nor the trading conditions54 of the leading
energy exchange in continental Europe, i.e. European Energy Exchange (EEX) based in
Leipzig, provide for arbitration. The same applies for the European Commodity Clearing
AG (ECC), i.e. the clearing house providing clearing services for energy and other commodities traded at EGH Gas Exchange of the Vienna Stock Exchange, European Energy Exchange
(EEX), EPEX SPOT, Hungarian Power Exchange, Power Exchange Central Europe and
Powernext.55
In contrast hereto, arbitration is the preferred dispute resolution mechanism in OTC- 41
Trading. In OTC-trading one may distinguish: (i) transactions carried out under framework
agreements or standard contracts, e.g. the General Agreements of the European Federation
of Energy Traders (EFET),56 allowing for high volume business, and (ii) truly customized
contracts, reflecting particular needs of the parties.
49
50
51
52
53
54
55
56
The value added chain in the German energy sector pre-liberalisation knew only three value added chain
levels: (i) Exploration & Production, (ii) Transport/Distribution, and (iii) Sale. Post-liberalisation the
following value added chain levels may be observed: (i) Exploration & Production, (ii) Wholesale (iii)
Sale. Transport/Distribution is now a separate function that needs to be performed at all levels of the
value added chain.
Cf. e.g. European Energy Exchange Contract Specifications, Release 0037b of 18.12.2013, available at
<https://www.eex.com/en/trading/ordinances-and-rules-and-regulations>.
Cf. supra Karstaedt, Trade Arbitration in Germany, paras 1 et seq.; Korte, Die Hamburger freundschaftliche Arbitrage ein berblick anlsslich des 100-jhrigen Jubilums des 20 Platzusancen fr den
hamburgischen Warenhandel, SchiedsVZ 2004, 240 with further references.
Cf. supra Horn, Arbitration of Banking and Finance Disputes in Germany, paras 7 et seq.
Statutes of the European Energy Exchange: EEX Exchange Rules, Release 0028a of 19.12.2013, available
at <https://www.eex.com/en/trading/ordinances-and-rules-and-regulations>.
EEX Trading Conditions, Release 0035a of 19.12.2013, available at <https://www.eex.com/en/trading/
ordinances-and-rules-and-regulations>.
Pursuant to 6.4 (2) of the ECC Clearing Conditions, Release0021b as of 15.01.2014 the ordinary
courts of Leipzig, Germany have exclusive jurisdiction in all matters relating to the ECC Clearing Conditions; the ECC Clearing Conditions are available at <http://www.ecc.de/en/about-ecc/Rules.
Cf. <http://www.efet.org >.
858
1.
EFET-Agreements
42 EFET57 thrives to improve the conditions for energy trading, inter alia, by providing the
markets with standard contracts for (physical) wholesale energy transactions (including gas,
LNG, coal, electricity and biomass).58
43 EFET provides its General Agreements in English language. Meanwhile, EFET Germany59
has provided a German translation of the General Agreement concerning the delivery and
acceptance of natural gas and the General Agreement concerning the delivery and acceptance of electricity.
44 The EFET General Agreements are designed as standardized bilateral framework contracts.60
The parties may adapt these General Agreements, i.e. the terms and conditions of the
Framework Agreement, by means of a so called Election Sheet to their particular needs.
Via the Election Sheet, the parties may elect to apply or not to apply or to alter or replace
certain provisions of the General Agreement.61 Individual contracts are finally concluded
by means of the so-called Confirmation of Individual Contracts, specifying, inter alia, the
particular delivery times, contract capacity and quantity and the contract price. The General
Agreements contain model forms for fixed price, floating price, call-option and put-option
transactions.
45 22 (2) of the current version of the EFET General Agreement Concerning the Delivery
and Acceptance of Electricity62 (EFET Electricity Agreement) provides:
Arbitration: Unless otherwise specified in the Election Sheet, any disputes which arise in
connection with the Agreement shall be referred for resolution to the German Institution of Arbitration (DIS) and decided according to its rules, ousting the jurisdiction of the ordinary courts. The number of arbitrators shall be three. The arbitration
shall be conducted in the language specified in the Election Sheet.
46 As the EFET model contracts have been designed for cross-border trading, the parties may
wish to consider to not only specify the language of the proceedings, but also the place of arbitration in the respective Election Sheet. The place of arbitration determines the applicable
arbitration law, the jurisdiction of state courts for supportive or supervisory measures, and it
is, as a general rule, a crucial factor for the methodology used in fact-finding and the taking
of evidence in course of the arbitral proceeding. It is not, however, necessary to conduct the
arbitral proceeding at the place of arbitration. To the extent a place of arbitration in Germany
is agreed upon, 1025 et seq. ZPO apply.63 The Agreement provides for the application
57
58
59
60
61
62
63
EFET was established in 1999 and today represents more than one hundred energy trading companies
operating in over twenty five countries. Its mission is the promotion of European energy trading across
national borders.
Cf. <http://www.efet.org/Standardisation/Legal-EFET-Standard-Contracts-and-Documentation>.
Cf. < http://www.deutschland.efet.org/ >.
For a detailed commentary and description of the EFET General Agreements cf. Fried, in: Schwintowski
(2006), paras 303 et seq.; Liesenhoff, in: Horstmann/Cieslarczyk (2006), paras 1 et seq.
Depending on the provision the Election Sheet usually gives the parties the choice to either (i) apply or
not apply, or (ii) to apply or replace a certain section of the General Agreement.
EFET General Agreement Concerning the Delivery and Acceptance of Electricity, Version 2.1(a) of 21.09. 2007, available at <http://www.efet.org/Standardisation/
Legal-EFET-Standard-Contracts-and-Documentation/Electricity-And-Electricity-Annexes>.
For a detailed commentary on 1025 et seq. see Part II, Wagner.
859
of the substantive of law Germany to the exclusion of United Nations Convention on the
International Sale of Goods of 11 April 1980 (CISG).
In deviation from 22 (2) EFET Electricity Agreement, 22 of the current EFET Gen- 47
eral Agreement Concerning the Delivery and Acceptance of Natural Gas (EFET Gas
Agreement)64 provides for two options regarding the applicable substantive law and the
dispute resolution forum. Option A stipulates (i) the applicability of English law, excluding
the application of the CISG and (ii) arbitration under the LCIA Arbitration Rules with the
place of arbitration being London, where all hearings and meetings shall be held. In deviation
thereof, Option B stipulates (i) the applicability of the substantive law of Germany, excluding
the application of the CISG and (ii) the arbitration under DIS Arbitration Rules (cf. supra
para. 45). In absence of a choice of the parties in the Election Sheet or an individual agreement between the parties otherwise, Option A shall apply as a default rule. Accordingly,
parties should thoroughly consider the implications that the application of the default rule
would have, in particular if both parties are continental parties.65
2.
Individual OTC-Contracts and in particular Long Term Gas Supply Contracts
Lately, another category of OTC-contracts has given rise to numerous arbitration proceed- 48
ings, i.e. gas price revision disputes relating to long term natural gas supply contracts,66 the
majority of which contains an arbitration clause.67
a. Introduction: Such disputes have in the past usually been solved amicably between the busi- 49
ness partners, as the choice of action was limited due to the high level of interdependency
between the market players. In addition, these long term natural gas supply contracts were
the core of the business of long distance gas utilities. It is not surprising that the business partners were reluctant to transfer the decision making on their core business to a neutral third
party decision maker, i.e. arbitrators. Often, long standing business ties as well as corporate
cross shareholdings further helped bringing about amicable settlements.
At the heart of the so called gas price revision disputes are long term natural gas supply 50
contracts for a validity period of up to twenty or even more years. These contracts have been
entered into by gas exploration companies and long distance gas utilities and often date back
to the 90s or even the 80s. Such long term contracts provide the buyers (long distance gas
utilities) with security regarding their gas supply and to a certain extent with some flexibility regarding the acceptance of the gas supply. The seller (exploration utility) in return
enjoys a predicable minimum sale and flow of revenues from these contracts, which make
the profitability of infrastructure projects in the field of gas exploration predictable and helps
satisfy lenders requirements or bringing third party investors on board.
The gas price itself is usually determined by a more or less complex price formula that is 51
negotiated between the parties. The price formulae themselves are usually linked to indices
64
65
66
67
EFET General Agreement Concerning the Delivery and Acceptance of Natural Gas,
Version 2.0(a) of 11.05.2007, available at <http://www.efet.org/Standardisation/
Legal-EFET-Standard-Contracts-and-Documentation/GasAndGasAnnexes>.
Cf. supra para. 46.
E.g. Handelsblatt (Online edition) of 03.07.2011 <http://www.handelsblatt.com/unternehmen/
industrie/preisanpassungen-eon-und-gazprom-einig-ueber-neue-gas-vertraege/6827966.html>;
ManagerMagazin (Online edition) of 07.06.2013, <http://www.manager-magazin.de/unternehmen/
energie/a-904354.html>.
Holland/Ashley, (30) Journal of Energy & Natural Resources Law 2012, 29 (30).
860
of competing fuels, such as oil or coal products or the like (e.g. inflation indices) or a combination thereof. The gas price is adapted automatically within certain periods, e.g. monthly
or quarterly, according to the development of the referenced indices.
52 As the economic circumstances may change considerably and even structural market changes
may occur throughout the extremely long contract terms, or referenced indices may cease to
exist, long term contracts usually additionally provide for a price formula review mechanism
that allows for the review of the gas price formulae itself within certain periods and under
certain conditions. In addition, some contracts provide the parties with the right to request a
revision of the gas price formula extraordinarily on a fixed number of occasions throughout
the term of the contract.
53 b. Economical Background: The liberalisation of the European and German gas market i.e.
the separation and the neutralization of the gas grid by enforcing free non-discriminatory
access to the gas grid68 and anti-trust measures69 marked such a structural market change
in Germany.70 Due to the liberalisation, gas trading at energy exchanges and off-exchange
OTC-Trading with short term contracts gained importance. Simultaneously the gas market
became increasingly liquid and the quantities of so traded energy increased considerably.
This resulted in a price drop for natural gas at the spot markets and the energy exchange
below the price level of long term natural gas supply contracts.
54 The long distance gas transport utilities in Germany were particularly affected by the market
developments, as they were bound by what had become expensive long term supply
contracts while new market players could take advantage of decreased wholesale prices at the
spot market or the exchange and offer regional or local gas distribution utilities gas at lower
price levels. As a result, the long distance gas transport utilities attempted to renegotiate
the gas price formula relying on the so called gas price revision or gas price re-opener
provision contained in most long term supply contracts, which resulted in numerous large
scale arbitration proceedings.
55 c. Gas Price Formula Revision Clause: The following clause contains the typical elements of a
gas price formula revision clause:
a. If the circumstances beyond the control of the Parties change significantly
compared to the underlying assumptions in the prevailing price provisions, each
Party is entitled to an adjustment of the price provisions reflecting such changes. The
price provisions shall in any case allow the gas to be economically marketed based on
sound marketing operation.
b. Either Party shall be entitled to request a review of the price provisions for the
first time with effect of dd/mm/yyyy and thereafter every three years.
c.
68
69
70
Each Party shall provide the necessary information to substantiate its claim.
Cf. supra paras 36 et seq.

Cf. e.g. order of the German Federal Cartel Office of 13.01.2005 B 8 113/03 1, JurionRS 2006,
10063 <https://www.jurion.de/Urteile/BKartA/2006-01-13/B-8-113_03-1>; confirmed by BGH
10.02.2009 KVR 67/07, JurionRS 2009, 19150 <https://www.jurion.de/Urteile/BGH/2009-02-10/
KVR-67_07>.
Cf. Holland/Ashley, (30) Journal of Energy & Natural Resources Law 2012, 29 (31) for an overview on
the structural changes in the U.S. American and British market.
861
d. Following a request for a price review the Parties shall meet to examine whether
an adjustment of the price provisions is justified. Failing an agreement within 120
days either Party may refer the matter to arbitration in line with the provisions on
arbitration of the Contract.
e.
As long as no agreement has been reached or no arbitration award has been
rendered all rights and obligations under the agreement including the price provisions shall remain applicable unchanged. Unless otherwise agreed or decided by
the arbitral award, differences to the newly established price shall be retroactively
compensated inclusive of interest on the difference calculated at a rate reflecting the
conditions on the international financing market. 71
In practice, the specific content of such price review or price re-opener clauses may vary 56
considerably.72 However, most of the clauses have certain elements in common:
the obligation of the parties / the right of a party to review the price formula when an
event has occurred (trigger);
the parameters / methodology for revising the price formula;
the formal requirements of a request and the process in which such revision shall be
conducted, if need be, by third parties; and
the (retroactive) applicability of the so adapted price formula.73
Price review or price re-opener clauses are not be confused with so-called general loy- 57
alty- or hardship-clauses that allow for the renegotiation of a contract or give an entitlement
to the adaptation of a contract under certain conditions.74 Hardship-clauses rarely co-exist in
contracts containing a price formula review clause, as the latter forms a provision specialis in
relation to a general hardship clause.
In order to request a price formula review, the party requesting such a review must usually 58
establish that a trigger event has occurred. Triggers often refer to the occurrence of objective events, such as the change of a particular magnitude in benchmark indices or simply the
expiry of a certain time period.75 The price formula review provision addressed above (supra
para. 55) requires, for example, that circumstances beyond the control of the Parties change
significantly compared to the underlying assumptions in the prevailing price provisions (). Accordingly, the party requesting a price formula revision must establish (i) that the occurrence
of the circumstance was beyond the control of either party and that (ii) the assumptions
underlying the price provision have changed significantly. Obviously, the term significant
71
72
73
74
75
Dickel/Konoplyanik/Selivanova, in Energy Charter Secretariat (2007), p. 143 (155), <http://www.

encharter.org/fileadmin/user_upload/document/Oil_and_Gas_Pricing_2007_ENG.pdf>.
For three further examples cf. Holland/Ashley, (30) Journal of Energy & Natural Resources Law 2012, 29
(30 and 38) with further references; Prnbacher/Duncker/Baur, SchiedsVZ 2012, 291; Greeno/Kehoe, in:
King (2012), p. 109 (111).
Greeno/Kehoe, in: King (2012), p. 109 (114).
Under German law hardship-clauses are considered a contractually agreed special case the doctrine of
frustration Wegfall der Geschftsgrundlage that is inherent to German civil law, cf. Prnbacher/Duncker/
Baur, SchiedsVZ 2012, 289 (291).
Not all price formula review clauses require for sophisticated trigger events. They may also provide that
a review shall take place periodically and that no further conditions need to be satisfied. In that case the
occurrence of the trigger event can easily be established. Cf. Holland/Ashley, (30) Journal of Energy &
Natural Resources Law 2012, 29 (37).
862
is open to interpretation. However, comparable wide terms are regularly being used in
price formula review provisions to offer the parties a certain extent of flexibility throughout
the term of the contract. It comes as no surprise that the parties view on what constitutes a
significant change may differ considerably and that many of the so called gas price revision
disputes relate to the interpretation of the trigger provision.76
59 Usually, price revision formulae also provide for the legal consequence if a request for the
revision of the price formula is well founded, i.e. the parameters / methodology according
to which the price formula shall be revised. Again, the contracts vary considerably in their
approach. In the gas price formula review clause discussed above (supra para. 55), the party
requesting the revision shall be entitled to an adjustment of the price provisions reflecting such
changes, i.e. significant changes in the underlying assumptions. In any case [t]he price provisions shall [] allow the gas to be economically marketed based on sound marketing operation.
This wide wording may be construed as a right of a party to request a complete renegotiation
of a new price formula instead of its amendment or the revision of its indexed parameters as
to reflect the significant changes proven. Other price formula review clauses may provide
for a very specific scope of review, i.e. limit the review to specific indices or the method of
calculation in the price revision formula used.77
60 As for the formal requirements, the gas price formula review clause (supra para. 55) provides
that [e]ach Party shall provide the necessary information to substantiate its claim. Failure to do
so may result in an invalid request. In that context, it should be noted that reference to the
wrong trigger may also invalidate a request for review in its entirety.78 That is a particular risk
if the price revision provision foresees very specific trigger events.
61 Another important question not being addressed by all price formula review clauses is when
the revised price formula is to come into effect. Possible dates include: (i) the date the price
formula review clause was invoked; (ii) the date the parties reach an agreement or the arbitrators / experts make a determination; or (iii) the date when the trigger event takes place.
62 Certainly the law governing the contract will also play an important role. While long term gas
supply contracts tend to be exhaustive and recourse to statutory provisions is not required,
the applicable law might have an impact on the contractual construction and interpretation
of the clause.79
63 Last but not least, a common element of price formula review clauses is a provision on dispute settlement in case the parties do not agree on a revised price formula review clause. The
majority of long term gas supply contracts will refer disputes on the contractual construction
and interpretation of the price formula review clause to arbitration,80 as confidentiality of the
purchase conditions and in particular the price and the price revisions formula is of essence
to the market participants.81
76
77
78
79
80
81
Prnbacher/Duncker/Baur, SchiedsVZ 2012, 289 (291); Greeno/Kehoe, in: King (2012), p. 109 (111).
Greeno/Kehoe, in: King (2012), p. 109 (118).
For an example cf. Greeno/Kehoe, in: King (2012), pp. 109 (115 seq.).
Holland/Ashley, (30) Journal of Energy & Natural Resources Law 2012, 29 (39 seq.).
Greeno/Kehoe, in: King (2012), pp. 109 (112 seq.), the authors argue that arbitration is preferred over
expert determination, because of the international enforceability of arbitral awards; Holland/Ashley, (30)
Journal of Energy & Natural Resources Law 2012, 29 (40).
Greeno/Kehoe, in: King (2012), pp. 109 (112 seq.) for further advantages.
863
d. Arbitration: Arbitrating disputes resulting from long term gas supply contracts exposes 64
the parties to a number of particular challenges. In order to avoid decisions which are less
founded by commercial and legal rationale than by the attempt of the arbitral tribunal to
please both parties, it is of great importance to find arbitrators that possess the required legal,
technical and market knowledge. In addition, the arbitrators should have proven to have
successfully handled arbitral proceedings of comparable complexity and size. These requirements limit the number of potential candidates considerably and often the question as to the
independence and impartiality of arbitrators arises.
It is common ground that sitting in parallel arbitral proceedings in which comparable or 65
sometime even identical legal, commercial or economic issues are at stake does not justify
a challenge of an arbitrator on the ground of his lack of independence or impartially.82 Likewise, there exists no obligation on the part of the arbitrator to disclose such circumstances.
However, in case arbitrators intend to base their decision on findings made in other arbitral
proceedings, it would constitute a violation of the parties right to be heard if the parties were
not given the chance to comment on any consideration that was made the basis of an arbitral
award.83
It is also generally accepted that multiple appointments of an arbitrator by one party do not 66
per se constitute a reason to challenge that arbitrator for a lack of independence or impartiality, as long as these multiple appointments do not qualify as a permanent relationship.84
The distinction line has to be drawn on a case by case basis, but some guidance may be
drawn from Sections 3.1.385 of the IBA Guidelines on Conflicts of Interest in International
Arbitration of 2004 (IBA-Guidelines).86 Pursuant to Part II, Section 3.1.3. IBA-Guidelines,
two or more appointments in the course of the past three years by one party constitute an
orange ground, i.e. a circumstance to be disclosed to the other party. Such disclosure does
not automatically result in the disqualification of the arbitrator and a party is deemed to have
accepted the arbitrator if, after disclosure, no timely objection is made. If a party objects to
the appointment, it needs to be explored further whether objectively i.e., from a reasonable
third-persons point of view having knowledge of the relevant facts there exists a justifiable
doubt as to the arbitrators impartiality or independence.
Further, confidentiality is an issue of particular importance in arbitral proceedings relating to 67
gas price review clauses. For example, the gas price formula review clause above (supra para.
55) provides that [t]he price provisions shall in any case allow the gas to be economically marketed based on sound marketing operation. In order for the claimant to prove its entitlement
to have the gas price formula adapted under this clause, it seems necessary to compare both
the gas prices the claimant is charging to its customers and the respective price it is charged
by the respondent. Such price comparison will almost inevitably require the disclosure of
sensitive business secrets.
82
83
84
85
86
Prnbacher/Duncker/Baur, SchiedsVZ 2012, 289 (291).

Prnbacher/Duncker/Baur, SchiedsVZ 2012, 289 (291).
Prnbacher/Duncker/Baur, SchiedsVZ 2012, 289 (291) with further references; OLG Hamm 22.07.2002
17 SchH 13/01, <http://www.dis-arb.de/de/47/datenbanken/rspr/-id238>.
Section 3.1.3. provides: The arbitrator has within the past three years been appointed as arbitrator on two or
more occasions by one of the parties or an affiliate of one of the parties.
For the fulltext cf. <http://www.ibanet.org/Publications/publications_IBA_guides_and_free _materials.aspx>.
864
68 Thus once more, the advantages of arbitration may come to shine. Different from state court
proceedings, the parties may provide for additional procedural tools to limit the disclosure of
business secrets to the other party and the arbitrators in course of the proceedings, without
running the risk of having the claim rejected for lack of substantiation. Absent an agreement
by the parties, the arbitral tribunal may weigh the interest in confidentiality of one party
against the other partys right to be heard, e.g. order only the limited disclosure of certain information to the other party, while the information is fully disclosed to the arbitral tribunal.87
The IBA Rules on the Taking of Evidence in International Arbitration of 201088 explicitly
empower the arbitral tribunal to, where appropriate, make necessary arrangements to permit
evidence to be presented or considered subject to suitable confidentiality protection. Irrespective of
the measures so ordered, the arbitral tribunal will always have to order appropriate measures
to safeguard the other partys right to be heard.
B.
Arbitration in the Gas Grid Sector
69 The current version of 20 (1) lit. b) Energy Industry Act (Energiewirtschaftsgesetz EnWG)
was induced by endeavours of the European Union (EU) regarding the liberalisation of the
electricity and gas sector in the Single Market of the European Union and, inter alia, provides
such right of access to the gas grids (long-distance and distribution grids) on the basis of
entry/exit model.89 It obliges gas grid operators to ensure:
the non-discriminatory and efficient access to the gas grid;
a contractual system that is transaction and transmission path-independent;90 and
that transmission customers are able to supply an end consumer/customer with gas
by entering into only one entry (capacity feed-in) contract and one exit (capacity
feed-out) contract (unless such cooperation is technically impossible or economically
unreasonable).91
70 In order to achieve the above, 20 (1) lit. b) EnWG requires the close cooperation among
grid operators.92 The obligation to cooperate is further specified by 8 (8) Gas Grid Access
Regulation (Gasnetzzugangsverordnung GasNZV), requiring the gas grid operators to
enter into a cooperation agreement setting out the particulars of their cooperation necessary
to ensure a transparent, non-discriminatory, efficient access to the gas grids suitable to carry
out bulk business at reasonable conditions.
87
88
89
90
91
92
Prnbacher/Duncker/Baur, SchiedsVZ 2012, 289 (291) with further references and examples of possible
measures and tools ensuring confidentiality.
For the full text cf. <http://www.ibanet.org/Publications/publications_IBA_guides_and_free
_materials.aspx>.
Cf. Directive 2003/55/EC of the European Parliament and of the Council of 26.06.2003 concerning
common rules for the internal market in natural gas and repealing Directive 98/30/EC, <http://eur-lex.
europa.eu>; the first EU Directives date back to 1996 and 1998: Directive 96/92/EC of the European
Parliament and of the Council of 19.12.1996 concerning common rules for the internal market in electricity <http://eur-lex.europa.eu>; Directive 98/30/EC of the European Parliament and of the Council
of 22.06.1998 concerning common rules for the internal market in natural gas, <http://eur-lex.europa.
eu>.
Britz/Hellermann/Hermes-Arndt (2010), 20 para. 127.
Britz/Hellermann/Hermes-Arndt (2010), 20 paras 140 et seq.
Britz/Hellermann/Hermes-Arndt (2010), 20 paras 166 et seq.
865
The gas grid operators have discharged their obligations by entering into the Agreement on 71
the cooperation pursuant 20 (1) lit. b) EnWG between the operators of gas distribution
grids situated in Germany (Vereinbarung ber die Kooperation gem 20 Abs. 1 b) EnWG
zwischen den Betreibern von in Deutschland gelegenen Gasversorgungsnetzen Cooperation
Agreement). The Cooperation Agreement is a further example of the wide spread use of
arbitration as a preferred means of disputes resolution in the energy sector.93
The Cooperation Agreement contains an ad hoc arbitration clause, which is typical for 72
the energy sector, in particular with regard to its appointing mechanism. The arbitration
agreement (60 of the Cooperation Agreement) provides for the President of the Higher
Regional Court (Oberlandesgericht OLG) in Dsseldorf or for the President the OLG at
the seat of the applicant94 as appointing authority in case of the Respondent not appointing
an arbitrator or the two party appointed arbitrators not appointing the chairperson.
There are two observations to be made in that context: (i) While it is still quite common 73
practice in the energy sector to provide for a president of a higher regional or regional court
as appointing authority in ad hoc arbitration clauses, there exists no legal obligation of the
president so designated to act as appointing authority.95 If the courts president refuses to
appoint an arbitrator, the appointment mechanism has failed. In that case, 1035 (4) Code
of Civil Procedure (Zivilprozessordnung ZPO) applies, i.e. the parties may apply to the
competent Higher Regional Court for the appointment of an arbitrator.96 As the Cooperation Agreement does not provide for a place of arbitration, the competent court would be
the OLG in whose district the claimant or the respondent has his place of business (provided
that the designation of the president of the OLG Dsseldorf would not be considered to imply
a choice of OLG Dsseldorf as the competent court in the sense of 1062 (1) ZPO). (ii) In
addition, it could be argued that in case the arbitration agreement provides for more than one
appointing authority, all of contractually agreed authorities must have refused to appoint an
arbitrator as a precondition to the admissibility of an application for the appointment of an
arbitrator before the competent OLG.
C.
Arbitration under the Renewable Energy Sources Act
1.
The Renewable Energy Sources Act
The German Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz EEG) remains 74

to be the central steering instrument for expansion of renewable energy sources.
Recently, the EEG that first entered into force in 2000 has been substantially revised for the 75
fourth time. The current version of the EEG entered into force on August 1, 2014, which is
93
94
95
96
Cf. for its latest version of 28.06.2013 and as in force of 01.10.2013 <http://www.bdew.de>.
Cf. OLG Koblenz 19.02.2004 2 Sch 04/03 (2), <http://www.dis-arb.de/de/47/datenbanken/rspr/id1278>. The court noted that arbitration clauses providing for more than one appointing authority are
valid, provided that the relevant appointing authorities are designated in a clear manner; Krll, SchiedsVZ
2005, 139 (142).
OLG Mnchen 05.04.2012 34 SchH 1/12, <http://www.dis-arb.de/de/47/datenbanken/rspr/id1393, id. 11.12.2009 34 SchH 10/99, < http://www.dis-arb.de/de/47/datenbanken/rspr/-id1051>.
In both cases the president of the Higher Regional Court of Munich refused to appoint an arbitrator. The
Applicant had then to apply to the competent senate of the presidents court for the appointment.
OLG Mnchen 05.04.2012 34 SchH 1/12, <http://www.dis-arb.de/de/47/datenbanken/
rspr/-id1393>, id. 11.12.2009 34 SchH 10/99, <http://www.dis-arb.de/de/47/datenbanken/
rspr/-id1051>.
866
why it is therefore beingcalled EEG 2014.97 While the Federal Government98 considers the
EEG a successful tool in achieving the scale-up target for sources of renewable energy of the
German Government, its economic and environmental efficiency, as well as aspects such as
the exemptions for certain industry sectors, are under debate.
76 As per 1 (1) EEG 2014 the purpose of the law is to facilitate:
a sustainable development of energy supply, particularly for the sake of protecting our
climate and the environment;
to reduce the costs of energy supply to the national economy, also by incorporating
external long-term effects;
to conserve fossil fuels; and
to promote the further development of technologies for the generation of electricity

from renewable energy sources.
77 In order to achieve the aforementioned goals, the EEG 2014 aims at increasing the share of
renewable energy sources in electricity supply to at least 40 to 45% until 2025, to 55 to 60%
until 2035 and to 80% by 2050 (1 (2) EEG 2014). The aim of the EEG 2014 is to integrate
energy produced from renewable sources into the market and thereby reduce the costs of
the so-called energy turnaround (Energiewende) in Germany. To achieve this goal the EEG
2014 inter alia (i) focuses on the promotion of cost-effective renewable energy sources; (ii)
ends the fixed feed-in-tariffs scheme still contained in the EEG 2012 in favor of a direct marketing obligation for electricity generated from newly installed renewable energy sources;
and (iii) broadens the financing base by abolishing exemptions to pay the EEG surcharge,
which was introduced to help finance the German energy turnaround.
2.
Dispute Resolution under the EEG the Clearing House EEG
78 81 EEG 2014 provides for a Clearing House EEG (Clearingstelle EEG)99 that is operated by
a legal person incorporated under private law.100 Pursuant to 81 (3) EEG 2014, the Clearing
House EEG inter alia has the function and purpose of avoiding and settling questions and
disputes relating to the application of 5 (Definitions), 7 (Statutory obligations), 7-55
(Grid connection, purchase, transmission and distribution), 19-55 (Financial Subsidies),
70 and 71 (Transparency), 80 (Prohibition of Multiple Sale) and 100 and 101
97
98
99
100
Information on the EEG 2014 is available at the website of the Federal Ministry for the Environment,
Nature Conservation, Building and Nuclear Safety, <http://www.erneuerbare-energien.de/EE/
Navigation/DE/Home/home.html>. It is expected that the website will soon also be available in English
again.
Report 2011 on the Renewable Energy Act pursuant to 65 EEG to be presented to the German
Parliament (Deutsche Bundestag) by the Federal Government (Bundesregierung), pp. 3 et seq. <http://
www.erneuerbare-energien.de/die-themen/gesetze-verordnungen/erneuerbare-energien-gesetz/
eeg-erfahrungsbericht-2011/>.
Cf. <https://www.clearingstelle-eeg.de/>.
Since 2007, the Clearing House EEG is being operated by RELAW GmbH Gesellschaft fr angewandtes
Recht der Erneuerbaren Energien. While the Clearing House EEG has been commissioned with its tasks
by the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, it is independent
of, and not subject to the supervision of the Federal Ministry, cf. for the EEG 2012 Chatzinerantzis/Fach,
EnWZ 2012, 19.
867
(Transitional Provisions) of the EEG 2014 (cf. 81 (2) EEG 2014). 101 Accordingly, its function must not be confused with a clearing house in the financial sector, that has the purpose
of reducing the risk of one trade partner failing to honor its trade settlement obligations.
The procedures offered by the Clearing House are determined by 81 (4) and (5) EEG 79
2014. They may be categorized in two main categories: (i) adversarial procedures, in which
two opposing parties with conflicting interests are participating (cf. 81 (4) EEG 2014), and
(ii) autonomous procedures, upon application by one party without an opposing party,102
that shall clarify abstract questions of interpretation and application of the EEG 2014 (cf.
81 (5) EEG 2014).
In comparison to 57 (3) EEG 2012103, 81 (4) No.1 EEG 2014 does not enumerate the 80
various procedures to be offered by the Clearing House EEG for the avoidance or settlement
of disputes between installation operators,104 grid system operators,105 and direct selling
entrepreneurs106 (Parties). 81 (4) EEG 2014 merely stipulates that the Clearing House
EEG may conduct procedures for the avoidance or the settlement of disputes upon joint
application of the Parties, but leaves it to rules of procedure (Verfahrensordnung VO) of
the Clearing House EEG to determine the various procedures that will be offered (cf. infra
para. 81). It provides further that these (sic!) procedures may also be conducted as arbitration
proceedings within the meaning of the ZPO, i.e. 1025 et seq., provide that the parties have
concluded an arbitration agreement. 107 It is obvious that in the latter case, the right of the
parties to initiate ordinary court proceedings in parallel pursuant to 81 (4) last sentence
EEG 2014 may not apply because of 1032 (1) ZPO.108
101
102
103
104
105
106
107
108
Cf. for the purpose and function of the Clearing House EEG under the EEG 2012: Bauer, ZUR 2012, 39
(40).
Pursuant to 81 (5) EEG 2014 the clearing house may conduct autonomous proceedings in order
to clarify questions of application having general significance beyond the individual case, provided an
application to this effect has been made by at least one installation operator, one grid system operator or
one association concerned, and there is a public interest in clarifying the questions of application.
The EEG 2012 in 57 (3) enumerated the various procedures that the clearing house may conduct. They
included inter alia: (i) on the joint application of the Parties, conduct proceedings to clarify questions
of application between the parties (conciliation proceeding (Schlichtungsverfahren)); (ii) on the joint
application of the Parties, issue opinions on questions of application for the parties (non-binding expert
determination (Votumsverfahren)); or (iii) on the request of a Party to proceedings before ordinary
courts of law, issue expert opinions for the courts (expert opinion proceeding (Stellungnahmeverfahren).
Pursuant to 3 No. 2 EEG 2014 installation operator (Anlagenbetreiberin oder Anlagenbetreiber) shall
mean anyone, irrespective of the status of ownership, who uses the installation to generate electricity from
renewable energy sources or from mine gas.
Pursuant to 3 No. 27 EEG 2014 grid system operators (Netzbetreiber) shall mean the operators of grid
systems for the general electricity supply, independent of the voltage level.
Pursuant to 3 No. 10 EEG 2014 direct selling entrepreneurs (Direktvermarktungsunternehmer) shall
mean a person that is entrusted by the operator of a renewable energy source with the direct selling
of electricity or is buying electricity from renewable sources for business purposes without being the
ultimate consumer. As the direct selling entrepreneur will play a more important role under the EEG
2014 than it did under the EEG 2012 it was introduced as a possible party to adversarial proceedings
before the Clearing House EEG.
The possibility to conduct arbitral proceedings was introduced by the legislator in the EEG 2012 for the
first time. Cf. for the EEG 2012 Chatzinerantzis/Fach, EnWZ 2012, 19 (20).
Cf. for the EEG 2012: Salje (2012), 57 Clearingstelle para. 15, for different view see Bauer, ZUR 2012,
39 (41).
868
81 In addition, 81 (4) No. 2 EEG 2014 provides that the Clearing House EEG may upon
request of a Party to proceedings before ordinary courts of law issue expert opinions for the
courts (expert opinion proceeding (Stellungnahmeverfahren)).109
3.
The Arbitration Rules of the Clearing House EEG
82 Pursuant to 81 (6) sentence 1 EEG 2014, the Clearing House EEG shall perform its functions in accordance with the VO which shall be established by the Clearing House EEG itself.
The VO is subject to the prior consent of the Federal Ministry for the Environment, Nature
Conservation and Nuclear Safety (cf. 81 (6) sentence 3 EEG 2014).
83 Pursuant to Section 5 (1) No. 3 VO of the Clearing House EEG,110 the Clearing House EEG
(i) upon joint request of the Parties may conduct the procedure on the clarification of
questions of the application of the EEG 2012111 between the Parties (ii) by amicable agreement of the Parties in the form of arbitration proceedings within the meaning of the ZPO,
in accordance with Section 21a VO.112 Here, the double requirement upon joint request
and amicable agreement must probably be read in conjunction with Section 21a VO, making the signing of an elaborate hybrid arbitration and arbitrators agreement between the
parties and the Clearing House EEG (not the individual arbitrators) a precondition to the
conduct of an arbitral proceeding. In other words: even if the parties had validly concluded
an arbitration agreement within the meaning of 1025 (2), 1031 ZPO,113 Section21a VO
would still make the conduct of an arbitral proceeding dependent on the conclusion of a
further agreement in accordance with Section 21a VO (as to the formal requirements and
the content cf. infra para. 85 seq.).
84 The rules of arbitration (Section 21a VO) provide for an administered arbitral procedure,
which may only relate to disputes within the meaning of Section 4 (1) VO, i.e. disputes between the Parties on the content or the extent of their obligations or rights under the EEG
2012114 and regulations relating thereto (Section 21 a (2) VO).
85 In deviation from 1044 ZPO and most other institutional arbitration rules, the arbitral proceeding commences pursuant to Section 21a (6) No. 4 VO with the signing of a written
arbitration agreement between the Parties and Clearing House EEG (not the individual
109
110
111
112
113
114
The wording of 81 (4) No. 2 EEG 2014 is misleading to the extent that it gives the impression that
a court may apply sua sponte to the Clearing House EEG. Cf. for the EEG 2012: Chatzinerantzis/Fach
EnWZ 2012, 19; Salje (2012), 57 Clearingstelle para. 14 citing the reasoning of the draft act of the
Federal Government for the situation under the EEG 2012.
The Rules of Procedure of the Clearing House EEG of 01.10.2007 in the version of 24.06.2014 are
available at <https://www.clearingstelle-eeg.de/files/downloads/Arbeitsordnungen/VerfO_140624.
pdf>.
When the current Rules of Procedure of the Clearing House EEG entered into force, i.e. 24.06.2014, the
EEG 2014 had not yet entered into force, which is why the VO still refers to the EEG 2012. It is to be
expected that the VO will be soon be amended in order to reflect the entry into force of the EEG 2014
and to overcome this discrepancy.
It would seem that because of 3 (2) Mediation Law (Mediationsgesetz MediationsG) the decision
to have the proceedings conducted in form of an arbitration needs to made prior to entering into a
conciliation proceeding. Cf. for a critical analysis of the MediationsG on the issue of a mediator becoming
an arbitrator in the same subject matter Trappe, SchiedsVZ 2012, 79 (84).
Such arbitration agreement could e.g. be seen in the joint request, provided that certain formal
requirements are met, cf. 1031 ZPO.
Cf. fn. 22.
869
arbitrators)115. The VO does not clearly distinguish between the arbitration agreement
(Schiedsvereinbarung) and the arbitrators agreement (Schiedsrichtervertrag). Accordingly,
the period of limitation will only be suspended in accordance with 204 (1) No. 11 Civil
Code (Brgerliches Gesetzbuch BGB) if all parties have signed the arbitration agreement,
i.e. under the present VO the hybrid arbitration and arbitrators agreement.
Section 24a (4) VO sets out certain minimum requirements as to the formal content of 86
the arbitration agreement. Further, Section 24a (6) VO contains a list of additional recommended provisions (should contain at least the following corresponding provisions). The most
important provisions are:
Section 24a (6) No. 2: In deviation from 1034, 1035 ZPO the Clearing House EEG
determines the composition of the arbitral tribunal and the appointment of arbitrators
in accordance with Section 17 VO. The arbitral proceeding will be lead by a member
of the Clearing House EEG and the number of arbitrators will be determined by Clearing House EEG. All arbitrators have to be members of the Clearing House.
Section 24a (6) No. 3: The place of the arbitration will be determined in accordance
with Section 13 (1) sentence 2 VO. Section 13 (1) sentence 2 VO provides that proceedings are to be conducted at the facilities of the Clearing House EEG in Berlin or at
a different location, if so determined by the chairperson or the sole arbitrator. It appears
that the VO assumes that the place of arbitration and the location at which the proceedings will be conducted are to be identical and that a deviating agreement by the parties is
inadmissible.
Section 24a (6) No. 6: The arbitral tribunal determines the applicable law in the sense
of 1051 ZPO. In practice in most cases the arbitral tribunal will apply German law. It
appears that deviating agreements by the parties shall be inadmissible.
Section 24a (6) No. 8: The Higher Regional Court (Oberlandesgericht OLG) having
jurisdiction pursuant to 1062 (1) ZPO shall be the Kammergericht Berlin.
Section 24a (6) No. 9 provides for the applicability of a number of general rules of
procedure, such as: Section 6 (1) VO (in writing requirement), Section 8 (1) sentence
1 VO (quorum), Section 10 (data protection and confidentiality); Section 11 and 12
VO (lack of impartiality and challenge); Section 15 (costs); Section 20 (3) VO (suspension), Section 31 and 31a VO (exclusion of liability).
The parties may agree with the Clearing House EEG on additional procedural rules, e.g. a time 87
schedule for the proceedings, pursuant to 1042 (3) ZPO and Section 21a (3) sentence 3
VO. Failing an agreement by the parties, and in the absence of provisions in the Tenth Book
of the ZPO, the arbitral tribunal shall conduct the arbitration in such manner as it considers
appropriate.
Pursuant to 1056 (1) ZPO, the arbitral proceedings are terminated by the final award or by 88
an order of the arbitral tribunal in accordance with 1056 (2) ZPO. The parties may agree
with Clearing House EEG that no reasons are to be given in the arbitral award (Section 21a
(6) No. 7 in conjunction with 1054 (2) ZPO).
115
See also Section 21a (3) sentence 2 VO; cf. however e.g. Prtting, SchiedsVZ 2011, 233 et seq. for a
description of the legal relationship between the arbitrators and the parties.
870
4.
Summary
89 The Clearing House EEG has been established as a vital and central dispute resolution mechanism in the EEG. An important element of its credibility is that the Clearing House EEG
is and remains independent and impartial. Whether or not the Clearing House EEG will
become a major player in the field of administered arbitration will to a great extent depend
on whether or not it provides rules of arbitration that are up to date and competitive with
other market players, such as the German Institution of Arbitration e.V. (Deutsche Institution
fr Schiedsgerichtsbarkeit e.V. DIS).
90 The procedures offered be the Clearing House EEG with exception to the arbitration
procedure are based on the voluntary participation of the parties and the will of the parties
to come to an amicable settlement. It is therefore difficult to see how an arbitral proceeding
that is generally of a contradictory nature and as a rule ends with a decision of a third party,
i.e. arbitral award, blends into the consensual dispute resolution mechanisms offered by the
Clearing House EEG. Here, the approach taken by the Clearing House EEG raises a number
of procedural questions. If enforceability is the key, the parties could always resort to an
attorneys settlement pursuant to 796a (1) Code of Civil Procedure (Zivilprozessordnung
ZPO), which is an enforceable title pursuant to 794 (1) No. 4b ZPO but would involve
additional costs.
91 Irrespective thereof, the legislator should consider clarifying that not only parties to ordinary
courts proceedings are entitled to rely on the expertise of the Clearing House EEG under
81 (4) No. 2 EEG 2014 but also parties to arbitration proceedings operating ad hoc or
under the auspices of an arbitral institution other than the Clearing House EEG.116
V.
Business Consumer (B2C) Disputes
92 In the European Union (EU) a clear trend towards alternative dispute resolution (ADR)
in consumer matters is to be observed.117 In reaction to an observation that consumers118 are
still confronted with obstacles regarding the enforcement of their rights when buying goods
and services on the European Single Market,119 the European Parliament recently passed
the Directive on consumer ADR120 (Directive) that complements existing EU consumer
protection measures. According to the Directive, the member states are, inter alia, to ensure
that disputes covered by the Directive121 can be submitted to an ADR entity that complies
with the requirements set out in the Directive.
116
117
118
119
120
121
The EEG 2014 falls short of such clarification. 81 (4) No. 2 still provides that only parties to ordinary
courts proceedings may address the Clearing House EEG and seek for an expert report.
Wolst, EnWZ 2013, 455; Isermann/Berlin VuR 2012, 47 (48).
13 Civil Code (Brgerliches Gesetzbuch BGB) provides: A consumer means every natural person who
enters into a legal transaction for a purpose that is outside his trade, business or profession.. Translation cited
from <http://www.gesetze-im-internet.de/englisch_bgb/englisch_bgb.html#p0045>.
Cf. e.g. Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee (Alternative dispute resolution for consumer disputes in the
Single Market), COM (2011) 793 final at pp. 2 et seq., <http://ec.europa.eu/consumers/redress_cons/
docs/ communication_adr_en.pdf>.
Directive of the European Parliament and of the Council of 21.05.2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC
(Directive on consumer ADR), <http://eur-lex.europa.eu>.
According to Article 2 (Scope) the Directive: shall apply to procedures for the out-of-court resolution of
domestic and cross-border disputes concerning contractual obligations stemming from sales contracts or service
871
The Directive aims at defining quality standards more precisely than EU Commission Rec- 93
ommendations had done in the past122 and makes such standards mandatory. The Directive
describes the following quality requirements in detail: Article 6 Expertise, independence
and impartiality, Article 7 Transparency, Article 8 Effectiveness and Article 9 Fairness.
These standards had previously only to be fulfilled by such ADR entities that were notified to 94
the EU Commission by the member states.123 One of those ADR entities is the Conciliation
Committee Energy (Schlichtungsstelle Energie e.V.)124 in Berlin. The Conciliation Committee
Energy is organized in form of a private association (eingetragener Verein e.V.). In October
2011, it has been recognized as a central conciliation committee in the meaning of 111b
para. 3 Energy Industry Act (Energiewirtschaftsgesetz EnWG) by the Federal Ministry for
Economic Affairs and Energy and the Federal Ministry of Food and Agriculture. Among its
founding members are the leading sectoral federations;125 it currently counts more than 100
members.126
Pursuant to 111b para. 1 sentence 1 EnWG recourse to the Conciliation Committee En- 95
ergy is available in disputes between consumer and entrepreneur regarding the access to and
usage of the connection to the gas or electricity grid, the supply and the measuring of energy.
Pursuant to 111b (1) sentence 2 EnWG, the entrepreneur is obliged to take part in the
conciliation proceeding if a consumer files a request for conciliation with the Conciliation
Committee Energy.127 Such request is, however, only admissible if the consumer has filed
a complaint with the entrepreneur first and the entrepreneur has not granted the redress
sought by the complaint.128
The Conciliation Committee Energy does not decide the disputes but it issues non-binding 96
conciliation recommendations to the parties.129 The parties must notify the Conciliation
Committee Energy within two weeks after receipt of the Committees conciliation recommendation on whether or not they accept the recommendation.130 In case both parties accept
the recommendation, a court action does not become per se inadmissible. However, since the
122
123
124
125
126
127
128
129
130
contracts.
Commission Recommendation of 30.03.1998 on the principles applicable to the bodies responsible for
out-of-court settlement of consumer disputes (98/257/EC), <http://eur-lex.europa.eu/>.
Member States may notify the Commission about ADR schemes which they consider to conform fully
with Commission Recommendation 98/257/EC (cf. fn. 123) and Commission Recommendation of
04.04.2001 on the principles for out-of-court bodies involved in the consensual resolution of consumer
disputes (2001/310/EC), <http://eur-lex.europa.eu/>.
Cf. <http://www.schlichtungsstelle-energie.de/>.
Federation of German Consumer Organisations (Bundesverband der Verbraucherzentralen und Verbraucherverbnde Verbraucherzentrale Bundesverband e.V. vzbv), the Federal Association of the Energy
and Water Industry (Bundesverband der Energie- und Wasserwirtschaft e.V. BDEW), the German Association of Local Utilities (Verband kommunaler Unternehmen e.V. VKU) and the Federal Association
of New Energy Providers (Bundesverband Neuer Energieanbieter e.V. bne).
See <http://www.schlichtungsstelle-energie.de/index.php?id=8>.
Isermann/Berlin, VuR 2012, 47 (49).
111b (1) sentence 3 EnWG.
Section 9 (2) sentence 3 Conciliation Rules of the Conciliation Committee Energy of 01.07.2013,
<http://www.schlichtungsstelle-energie.de/fileadmin/images_webseite/pdf/Verfahrensordnung_
01.07.13.pdf>.
Section 9 (2) sentence 4 Conciliation Rules of the Conciliation Committee Energy of 01.07.2013,
<http://www.schlichtungsstelle-energie.de/fileadmin/images_webseite/pdf/Verfahrensordnung_
01.07.13.pdf>.
872
parties by accepting the recommendation have concluded an out-of-court settlement,

such agreement and not the underlying legal relationship will form the basis of any future
court action.131
97 The Conciliation Committee Energy pursuant to 111b (4) EnWG may and in fact
does request a fee from the EVU participating in the conciliation proceeding.132 Consumers will be requested under exceptional circumstances only, i.e. if the request for conciliation
was obviously abusive.133
98 In the first 21 month of its existence, more than 22,000 requests have been filed with the
Conciliation Committee Energy.134 The fact that the Conciliation Committee Energy offers
a rather risk free access to redress and the relatively small amounts in dispute may be reasons
why arbitration in consumer disputes is a rare occurrence.
99 Irrespective thereof, an energy utility may validly conclude an arbitration agreement with a
private customer if the form requirements of 1031 (5) Code of Civil Procedure (Zivilprozessordnung ZPO) are observed.135 Pursuant to 1031 (5) ZPO, the arbitration agreement
must be in the form of a separate document; it must be in writing, signed by both parties and
shall only contain the arbitration agreement itself, but no other agreements. It does not need
to set out all details of the arbitration procedure and a reference to a set of arbitration rules
is admissible.136
100 A standard form arbitration agreement can be validly used. In particular, the requirements of
the consumer protection law i.e. the provisions on standard terms contracts (305310
Civil Code (Brgerliches Gesetzbuch BGB) are met by an arbitration agreement that
fulfils the criteria of 1031 (5) ZPO, i.e. if the arbitration agreement is contained in a separate
document or if the arbitration agreement is at least sufficiently segregated and individually
signed. The German Federal Court of Justice (Bundesgerichtshof BGH)137 confirmed that
the user of the standard form contract does not have to show a special interest in concluding
an arbitration agreement. In practice, energy utilities in their dealings with private customers
only provide for an arbitration agreement in exceptional cases.
VI. Summary
101 This chapter focused on arbitration in Germany in the energy sector in various relationships,
i.e. state state, investor state, B2B and B2C relationships. While it is fair to say that arbitration does not play a major role in B2C dealings, it very much does in all other constellations.
102 While states generally prefer to try to negotiate their border disputes instead of submitting
themselves to third-party determination, it does not seem farfetched to predict that the
number of disputes that will be submitted to a formal dispute resolution process under the
131
132
133
134
135
136
137
Wolst, EnWZ 2013, 455 (457).

Cf. Schedule of Fees of the Conciliation Committee Energy of 01.07.2013, <http://www.schlichtungsstelle-energie.de/fileadmin/images_webseite/pdf/Kostenordnung_neu.pdf >; Wolst, EnWZ 2013, 455
(457); on the financing of conciliation committees in general cf. Isermann/Berlin, VuR 2012, 47 (48 seq.).
111b (6) sentence 2 EnWG.
Wolst, EnWZ 2013, 455 (457).
For a detailed commentary on 1031 (5), cf. Part II, Trittmann/Hanefeld, 1031 paras 22 et seq.; for a
general overview on arbitration agreements in standard terms and conditions cf. Hanefeld/Wittinghofer,
Stumpf, Alternative Streiterledigung im Verwaltungsrecht, Tbingen (2006), p. 121.
BGH 13.01.2005, SchiedsVZ 2005, 95 et seq.
873
UNCLOS, such as ITLOS or ad hoc arbitration, will be increasing in the future. New technologies allowing the exploration of oil and gas fields that had been out of reach until recently
will certainly contribute to an intensification of the situation. In addition, the location itself,
e.g. for wind-parks or tide generating plants, is becoming increasingly interesting for states.
As a matter of course investor state arbitration in the context of investment treaty arbitra- 103
tion (e.g. in the context of the ECT) will continue to play an important role for the energy
sector, as it accounts for the largest and most complex infrastructure projects of our times.
Access to investment protection under investment promotion treaties including the access to arbitration will certainly continue to help promoting the flow of investment into
politically relatively unstable jurisdiction. Recently the system of investment protection, and
in particular investment treaty arbitration, has been under criticism. Accordingly, it will be
particularly important for the continued acceptance of arbitration as a dispute resolution
mechanism in investment protection treaties to take such criticism seriously, to tirelessly canvass the manifold and doubtlessly existing amenities of arbitration and to adjust the system
where such adjustment is required to reflect well founded concerns.
As for B2B transactions in the energy sector, arbitration will remain the preferred dispute 104
resolution mechanism because the energy sector just like any other economic sector often requires expert knowledge. While the German state court system is generally speaking
a very reliable and trustworthy court system, it may not be taken for granted that a state
court judge will always have the time to acquire the expertise necessary to decide the matter
in a way that satisfies the parties expectations. Arbitration offers the opportunity to choose
arbitrators that possess the required skills and expert knowledge and mitigates this risk. In addition, confidentiality plays a particular important role in the energy sector. Arbitration offers
the opportunity to safeguard business secrets, if the available toolboxes are used wisely. In
that regard, German arbitration law provides a set of rules guaranteeing procedural predictability and flexibility, i.e. the possibility to customize the proceedings to the parties needs.
Arbitration of Banking and Finance Disputes in Germany

Norbert Horn
Short Bibliography: Assmann/Schneider-Sethe, WpHG, Kln, 6th ed. 2012; Balzer, Anwendungsflle
und Grenzen von Schiedsverfahren im Finanzmarktrecht, DIS-Materialien XIV 2008, p.35; Berger,
Schiedsgerichtsbarkeit und Finanztermingeschfte Der Schutz der Anleger vor Schiedsgerichtsbarkeit durch 37h WpHG, ZBB 2003, 77; Berger, Arbitration in Finance; ISDA and Arbitration.
Practical examples, http//:bankrecht.uni-koeln.de/90/content/150-162/; Gillor, Die Bedeutung
der Schiedsgerichtsbarkeit fr Grobanken, DIS-Materialien XIV, 2008, p. 57; Hirte, Klner Kommentar zum WpHG, Kln 2007; Horn, Non-Judicial Dispute Settlement in International Financial
Transactions, in: Horn/Norton (eds), Non-Judicial Dispute Settlement in International Financial
Transactions, London 2000, p. 1; Horn, Auergerichtliche Streitbeilegung bei internationalen
Finanzgeschften. Eine Bestandsaufnahme, in: Berger/Ebke et al. (eds), FS-Sandrock, 2000, p.
385; Horn, Brgschaften und Garantien, 8th ed. Kln 2001; Horn, Ein neues Schlichtungsverfahen
fr Bankgeschfte, in: Briner/Fortier/Berger/Bredow, FS-Bckstiegel, 2001, p. 313; Horn (ed.),
Heymann Handelsgesetzbuch, vol. 4, 2d ed. Berlin 2005; Horn, Zwingendes Recht in der internationalen Schiedsgerichtsbarkeit, SchiedsVZ 2008, 209; Jordans, Schiedsgerichte bei Termingeschften und Anlegerschutz, 2007; Krll, Schiedsverfahren bei Finanzgeschften Mehr Chancen
als Risiken, ZBB 1999, 367; Krll, Schiedsgerichtsbarkeit im Finanzsektor, Anm. BGH 13.01.2009,
XI ZR 66/08, BKR 4/2009, 164; Kronke, Entwicklungen des internationalen Kapitalmarktrechts
und Schiedsgerichtsbarkeit, in: Briner/Fortier/Berger/Bredow (eds), FS-Bckstiegel, 2001, p. 431;
Lehmann, Wertpapierhandel als schiedsfreie Zone? Zur Wirksamkeit von Schiedsvereinbarungen
nach 37h WpHG, SchiedsVZ 2003, 219; Neau-Leduc, ICC Arbitral Awards Relating to Banking,
(2006) 17(1) ICC ICArb. Bull. 51; Park, Arbitration in Banking and Finance, (1998) 17 Ann. Rev.
Banking L. 213; Park, Arbitration of International Business Disputes Studies in Law and Practice,
Oxford 2006; Redfern/Hunter et al. (eds), Redfern and Hunter on International Arbitration, Oxford
2009; Reithmann/Martiny/Mankowski, Internationales Vertragsrecht, Kln 2010; Quinke, Brsenschiedsvereinbarungen und prozessualer Anlegerschutz, Kln 2005.
Para.
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
B2B Transactions . . . . . . . . . . . . . . . . . . . . . . . . 2
A. Domestic B2B Transactions . . . . . . . . . . 2
B. International B2B Transactions . . . . . . . 4
C. Stock Exchange and Financial
Services Transactions . . . . . . . . . . . . . . . . 7
1. Stock Exchange Regulations
and Conditions . . . . . . . . . . . . . . . . . . . 7
2. Financial Service Contracts
with Intermediates (Brokers,
Banks). . . . . . . . . . . . . . . . . . . . . . . . . . . 17
III. B2C Transactions. . . . . . . . . . . . . . . . . . . . . . . 22
A. Choice of Law and Form
Requirements for Arbitration
Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
I.
II.
Para.
B. Disputes on Securities Investment
Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
C. Mediation Services . . . . . . . . . . . . . . . . . . 28
IV. Interim Measures . . . . . . . . . . . . . . . . . . . . . . . 29
A. Remedies Available Under
German Law The Case of Unfair
Calling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
B. Evidence Requirements . . . . . . . . . . . . . 33
C. Remedies in International
Transactions . . . . . . . . . . . . . . . . . . . . . . . . 34
D. Evidence Requirements in
International Transactions . . . . . . . . . . . 36
V. Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
876
I.
Introduction1
1 For the settlement of banking and financial disputes arising between a bank or other financial
service provider and their customer, the parties may under German law agree on an arbitration agreement according to 1031 ZPO (Code of Civil Procedure). This clause must
be contained either in a document signed by the parties or in letters, telecopies, e-mail or
other forms of transmission of information providing evidence of the agreement exchanged
between the parties ( 1031 (1) ZPO). If the customer has the status of a consumer (as
defined in 13 BGB German Civil Code), the arbitration agreement must be contained
in a separate document (unless it is made part of a notarial deed), it must be hand signed by
both parties, or in an equivalent electronic document ( 1031 (5) ZPO). Particular restrictions under German and European conflict of law rules and German law on the protection of
investors in securities ( 37h WpHG German Law on Securities Trade) must be observed.
In Germany, arbitration is of different significance in the various business sectors. In this
respect, a distinction should be made first between B2B (Business to Business) und B2C
(Business to Consumer) transactions and second between national versus international
(cross-border) deals. Furthermore, stock exchange and other securities transactions will be
treated as a separate group. Finally, we will have a look at some specific problems of interim
measures by courts pending arbitration.
II.
B2B transactions
A.
Domestic B2B Transactions
2 Bankers are traditionally said to dislike arbitration, and this is true also with German bankers,
at least in their domestic business. We find forum clauses selecting the German court at the
place of business of the bank or any otherwise competent German court for legal disputes
on transactions with other merchants (as distinguished from private customers) in 6 (2) of
the standard terms and conditions of German banks and co-operative Banks (2009) and in
6 (3) of the standard terms and conditions of saving banks (2009). This way, arbitration is
excluded, unless the parties have agreed on other standard terms and conditions that contain
an arbitration clause. As a rule, however, banks in domestic transactions insist on their own
standard terms and conditions to be included in their contracts with (business or private)
customers. Moreover, the parties may individually agree on an arbitration clause. This clause
would set aside the forum clause in the standard terms and conditions (305b Civil Code
(Brgerliches Gesetzbuch BGB)). A valid arbitration clause constitutes a defence before
the court on the grounds of lack of jurisdiction according to 1032 Code of Civil Procedure
(Zivilprozessordnung ZPO).
3 Arbitration clauses are not yet very common in domestic B2B transactions of German banks.
More recently, however, banks will in special cases agree to enter into arbitration contracts
with customers even in respect to loan contracts, where banks traditionally considered State
courts the only adequate means of dispute resolution.2 Arbitration clauses are furthermore
used in some types of complex financial transactions.3 Moreover, sometimes a dispute settle1
2
See the case BGH 13.01.2009, BKR 4/2009, 161, comment Krll, BKR 4/2009, pp. 164 et seq.; see also
OLG Karlsruhe 15.07.2008, WM 2008, 1854; OLG Frankfurt a.M. 16.03.2007- 24 U 113/06.
Krll, BKR 4/2009, pp. 164 et seq.; Gillor, DIS-Materialien XIV, 2008, pp. 57 et seq.; on arbitration clauses
adopted by the Financial Planning Standards Board Germany see Balzer, DIS-Materialien XIV 2008, pp.
Arbitration of Banking and Finance Disputes in Germany Horn
877
ment is reached through mediation and, as a matter of personal experience, the banks in rare
cases subject a dispute relating to interbank transactions to a binding legal expert opinion by
an impartial third person.
B.
International B2B Transactions
The forum selection clause in favor of the German courts contained in the German standard 4
terms and conditions of banks applies also to international B2B transactions, provided the
counterparty qualifies as a merchant. In practice, however, things are somewhat different.
German banks are parties to international arbitration procedures the same way as are banks
from other countries.4
In general, international business prefers commercial arbitration to court proceedings at 5
least in those areas of the world where the judiciary does not have a reputation that wins
the confidence of foreign business partners. In other cases, parties agree on arbitration and
avoid a jurisdiction clause as a matter of general policy (e.g. many sovereign borrowers, most
development banks).5 Moreover, there are some types of transactions where international
practice prefers arbitration. Accordingly, arbitration clauses are found in many contracts of
banks on international transactions.6
The ICC International Court of Arbitration reports many awards relating to banking,7 the 6
majority of cases dealing with bank guarantees,8 followed by international lending.9 The use
of arbitration in disputes over bank guarantees is hardly reduced by the fact that Article28 of
the ICC Uniform Rules for Demand Guarantees (URDG) contains a forum selection clause
in favour of the courts at the guarantors place of business.10 In cases involving international
lending, if the borrower has assets in various countries, an arbitral award would more easily
open the possibility of recognition and enforcement in these countries. If real estate and
other tangible assets are used as credit securities, the relevant pledges, however, normally
contain a jurisdiction clause in favour of a state court where the assets are located. Other
arbitration procedures concern letters of credit,11 where, however, alternative dispute resolution mechanisms are increasingly used.12
4
5
6
7
8
10
11
12
35, 45 et seq.
Cf. e.g. Neau-Leduc, (2006) 17(1) ICC ICArb. Bull. 51, ICC Case No. 10074, at pp.107 et seq.
Horn/Norton-Horn (2000), pp.1 et seq.; Horn, FS-Sandrock (2000), pp.385 et seq.
Cf. in general: Park (2006), pp.559 et seq.; Kronke, FS-Bckstiegel (2001), pp.431 et seq.; Krll, Schiedsverfahren bei Finanzgeschften Mehr Chancen als Risiken, ZBB 1999, 367 et seq.; Horn/Norton-Horn
(2000), pp.1 (7 seq.); Horn, FS-Sandrock (2000), pp.385 (394 seq.).
Neau-Leduc, (2006) 17(1) ICC ICArb. Bull. 51 et seq.
Neau-Leduc, (2006) 17(1) ICC ICArb. Bull. 51, ICC Cases Nos 6471, pp.56 et seq.; 6657, pp.61 et seq.;
6763, pp.68 et seq.; 8994, pp.88 et seq.; 9288, pp.92 et seq.; 9561, pp.98 et seq.; 9941, pp.105 et seq.; 10886,
pp.112 et seq.; 11651, pp.115 et seq.; cf. also Park, (1998) 17 Ann. Rev. Banking L. 213 (241); Horn/
Norton-Horn (2000), p.1 (7); Berger, Arbitration in Finance; ISDA and Arbitration.
Neau-Leduc, (2006) 17(1) ICC ICArb. Bull. 51, ICC Cases Nos 6223, pp.53 et seq.; 8818, pp.70 et seq.;
8883, pp.85 et seq.; 9744, pp.101 et seq.
URDG, ICC Publication No. 458.
Neau-Leduc, (2006) 17(1) ICC ICArb. Bull. 51, ICC Case No. 10074, pp.107 et seq.
Under the ICC Rules for Documentary Credit Dispute Resolution Expertise (DOCDEX); Horn/
Norton-Horn (2000), pp.1 (11 et seq.); Neau-Leduc, (2006) 17(1) ICC ICArb. Bull. 51 et seq.
878
C.
Stock Exchange and Financial Services Transactions
1.
Stock Exchange Regulations and Conditions
7 For disputes relating to stock exchange transactions at the German stock exchanges Frankfurt Stock Exchange (Frankfurter Wertpapierbrse = FWB) as the leading place and the six
regional stock exchanges at Berlin-Bremen, Dsseldorf, Hamburg, Hannover, Mnchen and
Stuttgart arbitration remains an option both for B2B and B2C transactions under the general rules of private law, in particular Art. 1025 et seq. ZPO (Code of Civil Procedure), with
special restrictions for B2C transactions under Art. 37h WpHG (Securities Trading Law).
Most German stock exchanges provided in their regulations and conditions of contract rules
on arbitration. Since 2007, some German Stock exchanges, however, have adopted a more
restrictive policy regarding arbitration and do not consider it as suited for all sorts of such
disputes.
8 Frankfurt Stock Exchange (FWB) Regulations may serve as an example for such policy. Neither the Rules (Brsenordnung) nor the Conditions for Transactions (Geschftsbedingungen)
of FWB contain any provisions for arbitration, in contrast to preceding regulations.13
9 Moreover, 32 FWB Conditions excludes private law claims (contract or tort claims) of the
parties to the transactions regarding certain technical errors or mistakes in stock exchange
transactions (mistrade). 32 reads:
Exclusions of Claims by Civil Law:
Claims by civil law of the business parties according to 2 Par. 1 and 2 for cancellation
and adjustment of transactions as well as the right to appeal against transactions are
excluded. In case of cancellation of transactions by the Management Board, mutual
claims of the parties to compensation are excluded.
10 As a consequence, both litigation before the state courts and arbitration are excluded within
the scope of this provision. Such exclusion normally is in conflict with basic principles of
contract law and would be void according to 307 Civil Code (BGB). 32 FWB Conditions
must be construed narrowly and then can be justified, however, as it relates to disputes over
a narrowly defined group of mistakes in the execution of orders and the correction of these
mistakes is taken care of by special remedies under the FWB Conditions, i.e. the cancellation
of a transaction upon application by a party ( 24 et seq. FWB Conditions) or by official
action of the FWB Management board ( 29 FWB Conditions). Furthermore, the Management Board of FWB can officially delete orders which, in case of their execution, would
result in transactions which would have to be cancelled by the Management Board, or if the
company entering orders is not available for feedback or confirmation of the entered orders
( 31 no. 1 and 2 FWB Conditions).
11 The regulations of other German stock exchanges make reference to arbitration as a means
of settlement of disputes arising from stock exchange transactions. This is done in two different ways: (i) either arbitration is admitted depending on an agreement of the parties (e.g.
13
FWB Exchange Rules (Brsenordnung) as of 28.10. 2013; FWB Conditions for Transactions (Bedingungen fr Geschfte) as of 02.07.2012. On references to arbitration in former FWB Rules ( 49) and
Conditions (48), see 1st ed paras 8-10.
879
Stuttgart), or (ii) arbitration is declared to be the regular mechanism for dispute settlement
(e.g. Hamburg).
The Exchange Rules (Brsenordnung) of the Stuttgart Stock Exchange,14 in Section 86 12
provide:
(1) To the extent agreed between the parties, an arbitration tribunal shall have jurisdiction
over any disputes arising out of trades that were entered or were to be entered into the
Exchange Trade Settlement System of the Exchange, including the question of whether
a trade was consummated between the parties.
(2) Sections 1025 et seq. of the German Code of Civil Procedure (Zivilprozessordnung) shall
apply mutatis mutandis to proceedings before the Arbitral Tribunal.
(3) Detailed provisions in this regard are set forth in the Arbitration Rules.
The Exchange Rules (Brsenordnung) of the Hamburg Stock Exchange,15 in part XI (Stock 13
Exchange Arbitration), section 40, provide:
(1) Disputes arising out of transactions included in the exchange trading execution of the
Stock Exchange or arising out of the question of whether a transaction has been concluded between the parties, shall be decided by an arbitral tribunal.
(2) The Art. 1025 et seq. of the Code of Civil Procedure (ZPO) apply to the arbitral procedure analogously.
(3) The Arbitration Rules regulate the details.
Such arbitration clauses are binding only upon the brokers and dealers admitted at the stock 14
exchange; this includes banks as participants of stock exchange transactions.
The functioning of arbitration in stock exchange regulation matters is illustrated by an award 15
of the Primary Markets Arbitration Panel (Frankfurt/Main) of 10September200116 concerning a dispute between Deutsche Brse AG (the owner of Frankfurt Stock Exchange) and
a company listed in the then existing market segment new market. Deutsche Brse AG had
fined that company for not having complied with the requirement of timely putting forward
its quarterly financial statement as prescribed by the New Market Regulations. The company
opposed the fine, arguing that it was based on a new provision in the New Market Regulations inserted by Deutsche Brse AG and that Deutsche Brse AG was not authorized to
unilaterally impose such a change on the companies listed in the new market. In particular, a
clause in the Regulations establishing such competence for unilateral changes was allegedly
void. The Regulations were general conditions of contract subject to the special legal regime
of general terms and conditions (formerly contained in a special law and now included in the
German Civil Code; cf. paras 2 and 23). The Arbitration Panel held that the clause was void
because it did not contain criteria and limits for a change; but the panel nevertheless upheld
the fine on the grounds that the competence for a unilateral change could be found in the
individual listing agreement between Deutsche Brse AG and the company by way of a wide
interpretation of this agreement.
The Higher Regional Court Frankfurt dealt with another case of a change in the New Market 16
Regulations; in its decision, the court discussed aspects of the interplay of arbitration and
14
15
16
Rules of Stuttgart Stock Exchange as of 01.07.2013.

Rules of Hamburg Stock Exchange as of 20.07.2011.
Award of the Primary Markets Arbitration Panel, BKR 2001, 153 note by Krmer, BKR 2001, 131 et seq.
880
State court procedures.17 In June 2001, Deutsche Brse AG announced a change of the New
Market Regulation effective in October that year to the effect that issuers of stock with a too
low price level (penny stock) and a too low market capitalization (less than EUR 20 million)
shall be delisted. A number of companies that had issued such stock applied to the Regional
Court of Frankfurt for an interim measure prohibiting a delisting of their stock under the
new provisions of the Regulation. The application was rejected but, on appeal, awarded by
the Higher Regional Court of Frankfurt. The court saw a valid claim for the interim measure
based on its contractual relationship with Deutsche Brse AG and questioned the competence of Deutsche Brse AG to unilaterally establish a compulsory delisting mechanism. The
interim measure was valid until the Regional Court would have decided on the validity of the
delisting in the main proceedings. Even if the main proceedings were covered by an arbitration clause (which the court doubted but left undecided), this would not exclude an interim
measure by the Court as requested by the parties in this case.
2.
Financial Service Contracts with Intermediates (Brokers, Banks)
17 German courts had to decide a number of cases where German investors participated in
forward contract and option trade at US stock exchanges. These transactions occurred with
the aid of a US broker and one or more German intermediates, who used a fraudulent business scheme of unfair provisions and fees for the intermediates that left no chance of gain
to the investors. The claims of the investors for compensation of damages they had suffered
in these transactions were, in principle, recognized by the courts on the grounds of tort liability for immoral (fraudulent) impairment of the property of the investor under German
law (Art. 826 BGB = German Civil Code). This liability was seen by the courts not only in
respect of German intermediates, but also with respect to the US brokers as participants in
the fraudulent business scheme.18 The cases raised questions of jurisdiction, conflict of laws
including choice of law, and investor protection.
18 German courts assert their own (local and international) jurisdiction for such tort claims
against foreign (US) brokers under 32 ZPO, because the tortious action was carried out,
at least in important parts, in Germany.19 The jurisdiction of the court can be set aside by a
party that opposes a valid arbitration agreement ( 1032 ZPO). Under 37h of the German
Securities Trading Law (WpHG), an arbitration agreement or clause with respect to future
disputes arising in connection with financial service contracts is valid only if the parties are
merchants or juristic persons of public law (B2B transactions); it is void in cases of private
consumers as investors of financial services ( 37h WpHG).20
19 The arbitration agreement can be void if not in conformity with the form requirements of Art.
II NYC. In particular, the written form is not fulfilled if only one party signs the agreement.21
17
18
19
20
21
OLG Frankfurt 09.04.2002, BKR 2002, 449 et seq. = NJW 2002, 1958 et seq.
BGH 09.03.2010, BGHZ 184, 365, paras 26-44; BGH 08.07.2010, SchiedsVZ 2011,46, paras 40 et seq.;
BGH 25.01.2011, ZIP 2011, 666. The participation of the broker is not excluded by the fact that the
German intermediate uses another sub-intermediate in his relations with the German customer; BGH
ZIP 2011, 666.
BGHZ 184, 356, para. 32; BGH ZIP 2011, 1220. In relation to other member States of the EU, the
relevant jurisdiction rule is found in EU Regulation No 44/2001 Art. 5 (1) no. 3. The decisive criterion
here is the place where the damage occurred or is imminent. In the cases discussed, this leads to the same
result.
BGHZ 184, 365 para. 20.
BGH 08.06.2010, SchiedsVZ 2011, 46, para. 27. See also infra, para. 26.
881
Under the more favourable law provision of Art. VII (1) NYC, the validity of the arbitration
agreement is nevertheless upheld if the agreement meets the (more favorable) form requirements of the applicable national (German) law,22 irrespective of whether the agreed place of
arbitration is inside or outside Germany.23 Arbitration agreements of consumers are subject
to the particular form requirements of 1031 (5) ZPO.24 German consumer law qualifies
even merchants (if natural persons and not juristic persons) as consumers ( 13 BGB) in
those banking and financial transactions that are disconnected from their business and relate
to the administration of their private fortune.25
Under German conflict of law rules in force till 10 January 2009, in the case of consumer con- 20
tracts, the law of the place of residence of the consumer was applicable (Art. 29 (1), (2), Art.
35 EGBGB) and decided on the form requirements of such contracts (Art. 29 (3) EGBGB).
Furthermore, these (former) German conflict of law rules allowed a choice of law regarding
tort claims only for existing and not for future claims of this kind (Art. 42 EGBGB). The
Dsseldorf court of appeal did not recognize choice of foreign law and arbitration clauses for
future tort claims connected with Germany and recognized jurisdiction of German courts to
preserve the effect of Art. 42 EGBGB.26 This is in line with other German court decisions that
declare void choice of foreign law and foreign arbitration clauses that imply a circumvention
of German law, protecting certain groups of persons in Germany and thus amount to a violation of German public policy.27
The new rules on conflict of laws relating to tort liability, as provided in the EU Regulation 21
No. 864/2007 (Rome II) that came into force on 11 January 2009, locate the applicable
law at the place where the damage occurred (Art. 4 (1)). On this basis, the jurisdiction of
German courts in the above financial service cases continues to follow from 32 ZPO. A
valid arbitration agreement excludes this jurisdiction ( 1032 ZPO). The choice of another
law applicable to tort claims in advance of the tortious act, however, is permitted under Art.
14 (1) (a) Rome II under two restrictive preconditions only: (i) if freely negotiated and
agreed (ii) among persons with a commercial business activity. In the cases discussed, this
opens the way to choose the law of New York for securities transactions (including arbitration clauses) and for the tort claims that may arise from those transactions between the
New York broker and a German merchant as investor. The choice of law clause, however,
is not freely negotiated if unilaterally dictated by the general conditions of contract of the
22
23
24
25
26
27

BGH NJW 2005, 3499; Krll ZZP 117, 453, 473-478; Saenger/Saenger (2011), 1931 para. 19; other
authors confine the rule to agreements providing the place of arbitration in Germany; Zller/Geimer
(2014), 1031 para. 25.
Supra para. 1.
BGHZ 149, 80, 86; BGH 08.06.2010, SchiedsVZ 2011, 46, no. 34; OLG Frankfurt WM 2009, 718, 719;
Reithmann/Martiny/Mankowski (2010), para. 2351; Staudinger-Magnus (2002), Art. 49 EGBGB para.
33; Prtting/Wegen/Weinreich(2011), 13 para. 9. This principle, however, does not apply to the aforementioned 37h WpHG, because this provision uses the term merchant in the formal sense of 1 et seq.
HGB (Commercial Code).
OLG Dsseldorf 17.11.2008 -1-9 U 91708.
OLG Mnchen 17.05.2006, WM 2006, 1556: voidance of arbitration clause (California) with a choice
of Californian law that would most probably have deprived a German commercial agent (acting in
Germany) of his compensation claims under the German Commercial Code (HGB); Horn, SchiedsVZ
2008, 209 (210). See also supra, Quinke, Arbitration of Disputes from Commercial Representation in
Germany.
882
broker.28 Persons with a commercial business activity can be understood as entrepreneurs in

the meaning of (German and European) consumer protection law.29 This leaves room for an
interpretation that excepts contracts of those persons relating to the administration of their
private wealth disconnected from their business. Instead, these (natural) persons are treated
as consumers.30 A choice of New York law, e.g., (and New York as place of arbitration) would
not be recognized by German courts because of Art. 14 (1) (a) Rome II and accompanying
public policy reasons.31 If the choice of law, on the other hand, is valid because the restrictive
preconditions of Art. 14 (1) (a) are fulfilled, the validity of the arbitration clause (normally
with New York as place of arbitration) is decided by New York law and could validly exclude
the jurisdiction of German courts under 32 ZPO.
III. B2C Transactions

A.
Choice of Law and Form Requirements for Arbitration Clauses
22 The restrictive requirements of Art. 14 Rome II do not allow a choice of law clause for future
tort claims of a consumer, as discussed (supra para. 21). German banks, in their business
with private customers, do not provide for any forum selection or arbitration clause in their
general terms and conditions, in order to avoid a conflict with customer protection law
(38 (2) and 1031 (5)ZPO). A bank or other merchant, however, can validly conclude
an arbitration agreement with a private customer (consumer) in conformity with the form
requirements of 1031 (5) ZPO. The arbitration agreement must be separate from the main
contract; it must be in writing and signed by both parties. 32 An arbitration clause in a cash
and margin agreement between a private German investor and an US-American broker, that
was signed by the private investor but not by the broker, is held invalid under German law
by the courts, on the grounds that it satisfied neither the form requirements of the New York
Convention 1958 (Article V (1)(a) and Article II (1) and (2) NYC) nor those of the more
favorable German law (1031 (1) and (5) sentence 1 ZPO).33
23 A standard form arbitration agreement can be validly used. The requirements of the law on
standard terms contracts (305310 BGB) are normally met by an arbitration agreement
that fulfils the criteria of 1031 (5) ZPO. In particular, the user of the standard form contract
need not show a special interest in concluding an arbitration agreement. This was confirmed
by the German Federal Court of Justice (BGH) in 2005.34 The court pointed out that an additional requirement to prove such a special interest would not be in line with the intention of
the legislator of 1031 (5) ZPO, who considered compliance with the form requirements of
1031 (5) ZPO to be sufficient protection for the customer. Such a proof would furthermore
be too burdensome for the parties and would cause legal uncertainty. The court, in the case
decided, found no unreasonable disadvantage arising out of the composition of the arbitral
tribunal or out of the arbitral procedure either. The general admissibility of standard form
28
29
30
31
32
33
34
Prtting/Wegen/Weinreich-Schaub (2011), Rom II Art. 14 para. 4 with further references.

Prtting/Wegen/Weinreich-Schaub (2011), Rom II Art. 14 para. 4 with further references.
This is an approach generally used by German courts with respect to consumer protection law; cf. BGHZ
149, 80 (86); BGH 08.06.2010 para. 34, SchiedsVZ 2011, 46.
Supra, para. 15 note 25. The German merchant as a private investor cannot, however, set aside the arbitration clause by opposing 37h WpHG, for the reasons discussed in note 25.
Supra para. 1 and 19.
OLG Dsseldorf 09.02.2007, I-17 U 257/2006; see also BGH 25.01.2011, ZIP 2011, 1219.
BGH 13.01.2005, SchiedsVZ 2005, 95 et seq.; cf. Quinke (2005), pp.1 et seq.
883
arbitration agreements with respect to consumer contracts is also recognized by Directive

99/13 EC.35 The validity of the arbitration clause is not affected by the inclusion of tort claims
in the scope of application.36 Choice of law clauses regarding future tort claims, however,
must satisfy the requirements of Art. 14 Rome II, as discussed (supra para. 21).
B.
Disputes on Securities Investment Services
In international financial service contracts on stock exchange transactions, as in the afore- 24

mentioned cases of German investors participating in forward contracts and options trade
at a US stock exchange with the aid of a US-broker and German intermediates (supra para.
17), arbitration clauses used in connection with the underlying service contracts between
the parties are invalidated by German law on investor protection ( 37h WpHG, supra para.
18 and 25-27, and, in a way, Art. 14 Rome II, supra para. 21). The legal concept of protecting
private persons with respect to arbitration as confined to the form requirements in 1031
(5) ZPO, is deemed to be insufficient when it comes to capital market law and disputes on
securities investment services for private persons (consumers) as investors. Traditionally, the
German legislator and German courts pursued a policy of establishing strict legal barriers to
keep private customers away from the particular risks of contracts on futures, options and
other derivatives and all kinds of speculative forward contracts. Such speculative contracts
were declared invalid by law if concluded by private persons (former 764 BGB) and by
the former provision of 53 Stock Exchange Law (Brsengesetz; BrsG). Arbitration clauses
relating to those contracts were declared void by the courts. Since 1989, the German legislator also allowed speculative stock exchange forward contracts for private persons if those
persons were duly informed in advance by the bank or broker about the particular risks of
such a transaction.37
In 2002, the German legislator abolished the provisions of 764 BGB and 53 BrsG and 25
introduced a new concept of protecting private investors against possible dangers of arbitration. Arbitration clauses relating to future (not yet existing) disputes arising out of securities
investment services are valid only if both parties are either merchants or legal persons under
public law. The arbitration agreement is void if one party is a private customer of the financial
services. 38 The relevant provision of 37h WpHG Securities Trading Law) reads:
Arbitration Agreements.
Arbitration agreements on future legal disputes relating to investment services, noncore investment services or financial futures transactions shall be binding only if both
parties to the agreement are merchants within the meaning of the Commercial Code
or legal persons under public law.39
35
36
37
38
39
The (exemplary) list of clauses contained in this Directive which may be declared abusive only applies to
such clauses where the consumer is referred to arbitral proceeding not in conformity with the law.
BGH 13.01.2005, SchiedsVZ 2005, 95 et seq.
Cf. on further details, 1st ed. para. 17.
BGHZ 184, 365 para. 20.
37h WpHG as amended on 21.06.2002, BGBl. I p. 2010, in force since 01.07.2002. A full English
translation of the WpHG is available from the website of the Federal Financial Supervisory Authority, at
<www.bafin.de> (Legal Foundations and Official Announcements Securities Trading Act); critical on
that provision Quinke (2005), pp.381 et seq.; Berger, ZBB 2003, 77; Lehmann, SchiedsVZ 2003, 219.
884
26 The validity of 37h WpHG was challenged by some authors as violating Art. II (1) NYC.40
Such a conflict between this provision and the NYC, however, was denied and the validity of
37h WpHG was affirmed by the Federal Court (BGH), on the grounds that 37h WpHG
restricts (partially) the personal capacity to participate in arbitration only, as permitted in
Art. V (1) a NYC that refers to domestic legislation in such case.41 One should add that
public policy considerations of national legislators are respected by the NYC42 and the public
policy consideration to protect private investors43 supports the validity of 37h under public
international law.
27 The concept of investor protection adopted in 37h WpHG, according to prevailing doctrine and a narrow interpretation of the wording of 37h WpHG, is somewhat narrower
than in German and European consumer protection law. Every merchant in the formal sense
of 1 German Commercial Code (HGB) is said to be lacking the protection of 37h, even
if he acts in the administration of his private wealth, disconnected from his commercial
business.44 Arguably, the wider concept of consumer developed by the German courts in
accordance with European consumer law can also be used in the interpretation of 37h
WpHG. For the Commercial Code (HGB) defines the specific liability of a merchant in his
business relations only with respect to commercial transactions ( 343 HGB) and the wider
notion of consumer by the courts can help to label transactions for the administration of the
private wealth of a merchant as non-commercial. This more flexible approach is used by the
courts, as discussed, in old and new conflict of law rules where merchants not acting within
the scope of their business are treated as consumers45 and restrictions of the choice of law
clauses relating to future tort claims apply to their financial service contracts with brokers and
intermediates, unless they are themselves brokers or dealers.
C.
Mediation Services
28 The banks offer to their customers an informal and not binding mediation service for the
settlement of minor disputes. The banks accept the decision of the mediator (Ombudsman) as binding if a sum not exceeding the competence of the lower court is involved. The
customer remains free to go to court.46 The Federal Associations of German Private Banks
and of Mortgage Banks established such service in 1992,47 while the Federal Association of
Public Banks followed in 2001.48 All other groups of German banks now offer such services,
too.
40
41
42
43
44
45
46
47
48
Lehmann, SchiedsVZ 2003, 219 (224); Jordans (2007), pp. 263-267.

BGH 08.06.2010, SchiedVZ 2011, 46. This is line with prevailing opinion in German legal literature (e.g.
Assmann/Schneider/Sethe (2008), 37h para. 36; Reithmann/Martiny/Mankowski (2010), para. 2541).
Redfern/Hunter (1999), p. 137.
Cf. BGH 08.06.2010, SchiedsVZ 2011, 46, with references. The BGH, however, makes reference to the
wider notion of consumer including those merchants acting in the administration of their private wealth
outside their business.
Assmann/Schneider/Sethe (2008), 37h para. 21; Hirte (2007), 37h para. 26.
Horn, FS-Bckstiegel (2001), p. 313; Heymann/Horn (2005), Anhang 372, Bankgeschfte, para.I/19.
The original text of the procedural rules was published in NJW 1992, 2745. The current version of these
rules (2009) is available at https://bankenverband.de/publikationen/verbraucher/shopitem/d7f.
The text of the original procedural rules was published in the German Federal Gazette (Bundesanzeiger
BAnz) 83/2001 of 04.05.2001, pp.8569 et seq. All other groups of German banks now offer such
services, too, i.e. co-operative banks and saving banks. Addresses: https:bankenverband.de/service/
beschwerdestelle/verbraucherschutz/Schlichtungsstellen.
885
IV. Interim Measures

A.
Remedies Available Under German Law The Case of Unfair Calling
A party to an arbitration procedure may ask the arbitral tribunal for interim measures (1041 29
(1) ZPO) to be confirmed and executed by the state court, if necessary (1041 (2) ZPO).
A party may also directly have resort to the state court in order to obtain an interim measure;
the arbitration clause is no obstacle (1033 ZPO). German procedural law provides for
interim (preliminary or securing) measures in the form of either an arrest (seizure of the
assets of a party; 916 et seq. ZPO) or of an injunction (935, 940 ZPO).
A typical and much debated situation where a party seeks an interim measure is the unfair 30
calling of a bank guarantee to pay on first (written) demand or, less frequently but of increasing importance, the similar case of the fraudulent use of a letter of credit. The calling of a
guarantee is unfair when the risk which the guarantee was to cover did not materialize, e.g. a
performance guarantee was issued by a bank to protect the beneficiary as buyer (employer)
of an industrial plant against non-performance by the seller (contractor) and, after the contract has been completely performed by seller, the guarantee nevertheless is drawn by the
beneficiary. In such a case, drawing the guarantee would give the beneficiary (buyer) a windfall profit. This would lead to a corresponding loss of the counterparty (seller, contractor)
that was obligated under the contract to provide the performance guarantee, had instructed
its bank to issue it and that must reimburse the guarantee sum to the bank. This counterparty
(seller, contractor) then tries to avoid this loss through interim measures ordered by the
arbitral tribunal or by the state court to the effect that the beneficiary (buyer, employer) is
prevented from collecting the guarantee sum and/or the bank is prevented from honoring
the payment demand of the beneficiary.
Under German law, the counterparty (seller/contractor) theoretically has three options: (i) 31
to obtain a court order enjoining the beneficiary (buyer/employer) from collecting the sum
to be paid under the guarantee, (ii) to stop the beneficiary through a court order of attachment (arrest) of his assets, in the absence of other suitable assets particularly a seizure of the
guarantee claim as a receivable of the beneficiary, or (iii) to obtain a court order enjoining the
bank from paying the guarantee sum to the beneficiary.49 All three remedies are controversial,
at least in detail, and they are not easy to obtain.
Both an arrest and an injunction presuppose a claim of the applicant against the other party 32
and an imminent danger that applicant would suffer an irreparable loss or at least meet a
serious obstacle to execute its claim. In the last mentioned case of an injunction against the
bank, it is controversial whether there exists a claim against the bank. Such a claim, however,
follows from the contractual duty of care of the bank owed to the seller/contractor as its
customer under its contract of service to issue the guarantee. Under this duty of care, the
bank must safeguard the rights and interests of its customer with the consequence that it may
not pay out the guarantee sum in case of an obvious misuse of the guarantee.50 This duty of
49
50
Horn-Horn (2005), Anhang 372, Bankgeschfte, parasVII/132 and VII/137.

OLG Hamburg 04.11.1977, AWD/RIW 1978, 615 et seq.; OLG Saarbrcken 23.01.1981, RIW 1981, 338
et seq.; OLG Frankfurt 03.03.1983, ZIP 1983, 556; OLG Kln 07.08.1998, WM 1988, 21; Horn (2001),
paras583585; dissenting OLG Stuttgart 11.02.1981, ZIP 1981, 497; OLG Frankfurt 27.04.1987, WM
1988, 1480.
886
the bank not to pay, however, depends on strong evidence of the misuse that would enable
the bank to reject the payment claim of the beneficiary.51
B.
Evidence Requirements
33 In all three cases, the applicant, in its application for a court interim measure under 916
et seq., 935, 940 ZPO, must furnish prima facie evidence of the unfair calling (misuse) of
the guarantee from which follows the duty of the beneficiary not to collect the sum of the
guarantee and the duty of the bank not to pay. Furthermore, the applicant must produce
similar evidence that it would suffer a loss of its right or a substantial impediment in exercising its right. As the defense of unfair calling is seen by German courts as a rare exception
from the principle that a guarantee on first written demand must be honored without further
defenses, the courts go beyond the requirements of the law (920 (2) ZPO) and require
strong and liquid evidence (instead of prima facie evidence) that leaves no doubt as to the
misuse of the guarantee.52
C.
Remedies in International Transactions
34 The situation of unfair calling of a guarantee (or a letter of credit) arises mainly in international transactions.53 Interim measures can be obtained by a German court also in cases
where the seat of the arbitral tribunal is outside Germany; 1033ZPO applies.54 In one
such cross-border case, however, the Higher Regional Court Nrnberg construed a broadly
termed arbitration clause in the main contract so widely as to exclude also interim measures
of a (German) court outside the seat of arbitration (Geneva).55
35 Interim measures are more difficult to obtain in a cross-border transaction, e.g. a sales contract or BOT contract accompanied by a performance guarantee, for such a transaction not
only touches more than one national law and jurisdiction but also, as far as the guarantee is
concerned, typically involves two banks: one bank in the country of the beneficiary and one
in the country of the party that provides the guarantee (in our case: the seller/contractor).
(i) An injunction order against the beneficiary is more difficult to obtain. The foreign court in
the beneficiarys country may be unable or unwilling to issue such an order. A German court
might also be reluctant to issue such an order because the payment demand of the beneficiary is addressed to the first bank in its own country, which bank in turn asks payment from
the German bank under the counter guarantee.56 (ii) An arrest order seizing assets of the
beneficiary (the allegedly fraudulent creditor) often meets the problem that the beneficiary
51
52
53
54
55
56
BGH 10.10.2000, BGHZ 145, 286 (291 et seq.) with further references; Horn (2001), para. 580;
Staudinger-Horn (2013), Vor 765, paras 334 et seq.
BGH 20.09.2011, WM 2011, 2216; BGH 10.10.2000, BGHZ 145, 286 (292) with further references;
dissenting Horn (2001), para.588 (589): the law requires only prima facie evidence (920 ZPO).
As an example, see OLG Celle 18.07.2009, WM 2009, 1408.
OLG Nrnberg 30.11.2004, SchiedsVZ 2005, 50 with critical note by Geimer at p. 52 = IPRax 2006, 468
seq. with note by Schtze, IPRax 2006, 442 et seq.
OLG Nrnberg 03.08.2004, SchiedsVZ 2005, 50 (not convincing) with critical note by Geimer at p.52
= IPRax 2006, 468 seq. with note by Schtze, IPRax 2006, pp.442 et seq.; cf. Krll, Die internationale
Zustndigkeit deutscher Gerichte fr einstweiligen Rechtsschutz bei auslndischem Schiedsort, IHR
2005, 142 et seq.
An injunction against the (ultimate) beneficiary (buyer, employer) was issued in such cross border
situation with two banks involved by the LG Regensburg 25.05.2004; reversed by the OLG Nrnberg
30.11.2004, SchiedsVZ 2005, 50 with critical note by Geimer at p.52 = IPRax 2006, 468 seq. with note by
887
has no assets in the country of the seller/Contractor. There remains only the counter guarantee as an asset within the jurisdiction of the domestic court; the beneficiary (creditor) of the
counter guarantee, however, is not the buyer/employer but the foreign bank that issued the
first guarantee, and it is at least more difficult to argue that, economically, it is nevertheless an
asset of the ultimate beneficiary. (iii) There remains the option to ask a court order to enjoin
the second (German) bank from honoring the payment demand of the first bank.
D.
Evidence Requirements in International Transactions
The strict evidence requirements imposed by German courts also apply in cross border situ- 36
ations and they are exacerbated by the factual difficulties mentioned. With this reservation,
the remedies are also available in international transactions, including the last mentioned
situation of an injunction against the (German) bank where two banks are involved. Here,
the applicant must furnish liquid evidence (strong evidence) that the first bank, when confronted with the payment demand of the ultimate beneficiary (in our case: buyer, employer),
knows about the misuse of the guarantee and, when in turn calling payment from the second
bank under the counter guarantee, itself acts fraudulently.57
IV. Summary
Stock exchange transactions between the exchange and its members or between brokers and 37
dealers (including banks) can be made the subject of arbitration according to the various
stock exchange regulations (paras 7-16). Some stock exchanges provide for special settlement procedures in case of technical errors or mistakes in stock exchange transactions
(mistrade; paras 9-10). Disputes arising out of contracts between banks or other financial
service providers and their customers can be settled through arbitration and the parties can
agree on an arbitration clause ( 1031 ZPO; paras 1 et seq.). If the bank customer is a natural
person with the status of a consumer ( 13 BGB), the arbitration agreement must conform
to the particular form requirements of 1031 (5) ZPO (paras 19 et seq.). If the private
consumer concludes a contract on services relating to securities investment, an arbitration
clause regarding future disputes is not valid ( 37h WpHG; paras 21 et seq.). A merchant
in the meaning of 1 et seq. German Commercial Code (HGB) is not protected by 37h
WphG according to prevailing doctrine, even when he concludes a contract on financial services in the administration of his private wealth outside his commercial business (doubtful;
para. 27). A private investor is additionally protected by Art. 14 (1) (b) Rome II insofar as a
choice of another (non-domestic) law regarding future tort claims is invalid if the investor is
a consumer. A merchant acting in the administration of his private wealth outside his business is arguably protected in the same way. Moreover, the choice of law clause must be freely
negotiated (para. 21). The banks offer mediation services to their private customers for the
settlement of minor disputes (para. 28).
In an arbitration procedure, a party may apply for interim measures of either the arbitral 38
tribunal (to be subsequently executed by a state court) (1041 (1), (2)ZPO) or it may
directly have resort to a state court (1033 ZPO).58 Such measures were often sought by
parties that saw themselves victims of a fraudulent or otherwise unfair calling of a guarantee
57
58
Schtze, Die verkannte Funktion der Schiedsvereinbarung im internationalen Zivilprozessrecht, IPRax

2006, 442 et seq.
BGH 10.10.2000, BGHZ 145, 286 (292) (double misuse).
Cf. OLG Frankfurt 23.04.2002, NJW 2002, 1958 et seq.; supra, para. 17.
888
or letter of credit. The admissibility of such interim measures is partially controversial, as are
some details of their legal requirements. The contents and purpose of the interim measure is
either to seize assets of the beneficiary, or to stop the beneficiary from drawing the guarantee
or credit, or to prevent the bank from paying out the sum requested by the beneficiary of
the guarantee (or letter of credit) before a final decision of the arbitral tribunal. German
courts have set high standards of evidence to prove such fraudulent or unfair calling (paras
29 etseq.).
Arbitration of Insurance Disputes in Germany

Hubertus Labes
Short Bibliography: Beckmann/Matusche-Beckmann, Versicherungsrechts-Handbuch, Mnchen
2009; Busse/Labes, 18 Konfliktlsung bei Rckversicherungsvertrgen, in: Handbuch des Rckversicherungsrechts, Mnchen 2013, p. 771; van Bhren, Versicherungsrecht, Bonn 1997; van Bhren, Das versicherungsrechtliche Mandat, Bonn 2012; Echarti/Labes, in: Bruck/Mller, VVG, Berlin
2013; Gerathewohl, Rckversicherung, Grundlagen und Praxis, Karlsruhe 1976; Gumbel, Thoughts
on arbitration under reinsurance contracts and on an attempt to draft a standard clause, FS-Schmidt,
Karlsruhe 1976, p.890; Hasselblatt, Gewerblicher Rechtsschutz, Mannheim 2012; von Hippel, Der
Ombudsmann im Bank- und Versicherungswesen, Tbingen 2000; Honsell-Schwintowski, Berliner
Kommentar zum Versicherungsvertragsgesetz, Berlin 1999; Koch, Schiedsgerichtsvereinbarungen
und Haftpflichtversicherungsschutz, SchiedsVZ 2007, 281; Kaboth, Das Schlichtungs- und Schiedsgerichtsverfahren der Weltorganisation fr geistiges Eigentum (WIPO), Frankfurt am Main 2000;
Labes, Der Ombudsmann der Versicherungswirtschaft, Sachstand Erwartung Alternative, in:
Bhr/Labes/Pataki (eds), FS-Winter, Karlsruhe 2002, p. 149; Labes, Schiedsgerichtsvereinbarungen
in Rckversicherungsvertrgen, Frankfurt 1996; Laschet, Die Mehrparteienschiedsgerichtsbarkeit,
in: Glossner (eds), FS-Blow, 1981, p.119; Lew/Mistelis/Krll, Comparative International Commercial Arbitration, Hague/London/New York 2003; Lionnet/Lionnet, Handbuch der internationalen
und nationalen Schiedsgerichtsbarkeit, Stuttgart Berlin 2005; Luther, Das Drei-Mann-Schiedsgericht bei der Entscheidung zwischen drei und mehr Vertragspartnern, in: Ficker/Knig et al.
(eds), FS-von Caemmerer, 1978, p.578; Nicklisch, Mehrparteienschiedsgerichtsbarkeit und Streiterledigung bei Groprojekten, in: Plantey/Bckstiegel/Bredow (eds), FS-Glossner, 1994, p.238;
Prlss, Versicherungsaufsichtsgesetz, Mnchen 2005; Prlss/Martin, Versicherungsvertragsgesetz,
Mnchen 2010; Schrder-Frerkes, Konfliktbeilegungsmechanismen in der Rechtsschutzversicherung, Karlsruhe 1991; Steward, Arbitration and Insurance without the Common Law, (2004) 11(3)
ARIAS Quarterly, 5.
Para.
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Direct Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 5
A. Arbitration Clauses in Insurance
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
B. Expert Determination . . . . . . . . . . . . . . . 11
C. Insurance Ombudsman . . . . . . . . . . . . . 15
D. Arbitration Clause in a
Commercial Contract between an
Insured and another Party . . . . . . . . . . . 19
III. Arbitration between Insurers . . . . . . . . . . . . 24
I.
II.
I.
Para.
IV. Reinsurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
A. Drafting of Reinsurance
Arbitration Clauses . . . . . . . . . . . . . . . . . 31
1. Arbitration Rules . . . . . . . . . . . . . . . . 32
2. Necessary Components of an
ad hoc Arbitration Clause . . . . . . . . . 41
3. Mediation Clause Prior to an
B. Conducting Reinsurance
Arbitration Proceedings . . . . . . . . . . . . . 69
V. Resume and Outlook . . . . . . . . . . . . . . . . . . . 70
Introduction1
Both (re)insurance and arbitration are founded in a very old tradition whose purpose was 1
furthering commerce, and which to that end employed informality, speed, low cost, and
890
commercial realism.2 Irrespective of this, there is a clear differentiation in the insurance

market concerning the use of arbitration in Germany. While arbitration is widely used in
reinsurance, it plays only a limited role in direct insurance. According to the standard policy
wordings or standard insurance terms, disputes between the insured and the direct insurer
are to be decided by normal state courts.
2 The main legal instruments for monitoring insurers activities in German law are the Insurance Supervisory Law (Versicherungsaufsichtsgesetz VAG) and the Insurance Contract
Law (Versicherungsvertragsgesetz VVG). Neither of these two bodies of law mentions
arbitration or refers to arbitral proceedings.
3 Supervision of insurance companies in Germany is assumed by the German Federal Financial
Services Supervisory Authority (Bundesanstalt fr Finanzdienstleistungsaufsicht BaFin).
BaFin is an independent public law institution that is subject to the legal and functional
oversight of the Federal Ministry of Finance. Since it was established in May 2002, BaFin
has brought the supervision of banks and financial service providers, insurance undertakings
and securities trading together under one roof. BaFin operates only in the public interest. Its
primary objective is to guarantee the proper functioning, stability and integrity of the German financial system. As part of its solvency supervision, BaFin ensures the ability of banks,
financial services institutions and insurance undertakings to meet their payment obligations.
Through its market supervision, BaFin also enforces standards of professional conduct which
preserve investors confidence in the financial markets. BaFins investor protection role also
extends to combating the carrying-on of unauthorized financial business.
4 However, conducting arbitral proceedings does not belong to the duties of BaFin. Even if
both parties so wish, BaFin could not decide an arbitral proceeding. Outside of its market
supervisory competence, BaFin can participate as an arbitrator; however, BaFin has in the
past always declined to do so, much in the same way it has always declined to appoint an
arbitrator.3
II.
Direct Insurance
5 Direct insurance concerns the relationship between insurer and insured that often has the status of a consumer. Consequently, this relationship is affected by specific safeguards intended
to protect the insured, who is considered to be the weaker party compared to the generally
much larger insurance companies. This may be the real reason why German insurance law
does not provide for arbitration regulations. The insured is supposed to be better protected
by the ordinary legal proceedings provided by the state courts. However, unlike in the area of
securities trading (37h Securities Trading Act (Wertpapierhandelsgesetz WpHG)), the
legislator has not imposed restrictions on the subjective or objective arbitrability of insurance
claims. Furthermore, the Federal Court of Justice (Bundesgerichtshof BGH) confirmed
that in principle arbitration proceedings provide an equal protection to consumers as court
proceedings and are therefore valid even if contained in standard terms in consumer contracts.4 As a consequence, there would be no legal obstacles to the use of arbitration in direct
insurance cases, even those with consumers.
2
3
4
Steward, (1994) 11(3) ARIAS Quarterly 5.

Prlss-Kollhosser (2005), 81 para.62.
BGH 13.01.2005, SchiedsVZ 2005, 95 with note Wagner/Quinke JZ 2005, 932.
Arbitration of Insurance Disputes in Germany Labes
A.
891
Arbitration Clauses in Insurance Contracts
Contracts between insured and insurers in the form of standard policy wordings or standard 6
insurance terms (Versicherungsbedingungen), with rare exceptions, do not contain any reference to arbitration whatsoever.5 Rather, these standard policy wordings or standard insurance terms provide for a jurisdiction clause and a choice of law clause, which in the case of a
dispute brings the parties to the state courts. Therefore, disputes between insured and insurer
in Germany are usually resolved by the state courts.
One exception is 5 No. 1 (d) General Conditions for Legal Costs Insurance (Allgemeine 7
Bedingungen fr die Rechtsschutzversicherung ARB) 94/2000/2008 respectively in 2.3.3.2
of ARB 20126 concerning legal costs insurance (Rechtsschutzversicherung) introduced by
the German Insurance Association (Gesamtverband der Deutschen Versicherungswirtschaft
GDV). Though this regulation does not provide directly for dispute resolution by arbitration, it does require the legal costs insurer bearing the costs for an arbitration or a mediation
(Schlichtungsverfahren) proceeding. This assumption of costs, however, is restricted to the
costs which comparably arise from a trial court procedure and restricted to an award which is
legally binding.7 This at least indicates the possibility for the parties to solve potential disputes
through arbitration, although not specifically mentioned otherwise in the standard insurance terms for legal costs insurance. In contrast, 20 ARB 94/2000, forming the jurisdiction
clause within these terms, clearly refers to state court procedures only.
Another exception is the noncommittal sample tariff designed by the GDV, called Mustertarif 8
2007, which in No. 7.6.6 for commercial liability insurance (Betriebshaftpflichtversicherung)
provides for an arbitration clause recommended for respective direct insurance contracts.8
101 VVG stipulates the reimbursement of arbitration costs in case this corresponds to No.
7.6.6 for commercial liability insurance.9 Commercial liability insurance provides for defense
and indemnity coverage against third party claims. Since respective contract wordings do
not explicitly limit defense costs to litigation, it can be argued that the insurer has the duty
to defend the insured where the latter has agreed with the third party to settle the claim by
means of arbitration.10
Furthermore, the insurance industry in Germany developed standard arbitration clauses to 9
be included into a policy wording if both parties agreed. Such arbitration clauses replacing
the jurisdiction clause are especially useful in contracts providing property cover for the
8
9
10
This is different in other jurisdictions at least with regard to legal costs insurance: e.g. in Austria (Art.9 No.
2 ARB 88), France, Belgium (at least according to the terms of some insurers such as Art.13 Gemeinschaftspolice ARAG/DAS Test-Achats), Italy, Greece, and Spain.
Bauer, Allgemeine Bedingungen fr die Rechtsschutzversicherung (ARB 12), VersR 2013, 661 et seq.;
Allgemeine Bedingungen fr die Rechtsschutzversicherung (ARB 2012) GDV Musterbedingungen
(Stand: Juni 2013).
This was not possible according to 2 (1)(c) ARB 75. Further comments, also with regard to 2 (1)(c)
ARB 75 in: Beckmann/Matusche-Beckmann (2009), 37 para.194; Prlss/Martin-Prlss (2010), 5 ARB
94 para.5; Grabolle/Kaspar, Mediation in die Schadenregulierung integrieren, VW 2013, 72 et seq.
Prlss/Martin-Lcke (2010), Betriebshaftpfl. No.7.6.6, pp.1605, 1606.
Prlss/Martin-Lcke (2010), 101 VVG para.16.
Elaborate: Koch, SchiedsVZ 2007, 281 et seq. with detailed examination of contradicting opinions.
892
large insured, such as large industrial companies.11 A precondition for agreement on such
an arbitration clause is that the parties also agree on the applicable law. Furthermore, some
insurers also expect an agreement in respect to certain foreign risks.12
10 Whilst traditional arbitration is rarely used in direct insurance, there are other procedures
such as the expert determination (Schiedsgutachten) or the insurance ombudsman that have
a significant impact on direct insurance dispute resolutions.
B.
Expert Determination
11 Insurance arbitration must be distinguished from the expert determination procedures

(Schiedsgutachterverfahren).13 Such procedures only refer specific technical or factual issues
11
12
13
Example used by a large German insurance group for such cases:

1. Alle Streitigkeiten, die sich im Zusammenhang mit diesem Versicherungsvertrag oder ber dessen
Gltigkeit ergeben und nicht gtlich beigelegt werden knnen, werden unter Ausschluss des
ordentlichen Rechtsweges durch ein Schiedsgericht endgltig entschieden.
2. Das Schiedsgericht besteht aus drei Schiedsrichtern. Ein Schiedsrichter wird vom Versicherungsnehmer benannt. Der zweite Schiedsrichter wird von den Versicherern, vertreten durch
den fhrenden Versicherer benannt. Die so benannten Schiedsrichter bestimmen einen dritten
Schiedsrichter als vorsitzenden Schiedsrichter (Obmann). Hat eine Partei den Schiedsrichter
nicht innerhalb eines Monats nach Empfang einer entsprechenden Aufforderung durch die
andere Partei bestellt oder knnen sich die von den Parteien genannten Schiedsrichtern nicht
innerhalb eines Monats nach ihrer Bestellung auf einen dritten Schiedsrichter einigen, ist dieser
auf Antrag mindestens einer Partei durch den Prsidenten des Oberlandesgerichts Frankfurt zu
bestellen. Den Parteien bleibt es unbenommen, sich auf nur einen Schiedsrichter zu einigen; das
Schiedsgericht besteht in diesem Fall nur aus diesem Schiedsrichter.
3. Ist ein Schiedsrichter an der Ausbung seiner Ttigkeit gehindert oder stellt dieser die Ttigkeit
fr das Schiedsgericht ein, ist innerhalb von 4 Wochen ein Ersatzschiedsrichter zu bestellen. Die
Bestellung erfolgt nach den Regeln, die auf die Bestellung des zu ersetzenden Schiedsrichters
anzuwenden waren.
4. Das Verfahren des Schiedsgerichts wird im Einzelfall durch das Schiedsgericht festgelegt. Die
zwingenden gesetzlichen Regelungen des Zehnten Buches der Zivilprozessordnung finden Anwendung. Im brigen bestimmt das Schiedsgericht die Verfahrensregeln nach freiem Ermessen.
Es kann ergnzend die Schiedsgerichtsordnung der Deutschen Institution fr Schiedsgerichtsbarkeit e.V. (DIS) heranziehen und diese entsprechend anwenden.
5. Der Ort des Schiedsgerichtsverfahrens ist Frankfurt. Die Parteien knnen einen abweichenden
Ort innerhalb Deutschlands bestimmen. Zustndig fr Entscheidungen ber Antrge zum
Schiedsgerichtsverfahren ( 1062 (1) ZPO) ist das Oberlandesgericht Frankfurt. Im brigen
zustndig ist das Landgericht Frankfurt. Dort ist der Schiedsspruch auch zu hinterlegen.
6. Die Sprache des schiedsgerichtlichen Verfahrens ist deutsch. Sofern sich eine Partei auf schriftliche Beweismittel beruft, die einer anderen Sprache abgefasst sind, kann das Schiedsgericht die
bersetzung der Beweismittel auf Kosten der beweisfhrenden Partei anordnen. Soweit das
Schiedsgericht sich ohne eine bersetzung hinreichende Kenntnis ber den Inhalt des Beweismittels verschaffen kann, soll auf die bersetzung verzichtet werden.
7. Die Schiedsrichter erhalten fr ihre Ttigkeit ein Honorar. Dessen Hhe ist fr ein Verfahren
auf 50 % der in der Anlage zu 40.5 der Schiedsgerichtsordnung der Deutschen Institution fr
Schiedsgerichtsbarkeit e.V. (DIS) genannten Betrge, hchstens aber auf jeweils . fr den ersten
und zweiten Schiedsrichter und . fr den vorsitzenden Schiedsrichter beschrnkt.
Such as claims out of Catastrophes Naturelles in France or for example terror risk (the latter discussion
was described by Armbrster, Geltung auslndischen zwingenden Rechts fr deutschem Recht unterliegende Versicherungsvertrge, VersR 2006, 1 et seq.).
Bauer, Rechtsentwicklung bei den Allgemeinen Bedingungen fr die Rechtsschutzversicherung bis
Anfang 2009, NJW 2009, 1564 (1568); van Bhren (2012), 11, pp. 425 et seq.
893
(e.g. the assessment of a loss) to certain experts (assessors, appraisers, adjusters, etc.). Their
purpose is to provide an expert opinion on normally limited issues; their purpose is not to
settle a dispute.14
According to 128 VVG, in legal costs insurance, the insurance policy or a comparable con- 12
tractual agreement must provide for a dispute resolution procedure using an expert evaluator
(Gutachterverfahren).15 If legal action cannot be avoided despite involving such an expert, the
case will be dealt with by the civil courts.16
A specific expert evaluation procedure for legal costs insurance is regulated in 3.4 ARB 2012 13
(standard insurance terms for legal costs insurance). In cases where the insurer refuses to
safeguard the legal interests of the insured and thus denying the prospects of success, the
insured has the possibility to consult a legal expert (Stichentscheid; Schiedsgutachten) to disprove the insurers view. The decision of this legal expert is binding for the insurer.17
Consequently, such an expert evaluation procedure is not comparable to arbitration, nor is 14
it a true alternative to it. As such, a clause in an insurance policy that requires the parties to
arrange for a mutually agreed expert opinion does not constitute an arbitration clause binding the parties.
C.
Insurance Ombudsman
In the same way, arbitration must be differentiated from the ombudsman scheme, which is 15
considered an alternative dispute resolution (ADR)18 method.
On 1 October 2001, the German insurance ombudsman scheme19 was established.20 Since 16
then, more than 95 per cent of all German insurers have become members. For cases with an
amount in dispute of up to EUR10,000, the ombudsmans decision is binding; for amounts
of up to EUR100,000, there is an authority to give non-binding recommendations. However, because of the thorough legal analysis involved, these recommendations are often also
accepted by the parties.21
In the last few years, the number of complaints filed by insured Germans averages around 17
18,000, some 30 per cent of which concerned life insurance contracts. However, part of
14
15
16
17
18
19
20
21
In case there is a doubt regarding the distinction between an arbitration agreement and an agreement
for expert evaluation, preference should be given to expert evaluation, since it was less invasive than an
arbitration agreement: OLG Mnchen 07.08.2006, SchiedsVZ 2006, pp.286 et seq.
Beckmann/Matusche-Beckmann (2009), 37 paras446 et seq.; Prlss/Martin-Prlss (2010), 18 ARB
2008/II para. 2; Austrian Law in 64 and 158l VVG also provides for an expert evaluation procedure
(Schiedsgutachterverfahren).
BGH 03.11.1995, VersR 1996, 898 et seq.; van Bhren (1997), pp.305 et seq.
Prlss/Martin-Prlss (2010), 17 ARB 75 paras1 et seq., 18 ARB 94/2008 paras1 et seq.; in detail:
Schrder-Frerkes (1991), pp.332 et seq.; van Bhren (1997), pp.305 et seq.
ADR is in many respects a client driven process rather than a process led by lawyers and there are hardly
any legal formalities to be paid attention to. ADR awards are not as such recognizable or enforceable
which is why a settlement out of such a procedure cannot be imposed on a party in the same way as a
court judgment or an arbitral award.
Officially called Versicherungsombudsmann e.V., Address: Postfach 080632, D-10006 Berlin or info@
versicherungsombudsmann.de. The election period is five years.
von Hippel (2000); Labes, FS-Gerrit Winter (2002), pp.149 et seq.
Germann, Mehr Beschwerden beim Ombudsmann, VW 2005, 1212; Kienzle, Germany, Insurance and
Reinsurance, IFLR 2003, 49 et seq.
894
these complaints were inadmissible, either because the complaint exceeded the amount
of EUR100,000, the complaint related to the private health insurance, or the complainant
missed the appeal period of six weeks. In 2012, 17,263 complaints were filed and of those
which the ombudsman was competent to decide, about 40 per cent were successful.22
18 Due to the resistance of the insurance industry to have an ombudsman also for private health
insurance, the insurers providing private health insurance protection (Private Krankenversicherung PKV) decided to have their own ombudsman scheme as from 1 October 2001.23
The resistance of the insurance industry can be attributed mainly to the relationship between
private and public health insurance. Only about 10 per cent of the German population is
covered under private health coverage. Therefore, by far the vast majority of all insured are
not able to use the PKV ombudsman.24 Nevertheless, the private insurance industry considered it essential to also have an ombudsman scheme due to the importance of medical issues.
D.
Arbitration Clause in a Commercial Contract between an Insured and another Party
19 Beyond the obvious cases where the insurer has signed an arbitration agreement, he may also
be bound to arbitrate in other situations where the contracts and the arbitration clause have
been concluded between the insured and a third party. At first sight, it seems paradox that the
insurer should be bound by an arbitration clause in a commercial contract to which it is not a
party. An initial analysis suggests that the insurer could claim not to be involved in the arbitral
proceedings on the basis of 1) the principle of privacy of contract (145, 241 Civil Code
(Brgerliches Gesetzbuch BGB), and 2) the rule that the decision of an arbitral tribunal is
res judicata only for the parties to the arbitration.
20 However, as a consequence of the accessory nature of the insurance contract, at least for those
lines of business where the insured is protected against claims from third parties such as in
liability insurance, the insurer might also be affected by an arbitration clause in a commercial
contract. In liability insurance, for example, the insurer acts as a guarantor for the financial
consequences emanating from the insureds liability.
21 According to the General Standard Insurance Terms for Liability Insurance in No. 5.1 AHB
(Allgemeine Bedingungen fr die Haftpflichtversicherung Stand April 2012), the insurer is
obliged to settle a claim in favour of the insured if the insurer acknowledged the obligation
to settle a claim (Anerkenntnis), if the insurer reaches or agrees to an out-of-court settlement
(Vergleich), or in the case of a respective state court decision (rechtskrftiges Urteil) or according to law.25
22 However, the insurer is (in principle) not obliged to settle claims based on arbitral awards
since arbitration is not explicitly mentioned in the general standard insurance terms for liability insurance. Consequently, liability insurers historically declined acknowledgment of
22
23
24
25
Ombudsmann: Weniger Beschwerden, mehr Entlastung fr die Gerichte, Zf V 2012, 351; ParallelUniversum fr den Rechtsschutz, VW 2013, 8.
The ombudsman elected by the private health insurance can be found at www.pkv-ombudsmann.de;
latest developments: Wenig Probleme mit Vermittlern, VW 2013, 7.
Labes, FS-Gerrit Winter (2002), pp.166 et seq.; Michaels, Speech given at the 16th Mnsterischen Versicherungstags, VW 1998, 1752; Mller, Der Ombudsmann in der Versicherungswirtschaft brauchen
wir noch die Beschwerdebearbeitung durch das Bundesaufsichtsamt fr das Versicherungswesen,
VGA-Nachrichten 4/2000, pp.77 et seq.; Surminski, Der Ombudsmann zum Dritten, Zf V 2000, 166.
This latest regulation is comparable to the status of AHB 2007, see Koch, SchiedsVZ 2007, 281 (285).
895
arbitral awards if the arbitral awards were based on equitable decisions ex aequo et bono.26
Liability insurers do not equate such equitable decisions with state court decisions. In the late
1960s, however, German arbitration practice confirmed the commitment of the arbitrators
to substantive law. In 1970, this created an agreement between the Federation of German
Industries (Bundesverband der Deutschen Industrie BDI) and the trade association of the
liability insurers (HUK-Verband), acknowledging arbitral awards. Preconditions for such an
acknowledgment are:27
the arbitration panel must consist of three arbitrators;
the umpire or chairman of the arbitration panel must be a fully qualified lawyer (Befhigung zum Richteramt) and at least in international cases must belong to a country
other than that of the two parties;
the arbitrators have to decide according to substantive law (therefore, the arbitration
clause should not empower the arbitrators to decide ex aequo et bono). The applicable
substantive law must be agreed to, together with the arbitration clause; and
the arbitration award must be in writing and needs to provide the reasons for the
decision.
Comparably, GDV recommends a clause to be used in Liability Insurance contracts, which 23

can often also be found in the special conditions (Besondere Bedingungen) for General
Commercial Liability Insurance.28 These criteria comply with both German law standards
as well as international arbitration standards, and are therefore by no means outstanding or
uncommon. The practical relevance of this acknowledgment, nevertheless, is questionable
and is restricted to individual situations. If, however, the insured is part of a commercial contract containing an arbitration clause, he must inform his insurer well in advance and should
neither make any statement nor reach any agreement within the arbitral procedure without
the prior involvement of the insurer.29
III. Arbitration between Insurers

It is of course also possible to have disputes between insurers. Just as in any other contractual 24
relationship, it would be necessary that the parties agree on an arbitration clause.
Additionally, there may be special cases without a contractual relationship that, nevertheless, 25
produce the necessity to solve a dispute. Typical situations of this kind in the insurance field
are co-insurance situations, competition problems, or sales and marketing disagreements.
However, these are typical situations where the parties must agree on an arbitral proceed- 26
ing in order to avoid state court procedures. There are no special regulations or needs just
because insurance companies are involved. As far as co-insurance is concerned (especially
in an international context), reference can be made to the following comments in relation to
arbitral proceedings in reinsurance matters.
The enforcement of awards out of an arbitral proceeding between insurers in Germany, 27
which in the same way is also true for arbitral proceedings between insureds and insurers,
26
27
28
29
Lionnet/Lionnet (2005), pp. 51, 373 et seq.; Prlss, Schiedsverfahren ber Haftpflichtansprche und
Haftpflichtversicherungsschutz, VersR 1965, 102 et seq.
Koch, SchiedsVZ 2007, 281 (283); Prlss/Martin-Lcke (2010), Betriebshaftpflicht 7.6.6.
Koch, SchiedsVZ 2007, 281 (291).
896
must adhere to the provisions of the Code of Civil Procedure (1060 et seq. Zivilprozessordnung ZPO).
IV. Reinsurance
28 According to 209 VVG, insurance contract law is not applicable to reinsurance.30 The latter
is only governed by the contractual regulations. The general principles of insurance contract
law (VVG), however, influence the interpretation of reinsurance contracts.31
29 During recent years, the reinsurance industry has observed a climate where disagreements
between insurers and reinsurers have become more commonplace. The era when disputes
arising from reinsurance contracts were settled amicably between individuals seems to
belong to the past. Reinsurance contracts have had to meet additional demands due to particular developments in the reinsurance market within the past couple of decades, such as a
dramatic expansion of the market and a series of massive claims and catastrophic losses with
constant higher volumes and therefore costs, as well as the international nature of contractual
relationships. In an excellent manner, arbitration meets the specific demands of reinsurance
contracts, such as the lack of specific legal provisions, the lack of relevant case law and the
international nature of the contractual relationships.32
30 Almost every reinsurance contract contains an arbitration clause33 and many reinsurance
contract wordings include arbitration clauses that assign the seat of arbitration to Germany.
For such cases, the carefully prepared German arbitration law provides an efficient legal basis.
An important element for reinsurance, being generally international, is that the German arbitration law in 1060 ZPO et seq. makes a formal distinction between foreign and domestic
awards. Accordingly, the recognition and execution of international awards is governed by
the New York Convention 1958, which has been part of German law since 1961. Domestic
awards, on the other hand, would not require recognition but only an order of enforcement.34
A.
Drafting of Reinsurance Arbitration Clauses
31 As in other industries, the negotiation of an arbitration clause in reinsurance is often difficult,

as the contracting parties do not want to burden or even endanger the contract in total.35
Furthermore, it must not be overlooked that even a clear and comprehensive arbitration
clause will not deal with all possible circumstances and that there will be further questions
which are likely to occur when the reinsurance arbitration proceeding is initiated and carried
out. For arbitration proceedings in Germany, German arbitration law (1025 et seq. ZPO)
will be complementary applicable. As German arbitration law is dominated by the principle
of party autonomy, the parties are largely free in the drafting of their arbitration clause and in
the way they want their proceedings to be conducted.
30
31
32
33
34
35
As to the history of reinurance: Echarti/Labes (2013), pp. 4 et seq.

Echarti/Labes (2013), pp. 11 et seq.; Prlsss/Martin-Kollhosser (2010), 209, para. 3.
Busse/Labes (2013), pp. 774 et seq.
Gerathewohl (1976), Vol. I, Chap. 7 para.4; Labes (1996), pp.6 et seq.; Honsell-Schwintowski (1999),
186 para.18; this at least is true for the obligatory reinsurance, whilst facultative reinsurance agreements sometimes refer to litigation (Echarti/Labes (2013), p. 42; as to the various forms of reinsurance
see Echarti/Labes (2013), pp. 24 et seq.).
Cf. Part II, Krll/Kraft, 1059 paras 24 et seq.
Bckstiegel-Kerr, Arbitration Law Relevant to English German Business Relations, in: DIS Schriftenreihe
No. 7, Kln 1987, p.14.
1.
897
Arbitration Rules
The parties to a reinsurance contract have, in the same way as any other contractual parties, 32
the possibility either to create their own code of procedure by a kind of tailor-made ad hoc arbitration clause,36 or they submit themselves to already existing institutional arbitration rules.
Arbitration rules which have been developed especially for reinsurance contracts37 are pro- 33
vided by the International Underwriting Association (IUA),38 the Reinsurance Association
of America (RAA),39 and the London Court of International Arbitration (LCIA).40 Likewise,
the Association Internationale de Droit des Assurances (AIDA)41 provides arbitration rules
especially for reinsurance contracts, namely the AIDA Reinsurance and Insurance Arbitration Society (ARIAS) with various national chapters such as organizations in the US,42 in the
UK43 and in Europe (based in Germany).44 Under the principle of party autonomy governing
German arbitration law, the parties are free to select any of these rules irrespective of whether
they have been drafted for use in a different legal setting.
Those arbitration rules especially created for reinsurance45 to a very large degree regulate 34
the arbitral proceeding in the same way as the well-known sets of rules provided by other
institutions, such as the German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS) or the Court of Arbitration of the International Chamber of Commerce
(ICC). All of them, for example, arrange for a panel of three arbitrators, order for certain
periods to appoint arbitrators, and provide regulations on costs, written awards, place of arbitration and proper law. Some explicit sections, however, specifically refer to the particularities
of reinsurance, i.e.:
ROA, ILU, LUA Standard Arbitration Agreement 1990

(4) Unless the parties otherwise agree, the arbitration tribunal shall consist of persons
with not less than ten years experience of insurance or reinsurance.
(6) The appointor shall be the chairman for the time being of the Reinsurance Offices
Association or if he is unable to act for any reasons, such person as may be nominated by
the Executive Committee of that Association.
ARIAS (UK) Recommended Arbitration Clause

(5) Unless the parties otherwise agree, the arbitration tribunal shall consist of persons
(including those who have retired) with not less than ten years experience of insurance
36
37
38
39
40
41
42
43
44
45
Echarti/Labes (2013), pp. 44 et seq.

Butler, A new chapter on arbitration, Reinsurance April 1990, pp.29 et seq.; Gumbel, in: FS-Schmidt
(1976), p.890; Thompson, Who shall arbitrate?, Reinsurance September 1991, pp.69 et seq.; Tract, The
case for litigation, ReActions July 1987, pp.37 et seq.; Shapiro, Law may speed case settlement, Business
Insurance March 1997, pp.23 et seq.
IUA was formed by a merger of the Reinsurance Offices Association (ROA) and the London International Insurance and Reinsurance Market Association (LIRMA), see also <http://www.iua.co.uk>.
See (protected by password) <http://community.reinsurance.org/ScriptContent/Index.cfm>.
See <http://www.lcia.org/Default.aspx>.
See <http://www.aida.org.uk/default.asp>.
See <http://www.arias-us.org>.
See <http://www.arias.org.uk>.
See <arias-europe.org>; Lansch, Schlichten statt richten, Handelsblatt 26 September 2006, p.24.
Further examples mentioned in: Labes (1996), pp.185 et seq.
898
or reinsurance as persons engaged in the industry itself or as lawyers or other professional advisers.
(7) The appointor shall be the Chairman for the time being of ARIAS (UK) or if he is
unavailable or it is inappropriate for him to act for any reason, such person as may be
nominated by the Committee of ARIAS (UK). If for any reason such persons decline or
are unable to act, then the appointor shall be the Judge of the appropriate Courts having
jurisdiction at the place of arbitration.
RAA Procedures for the Resolution of U.S. Insurance or Reinsurance Disputes

(6.2) The arbitrators and umpire shall be persons who are current or former officers
or executives of an insurer or reinsurer. Alternative: The arbitrators and umpire shall be
persons who are current or former officers or executives of an insurer or reinsurer or
other professionals with no less than ten years of experience in or serving the insurance
or reinsurance industry.
35 Moreover, the RAA Procedures for the Resolution of U.S. Insurance or Reinsurance Disputes46 in many sections refer to insurance and reinsurance specifications, such as the panel
shall apply the custom and practice of the insurance and reinsurance industry, or, for example,
that confidentiality must be maintained in order to support reinsurance and retrocession.
None of these particular requirements as to the qualification of the arbitrators or the chosen
appointing authority create any problem under German law, which in 1035 (1), 1036 (2)
ZPO allow the parties to regulate the appointment process and impose requirements as to
the arbitrators qualifications.
36 A very special set of rules for reinsurance disputes was formed by the LCIA. The LCIA
Reinsurance Arbitration Rules,47 established in 1983, are meant to be a specific addition
to the LCIA Arbitration Rules, considering the typical circumstances of reinsurance by e.g.
providing a multi-party arbitration regulation.
37 Apart from these specific set of rules, reinsurers can of course also choose the rules of the
several institutions of international arbitration such as for example the ICC in Paris, the
American Arbitration Association (AAA), or the DIS in Cologne,48 all of which perform
administrative work that can be compared to the functions of a legal administrative body.
38 Contrary to all the other procedural rules mentioned, the DIS offers a set of rules specialized for the German market. Furthermore, ARIAS Europe develops arbitration clauses for
reinsurance contracts, provides a comprehensive list of experienced arbitrators and intends
to establish arbitration training tools for insurers and reinsurers.49
39 The benefit of institutional arbitration is that the parties can rely on an organization with
experience in the handling of arbitral proceedings, which adds to efficiency. Such arbitration
rules, however, have not to date been of much practical significance in reinsurance contracts.50
Most reinsurance contracts contain a loosely worded arbitration clause allowing the parties
to agree their own set of rules at the time. Therefore, by far the majority of the reinsurance
46
47
48
49
50
See <http://www.arbitrationtaskforce.org/images/Procedures2004_final.pdf>.
Full text in: Labes (1996), pp.200 et seq.
For a detailed discussion of the DIS Rules see Part III.
http://www.arias-europe.org/schiedsrichter.php.
That may be different to some degree in the Anglo-American world.
899
arbitrations that take place are in this sense ad hoc.51 This contrasts with common practice
in international business contracts, where the majority of arbitral clauses seem to contain
a reference to institutional arbitration rules.52 Reinsurers consider it to be problematic that
their independence in forming the tribunal by using an institution may also affect the reinsurers interest in strict confidentiality.53
Moreover, the universally accepted arbitration rules of the United Nations Commission for 40
International Trade Law (UNCITRAL) present an independent set of rules without having
any institutional organization or administration.
2.
Necessary Components of an ad hoc Arbitration Clause
In order to ensure reliable and predictable arbitral proceedings, ad hoc arbitration agreements 41
should ideally provide for the essential mechanisms. This includes the regulation of details
such as the appointment of arbitrators, the apportionment of costs and many other usual
regulations not dissimilar to those of other industries. Although these internationally applied
regulations are typically contained in arbitration clauses, many of the existing arbitration
clauses in reinsurance contracts do not provide for the essential regulations characteristically
needed for reinsurance disputes; others comprise of regulations which in practice prove to be
detaining or just redundant. Examples are given in the following paragraphs. Whenever the
parties have not taken care of these regulations in their arbitration agreement, the relevant
provisions of German arbitration law apply and provide in nearly all situations for acceptable
fall-back provisions which ensure that the arbitration proceedings may be set into motion.
a. Qualification of the Arbitrators: Arbitral awards have the same effect as a final and binding 42
court judgment and challenge is limited to specific grounds.54 It is thus particularly important
that the parties end up with a tribunal in which they have confidence. Appointment of a sole
arbitrator in reinsurance disputes does sometimes happen, but rarely.
A typical ad hoc arbitration clause used in German reinsurance treaties is not much differ- 43
ent from arbitration clauses in other industries. A characteristic addition, however, is the
following or similar phrase: The members of the arbitration panel shall be active or retired
executives of insurance or reinsurance companies.55
Many arbitration clauses in reinsurance contracts provide for arbitrators in an existing execu- 44
tive or similar position. In general practice, however, the appointment of individuals who
hold such a position in reinsurance companies and who are also willing to accept the task of
being an arbitrator can be difficult due to time constraints or conflicts of interest.
More important, there should be no need for a provision on the qualification of the arbitra- 45
tors, since the parties will in their own interest avoid appointing candidates without the
51
52
53
54
55

Bckstiegel, Schiedsgerichtsbarkeit im wiedervereinten Deutschland, RPS 1992, 7; Labes, Rckversicherungs-Schiedsgerichtsbarkeit, VersR 1996, 1462.
Cornish, English reinsurance developments during 1992, Zf V 1992, 542; McCullough/Eilers, and
justice for all, ReActions September 1991, 53; McCullough/Haab, A devil of a job, ReActions October
1992, 50 et seq.; Tract, The case for litigation, ReActions July 1987, 38; Wollan, The case for arbitration,
ReActions September 1987, 61 et seq.
1055 ZPO. Before an award can be challenged in court permission of the court is needed according to
1059 ZPO. The grounds on which appeal can be made are severely limited. Very few applications for
permission succeed.
Busse/Labes (2013), pp. 794 et seq.; see also para. 34 above.
900
necessary qualification.56 Thus, a broad phrasing of the arbitration clause is recommended to

simplify the appointment and to keep the range of potential candidates wide enough.
46 A reliable alternative is to select from the lists of arbitrators offered by a specialized institution
such as ARIAS (US) or ARIAS Europe.57 Experts in the field of arbitration are often hesitant
and suspect prejudice or even partiality as well as a limitation of party autonomy with the
arbitrators selected from such lists. However, these lists establish a pool of arbitrators with
appropriate qualification which considerably simplifies the often time consuming process of
appointment. Sometimes the appointment of the arbitrators, the election of the chairman,
the umpire58 and their preparation for the proceedings take as much time as the remaining
procedure.
47 Furthermore, concerning the course of procedure, the composing of the award and its later
enforcement, it is advisable to choose at least one arbitrator, e.g. the chairman or umpire, with
a legal background especially relating to arbitration procedural law. Additionally, German
courts acting as a fall-back appointing authority will normally appoint lawyers in the case of
a substitute nomination of an arbitrator. It will presumably be easier to solve technical details
concerning insurance by consulting an expert than by having arbitrators without or with little
legal experience decide on legal details.59
48 Beyond this, the parties should bear in mind that a designation of a specific arbitrator by
name already in the arbitration agreement might lead to the ineffectiveness of the whole
arbitration agreement in the event this specific arbitrator becomes unavailable or does not
want to accept this position.60
49 b. Multi-party Arbitration: Difficulties concerning the designation of arbitrators also often
result from multi-party arbitration proceedings.61 This is especially typical for reinsurance
contracts, where generally insurers have several reinsurers and reinsurers distribute parts of
their risk onto several retrocessionaires who then also assign parts of their risk to others. The
settlement of such a dispute can therefore lead to a multi-party arbitral proceeding.
50 The basic problem is that the whole arbitration system is designed for two-party procedures.
Therefore, intentions to combine arbitral proceedings for several contracts or procedures
with several parties require procedural rules that differ from those of a two-party procedure.
51 Two indispensable conditions for multi-party arbitration are generally accepted. Firstly,
a multi-party procedure must be established on a contractual basis. German law does not
provide any means to consolidate arbitrations or the joinder of parties which have not signed
the arbitration agreement without the consent of all parties concerned. Secondly, it must be
guaranteed that all parties have equal influence and control of the composition of the arbitral
56
57
58
59
60
61
Busse/Labes (2013), p. 797.

See <http://www.arias-us.org/index.cfm?a=16&app=arbitrators> resp. <http://www.arias-europe.org/
schiedsrichter.php>; Busse/Labes (2013), p. 792.
Busse/Labes (2013), p. 797; Hunter, Practical Aspects of Insurance and Reinsurance Arbitration: A Common Law Approach, ICC ICArb. Bull., Arbitration, Finance and Insurance Special Supplement 2000,
p.44.
Busse/Labes (2013), p. 796; Davis, Pathological Clauses: Frdric Eisemanns Still Vital Criteria, Arb.Int.
1991, 365.
Busse/Labes (2013), pp. 804 et seq.; Echarti/Labes (2013), pp. 49 et seq.
901
tribunal.62 If one of these prerequisites is missing and the parties nevertheless conduct a joint
action, recognition and enforcement of the arbitral award before state courts might fail unless
the courts construe the participation as consent.63
A possibility to assure equal influence of all parties is to agree on a single arbitrator. In this 52
case, all parties would in the same manner take part in the formation of the arbitral tribunal
and would have equal influence. However, in the case of a missing party directive, German
Law provides for three arbitrators.
A further solution could be that each party would have the right to appoint one arbitrator 53
and these arbitrators would then choose a chairman. This method is well established for the
appointment of arbitrators in disputes with two parties. Depending on the complexity of the
case, the number of arbitrators could increase to an extent that might hinder the tribunals
ability to function properly, even resulting in the complete inability to reach a decision.
Furthermore, it has been suggested for multi-party arbitrations to have the entire arbitral 54
tribunal appointed by a third party if several parties on one side are unable to agree on a joint
arbitrator.64 This solution, however, would deprive the opposing party willing and able to appoint its own arbitrator of its power of appointment only for reasons of procedural economy
without this party being at fault for the situation.
In the end, the best solution would seem to be to stipulate a multi-party clause65 in advance, 55
with the intention being for all parties on one side to agree on a joint arbitrator. Then the usual
principles for the formation of a three-party arbitral tribunal will also apply to multi-party
arbitration. Such a multi-party clause could be accepted by all parties in the same contract. It
will later be helpful to use an identical multi-party clause in all separate contracts which exist
between the parties. In this case, the parties to the original contract agree on a multi-party
clause and then commit themselves to include this clause in their further contracts with third
parties.
The several parties on the one side need to elect a representative and give him the power to 56
conduct all negotiations on procedural questions with binding force. This representative will
make decisions on the arbitration proceeding and thus, for example, also on the appointment
of an arbitrator. Any limits to his authority, the right to intervene, or other rights of the other
parties involved should be explicitly provided for.
German law, however, might hinder such a solution. The Higher Regional Court (Oberlan- 57
desgericht OLG) Frankfurt66 ruled that pursuant to 1034 (2) ZPO, a party to an arbitration has an equal right to nominate a party-appointed arbitrator and can, therefore, in case
of doubt ask the court to permit such a nomination. Consequently, the court ruled that a
party is precluded from raising an objection against an unequal composition of the tribunal
in cases where the party had not made use of their possibilities pursuant to 1034 (2) ZPO.
62
63
64
65
66
The principle of equality between the parties in the appointment of the arbitral tribunal was considered to
be part of the international ordre public in the 1992 Dutco case decided by the Cour de Cassation: Socit
Siemens AG and BKMI v. Socit Dutco Construction, RdA 1992, 470; Busse/Labes (2013), p. 806; detailed
explanation in: Labes (1996), pp.35 et seq.
Berger, Schiedsrichterbestellung in Mehrparteienschiedsverfahren, RIW 1993, 707; Luther, in: FS-von
Caemmerer (1978), p.578; Lew/Mistelis/Krll (2003), paras16-11 et seq.
Labes (1996), pp.50 et seq.; Laschet, FS-Blow (1981), p.119; Nicklisch, FS-Glossner (1994), p.238.
902
58 c. Choice of the Applicable Law: The question of the applicable law is not limited to arbitral
proceedings or to reinsurance disputes.67 Any national judge dealing with an international
case must decide on this question. Nevertheless, the problem of the applicable law is different for arbitral proceedings because international arbitral tribunals are not bound by a lex fori
and therefore are not vested with a specific national set of conflict of laws rules. German law
in 1051 ZPO provides for a special conflict of laws rule, which allows the parties to merely
decide according to their needs and ideas.68
59 Generally, the parties to an arbitral proceeding have very extensive autonomy in choosing
both the applicable procedural law and the applicable substantive law. Reinsurance contracts
in most cases already determine the place of arbitration. By choosing the place of arbitration,
the parties generally have also decided on the applicable procedural law for the arbitration,
as most national arbitration laws link the nationality of arbitral proceedings or arbitration
awards to the place of arbitration.
60 For arbitrations taking place in Germany, there are no special rules for insurance related
disputes; 1051 ZPO restricts neither contract type nor modality. Therefore, 1051 ZPO is
also applicable to insurance related disputes, independent of the location of the risk.69
61 d. Common Usage in the Reinsurance Business: The parties are allowed to exclude the application of substantive law which is not compulsory and instead refer to the common usage
and practice in the reinsurance business. This can be found in standard arbitration clauses of
many reinsurance contracts.70
62 Being unwritten law of reinsurance contracts, common reinsurance business usage is mainly
formed by business practices and the specific needs of reinsurance. It is especially influenced by the principle of equity and fair dealing. It is represented by individual reinsurance
contracts and can thus neither be considered to be rules of law nor rules of customary law.
Nevertheless, it will need to be established that a business practice has been in existence for a
considerable period and that it is commonly accepted and applied in the market place.
63 For an arbitral tribunal with specific knowledge in reinsurance, a reference to common
reinsurance business usage might be a reasonable basis for the final decision. But even so,
reinsurance does not stand outside the legal system and reinsurance business is subject to
common private and public legal obligations in the same way as any other business. Additionally, specific agreements of the parties to an individual contract always prevail. In practice,
however, there remains a wide scope for the application of common usage and practices in
the reinsurance business.
64 If the parties wish to refer to common reinsurance business usage, they would be wise to
incorporate such a clause into the reinsurance contract, which would explicitly enable the
arbitrators to apply common reinsurance business usage in cases of dispute for which the
contract contains no (clear) provisions. Otherwise, the arbitrators are bound to decide solely
on principles of law.
67
68
69
70
Busse/Labes (2013), pp. 808 et seq.; Echarti/Labes (2013), pp. 51 et seq.

Cf. Part II, Schmaltz 1051.
Beckmann/Matusche-Beckmann (2009), 4 para.138.
Busse/Labes (2013), pp. 793 et seq.; Echarti/Labes (2013), pp. 53 et seq.; Labes (1996), p.93; Steward,
(1994) 11(3) ARIAS Quarterly 5.
3.
903
Mediation Clause Prior to an Arbitration Agreement
A useful supplement to an arbitration agreement in a reinsurance contract may be the obliga- 65

tion to conduct a mediation proceeding prior to the arbitral proceeding, so that the parties
have the opportunity to reach an amicable settlement before a large scale arbitral proceeding
has to be initiated.71 Experience shows that the mediator can succeed in many cases, leading
the parties to an amicable settlement. The threat of initiating an arbitral proceeding might
itself even lead to a fast and final resolution, forcing the parties to focus on the merits of their
respective positions. The admissibility of such multi-tier dispute resolution clauses is beyond
doubt in Germany.
Due to the fact that the means do not exist to enforce mediation agreements, it is a basic 66
precondition for a mediation agreement that the parties are willing to accept the outcome of
such a proceeding as a final and conclusive resolution of the dispute and that they are willing
to comply with it voluntarily. A compulsory enforcement of a mediation agreement can
with some restrictions also be achieved by a lawyers settlement along with a submission
(Anwaltsvergleich mit Vollstreckungsunterwerfung pursuant to 796a796c ZPO) or by an
arbitral award on agreed terms (Schiedsspruch mit vereinbartem Wortlaut pursuant to 1053
ZPO).72
A violation of the mediation must automatically result in a transition to the arbitral proceed- 67
ing. This might be the case, for example, if the parties cannot agree on a mediator within
the provided period of time. The reason for this is that the inability to agree on a mediator
within a certain time limit can be seen as an indicator of the parties general unwillingness to
successfully complete the mediation proceedings.
Finally, it also has to be determined which information, documents or other parts of the me- 68
diation proceeding may be used in subsequent arbitral proceedings. An agreement should be
reached between the parties at the outset of the mediation process that the following arbitral
proceeding should be completely separate from the mediation proceeding. This means,
particularly, that the mediator should not be appointed as an arbitrator and that the mediator
should not be heard during the arbitral proceeding. Furthermore, all documents resulting
from the mediation proceeding of either the arbitrator or the parties should be subject to
absolute discretion and should only be available in the later arbitral proceedings with the
permission of both parties. Settlement or other offers of the parties during the mediation
proceeding should be of no significance (privileged and confidential/without prejudice)
for the arbitral proceeding and should be excluded.
B.
Conducting Reinsurance Arbitration Proceedings
Reinsurance arbitration proceedings are in reality not very different from other industries 69
arbitral proceedings involving international disputes. In particular, the differences between
procedural traditions of common law and civil law become apparent. Thus, the obligation
of disclosure or discovery common to the Anglo-American legal world does not exist under
German law. However, as the arbitrators are free to conduct the proceedings in the way they
consider appropriate (1042 (4) ZPO), the appointment of arbitrators from a common
law country may lead to proceedings which incorporate certain features of common law
71
72
Busse/Labes (2013), p. 786; Echarti/Labes (2013), pp. 41 et seq.

Kaboth (2000), p.198; Hasselblatt-Labes/Lrcher (2012), p.239; Lrcher, Mediation: Rechtskraft ber
Schiedsspruch mit vereinbartem Wortlaut?, DB 1999, 789etseq.
904
procedure. The same is true for organisational elements such as an organisational meeting,
which is usually expected by American arbitrators. Another example: in the U.S. it is quite
normal for the claimant to seek an order from the tribunal that the respondent to a monetary
claim post security. In contrast, purely German arbitrations do not envisage such practices.
V.
Resume and Outlook
70 Arbitration is of minor relevance in direct insurance where disputes are usually solved by
state courts. However, arbitration has long been used in reinsurance.
71 As regards direct insurance, arbitration must be distinguished from an expert evaluation
procedure (Schiedsgutachterverfahren) where an expert provides for an expert opinion but
does not settle a dispute, and from the ombudsman scheme which represents an alternative
dispute resolution method.
72 In some very rare occasions, contracts between the insured and their direct insurers refer to
arbitration. In order to be able to deal with a situation where an arbitration clause is advisable,
the insurance industry in Germany developed standard arbitration clauses to be included
into a policy wording if both parties were in agreement.
73 Furthermore, insurers may under certain circumstances and due to the accessory nature of
insurance contracts, be affected by an arbitration clause in a commercial contract between
the insured and a third party. Last but not least, there may also be disputes between insurers
which may lead to an arbitral proceeding.
74 That scenario is different from reinsurance, where almost every reinsurance contract contains
a loosely worded ad hoc arbitration clause allowing the parties to agree their own set of rules.
Arbitration rules provided by institutions have not to date been of much practical significance in reinsurance contracts. On the other hand, ad hoc arbitration clauses in reinsurance
contracts are often either missing necessary clauses typically needed for reinsurance disputes
or contain regulations which are detaining or just redundant.
75 Starting with the reform of German arbitration law in 1998 and continuously during the
years thereafter, arbitration has become more and more important as a modern and flexible
method of dispute settlement in Germany; this is also true for the insurance and reinsurance
industry. The existence of the European chapter of ARIAS, based in Germany and composed
of experts dealing with insurance and reinsurance dispute resolution for many years, obviously demonstrates that insurers and reinsurers consider arbitration to be an important tool
in order to solve disputes within the industry.
76 The number of arbitration procedures in the (re)insurance sector has significantly increased
since the late 1990s, although it can be noticed that such procedures stagnated during the
past five years. In many cases, however, the threat of arbitration is just used to motivate
the contractual party to e.g. make certain claims payments. But there is no doubt that the
time when disputes arising from insurance and reinsurance contracts were exclusively settled amicably between individuals has passed. Market developments, especially such as the
expansion of the market and significant higher loss values, have created a climate in which
disagreements are more commonplace. This mainly involves reinsurers that are increasingly
confronted with arbitration, mainly from Anglo-American business partners. Additionally,
disputes between German parties are not an exotic exception anymore, as was the case until
approximately 20 years ago.
905
In the same way, direct insurers must reflect on these developments. Within a massive 77
consolidation process, huge direct insurance groups emerged that are more and more acting
opportunistically and in a solely profit oriented manner. This will certainly lead to aggressive
claims management tactics, including dispute resolution. It remains to be seen if this is followed by an increasing use of arbitration. At least for the insurance of substantial risks, such
as large industrial companies or significant individual risks, arbitration is indeed a considerable alternative to effectively solve disputes in a reasonable and quick manner.
Arbitration of Intellectual Property Related

Disputes in Germany
Erik Schfer
Short Bibliography: Adolphsen, Europisches und internationales Zivilprozessrecht in Patentsachen,
Kln 2005; Albrechtskirchinger/Kretschmer, Schiedsgerichtsbarkeit und gewerblicher Rechtsschutz
in der internationalen Diskussion, in: Plantey (ed.), FS-Glossner, 1994, p. 11; Barber, Objektive
Schiedsfhigkeit und ordre public in der internationalen Schiedsgerichtsbarkeit, Frankfurt am Main
1994; Baumann, Patentstreitigkeiten vor Schiedsgerichten, Frankfurt a.M. 2008; Benkhard (ed.),
Patentgesetz/Gebrauchsmustergesetz, Mnchen 2006; Bhring, Gebrauchsmustergesetz, Kln
2007; Bhring/Braitmayer/Schmid, Gebrauchsmustergesetz, Mnchen 2011; Bulling/Langhrig/
Hellwig, Gemeinschaftsgeschmacksmuster, Kln 2011; Busse, PatG, Berlin 2013; Cook/Garcia, International Intellectual Property Arbitration, Alphen aan den Rijn 2010; Eichmann/vonFalckenstein,
Geschmacksmustergesetz, Mnchen 2010; Eichmann/Khne Designgesetz DesignG, Mnchen
2014; Fezer, Markenrecht, Mnchen 2009; Fezer, UWG Lauterkeitsrecht, Mnchen 2010; Frost,
Schiedsgerichtsbarkeit im Bereich des geistigen Eigentums nach deutschem und US-amerikanischen Recht, Mnchen 2001; Gaudian/Hasselbladt/Lrcher (eds), Mnchener Anwaltshandbuch
Gewerblicher Rechtsschutz, Mnchen 2012; Geissler, Halbleiterschutzgesetz, Kln 1988; Halket
(Ed.), Arbitration of International Intellectual Property Disputes, New York; Harte-Bavedamm/
Henning-Bodewig, Gesetz gegen den unlauteren Wettbewerb, Mnchen 2013; Hildebrandt/Lubberger, Gemeinschaftsmarkenrecht GMV, Mnchen 2014; Keukenschrijver, Sortenschutzgesetz, Kln
2001; Khler/Bornkamm, Gesetz gegen den unlauteren, Mnchen 2013; Kraer, Patentrecht, Mnchen 2009; Loth, Gebrauchsmustergesetz, Mnchen 2001; Mellulis, Zum Besichtigungsanspruch im
Vorfeld der Feststellung einer Verletzung von Schutzrechten, in: Keller/Plassmann/von Falck (eds),
FS-Tilmann, 2003, p.843; Nieder, Die Patentverletzung, Mnchen 2004; Ochmann, Das schiedsrichterliche Verfahren unter Bercksichtigung der gewerblichen Schutzrechte und seine Vor- und Nachteile gegenber dem staatlichen Gerichtsverfahren, GRUR 1993, 255; Pagenberg, The Arbitrability
of Intellectual Property Issues in Germany, in: WIPO (ed.), Worldwide Forum on the Arbitration
of Intellectual Property, Genf 1994, p.81; Pitz, Patentverletzungsverfahren, Mnchen 2010; Plant,
Resolving International Intellectual Property Disputes, Paris 1999; Pfaff/Osterrieth, Lizenzvertrge,
Mnchen 2010; Ruhl, Gemeinschaftsgeschmacksmuster, Kln 2010; Schfer, Schiedsgerichtsbarkeit in IT/IP-Prozessen (2010), in: Kilian/Heussen, Computerrechts-Handbuch, Mnchen 2012;
Schfer, Die Umsetzung der Expertenkenntnisse im Verfahren, in: Nicklisch (ed.), Der Experte im
Verfahren Erkenntnisse aus nationalen und internationalen Verfahren vor Schiedsgerichten und
staatlichen Gerichten, Mnchen 2006; Schricker/Bastian/Knaak (eds), Gemeinschaftsmarke und
Recht der EU-Mitgliedstaaten, Mnchen 2006; Schricker/Loewenheim, Urheberrecht, Mnchen
2010; Schwippert, in: Gloy/Loschelder/Erdmann (eds), Wettbewerbsrecht, Mnchen 2010;
Singer/Stauder, Europisches Patentbereinkommen, Kln 2013; Smit, WIPO Arbitration Rules:
Commentary and Analysis, New York 2000; Strbele/Hacker, Markengesetz, Kln 2009; Tilman/
Schreibbauer, Beweissicherung vor und im Patentverletzungsprozess, in: Ahrens/Bornkamm (eds),
FS-Erdmann, 2002; Wandke/Bullinger, Praxiskommentar zum Urheberrecht, Mnchen 2011.
908
I.
II.
Para.
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A. IP Related Disputes Submitted to
Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
B. Issues That Distinguish IP Related
Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
C. What Does IP Mean in the
German Context? . . . . . . . . . . . . . . . . . . . . 7
D. The Territoriality and
Internationality of IP . . . . . . . . . . . . . . . . 12
The Arbitrability of IP Related Disputes . 16
A. IPR in Force in Germany . . . . . . . . . . . . 17
B. IPR in Force in Other Countries . . . . . 32
1. The Validity of the IPR at Issue is
Fully Arbitrable in the Country
forWhich It Was Granted . . . . . . . . 33
2. The Validity of the IPR at Issue
is Not Arbitrable in the Country
for Which It Was Granted . . . . . . . . 35
Para.
C. Impact of Arbitrability on the
Arbitration Agreement . . . . . . . . . . . . . . 39
1. Drafting the Arbitration
Agreement. . . . . . . . . . . . . . . . . . . . . . . 39
2. The Defence of Non-Arbitrability. 40
III. The Substantive Law Applicable to IPR . . 45
IV. Specific Procedural Aspects of IPR
Related Arbitration in Germany . . . . . . . . . 47
A. Constitution of the Arbitral Tribunal. 48
B. Interim Injunctions . . . . . . . . . . . . . . . . . 49
C. Interim Relief for Establishing or
Preserving Evidence. . . . . . . . . . . . . . . . . 52
D. Protecting Confidential Information . 56
1. Confidentiality of the Arbitration . 56
2. Confidentiality of Evidence
inter partes . . . . . . . . . . . . . . . . . . . . . . . 57
E. Using Experts . . . . . . . . . . . . . . . . . . . . . . . 60
V. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
I.
Introduction1
A.
IP Related Disputes Submitted to Arbitration
1 The share of arbitral proceedings related to intellectual property (IP) among the total number of arbitrations conducted tends to be rather small, if one relies on the statistics published
by arbitration institutions. The IP case share of the published total institutional caseloads
(ICC, DIS, etc.) tends to spread over a range from some 3% to some 10%, with greater deviations depending on the reference periods. There is no indication that this proportion is
substantially higher in the area of ad hoc arbitration.
2 The available statistical data does not reveal to what extent these cases required the arbitral
tribunal to address intellectual property right (IPR) specific core-issues. One may suppose
that the disputes mainly arose out of long-term agreements containing an arbitration clause,
such as:
a) license agreements;
b) contracts with a licensing aspect, such as franchising agreements, merchandising agreements, film production and other copyright agreements;
c) research and development agreements;
d) complex trademark co-existence agreements; or
e) agreements relating to the exploitation of intellectual property rights, such as pooling
arrangements, contracts with inventors and the like.
3 However, this does not exclude that IPR related issues may not also become relevant in other
areas. For example IP value, or the freedom to operate, may be relevant in disputes arising
in the context of merger and acquisition transactions, outsourcing, manufacturing, software
development and distribution agreements.
1
Arbitration of Intellectual Property Related Disputes in Germany Schfer
909
Moreover, experience seems to indicate that the main focus of these disputes lies in the law 4
of obligations and IPR tend to play a rather secondary role (frequently in connection with issues that need only to be addressed for determining the contractual claims). Antitrust issues
tend to arise more frequently in such disputes than questions relating to IPR in the narrower
sense.
B.
Issues That Distinguish IP Related Arbitration
Based on the above summary, this chapter complements the preceding general chapters deal- 5
ing with arbitration in Germany and only deals with aspects that require special consideration. These aspects, which shall be addressed herein are:
possible limits to the arbitrability of issues concerning the validity of IPR;
the determination of the substantive law applicable to the existence and scope of IPR;
and
practical procedural aspects of arbitral proceedings that are IP related.
In all other respects, the general explanations on arbitration in Germany above are applicable. 6
C.
What Does IP Mean in the German Context?
Discussing IP related issues in arbitration requires a basic explanation of the characteristics 7

of IPR. Intellectual property in general is characterized by being a right or, better, a bundle
of rights granted by or under a statute for a specific territory and period of time to the owner,
excluding unauthorized other parties from using or otherwise exploiting the protected subject matter. Generally, IP as such does not confer the unrestricted right to use the protected
subject matter on the owner; i.e. if the owner would use the IP of another party when exercising his IPR, such other party may enjoin him from doing so.
IP in the strict sense of the term may be divided into the following broad categories:2
technical IPR, such as patents, designs of semiconductors, and utility models;
IPR that protect a work or shape, such as copyright,6 registered designs;7
The relevant German legislation is available on the internet, albeit in German, at <http://www.gesetzeim-internet.de> or <http://www.jura.uni-sb.de/Gesetze/> or <http://www.dpma.de/index.htm> or
<http://www.european-patent-office.org/index.en.php> or <http://www.wipo.int/portal/index.html.
en>; EU law may be found also in English at <www.oami.eu> and <http://europa.eu.int/eur-lex/en/>.
German Patent Act (Patentgesetz PatG); for further guidance see, inter alia, Benkhard (2006); Singer/
Stauder (2013).
German Act on the Protection of Semiconductordesigns (Gesetz ber den Schutz von Topographien HalbleiterschutzG); for further guidance see inter alia Geissler (1988).
German Act on Utility Models (Gebrauchsmustergesetz GbmG); for further guidance see Benkhard
(2006); Bhring/Braitmayer/Schmid (2011); Loth (2001).
German Copyright Act (Urheberrechtsgesetz UrhG); for further guidance see inter alia Wandke/Bullinger (2011); Schricker/Loewenheim (2010).
Geschmacksmustergesetz (German Act on Registered Designs GMG); for further guidance see inter
alia Eichmann/von Falckenstein (2010); Eichmann/Khne (2014); Council Regulation (EC) No. 6/2002
of 12.12.2001 on Community designs (GMVO); for further guidance see, inter alia, Bulling/Langhrig/
Hellwig (2011); Ruhl (2010).
910
IPR that protect grains and seeds;8 and
IPR that protect distinctive signs, such as company names, registered trade marks and
trade designations.9
9 However, in the broader sense of the term, IP also encompasses secret commercial and
technical know-how that is hybrid in the sense that it is fungible (e.g. licensable) as other
IPR on the one hand, but essentially only protected against certain acts of misuse or misappropriation on the other. Furthermore, the German Unfair Trade Practices Act (Gesetz gegen
den unlauteren Wettbewerb UWG) affords complimentary protection against imitations of
the get-up of products, if certain additional elements of unfairness are present in the specific
case.10
10 All other products of human intellectual endeavour, which are not specifically protected as
described above, may be freely exploited.
11 IP may further be divided into IPR that on the one hand come into existence by operation of
the law if the statutory requirements are met (such as copyright, rights to a company name,
rights acquired by sufficient use to a trade designation, non-registered community designs,
secret know-how, or the above mentioned protection under the UWG). On the other hand,
certain IPR require a registration in order to come into existence. This category may be subdivided into rights that are only examined in regard to the formal filing requirements (e.g. utility models, registered designs) and rights where an examination of substantive requirements
and a formal act of grant in this regard are preconditions (e.g. registered trademarks, patents).
D.
The Territoriality and Internationality of IP
12 The subject matter of IP is ubiquitous. A patented invention may be put to use by manufacturing or distributing devices in more than one country. A registered trademark may be affixed
to goods that are promoted and sold in more than one country. A copyrighted book may also
be printed and sold in more than one country. However, the owner of any of these IPR may
only enjoin unauthorized third parties from such activities, if he is also to be considered as
owning the concerned IPR in the territory where such use is taking place. Thus, in the case
of a patent or a registered trademark, such right must have been granted with effect in the
territory where the right is to be enforced. Sometimes the IP rights holders are different, depending on the concerned territory. In the case of copyright and other rights that come into
existence solely by operation of the law, either the local statutory requirements for protection
must be met or the IPR that exists under the laws of a foreign state must be recognized by
way of a treaty applicable in the concerned territory. Generally, such treaties provide that the
IP owner of one contracting state is granted the same protection in another contracting state
as would be directly afforded to an owner domiciled in that state in regard to the IPR at issue.
10
German Act on the Protection of Plant Variants and Seeds (Sortenschutzgesetz SortSchG); for further
guidance see inter alia Keukenschrijver (2001).
German Trademark Act (Markengesetz MarkenG); for further guidance see, inter alia, Strbele/Hacker
(2009); Fezer (2009); Council Regulation (EC) No. 40/94 of 20.12.1993 on the Community Trademark (CTMR); for further guidance see inter alia Hildebrandt / Lubberger (2014); Schricker/Bastian/
Knaak (2006).
4 No. 8 UWG; for further guidance see, inter alia, Harte-Bavedamm/Henning-Bodewig (2013); Khler/
Bornkamm (2013); Fezer (2010).
911
Concerning German territory, one must distinguish between IPR that exist throughout the 13
whole European Union (EU) and those which cover German territory alone, even if this
does not exclude that parallel IPR protecting essentially the same subject matter may exist in
other countries. In 2013, the IPR in force throughout the whole of the EU were community
trademarks and community designs. After many years, the Unitary Patent is about to enter
the stage that, like other Community IP, is considered one single right covering the whole of
the EU. The Unitary Patent will be filed with, examined and granted by the European Patent
Office.11 The Unitary Patent will be enforced through a Unitary Patent Litigation System
with an autonomous set of procedural rules12 and to which an EU Arbitration and ADR
Institution shall be somehow attached.13 All other IPR are confined to the German territory,
such as trademarks, trade names, registered designs, copyright, patents, utility models, seeds
and plants and semiconductor circuits. In part, these rights are subject to harmonized EU law
that was transposed into national German law, as is the case for trademarks and registered
designs.
Furthermore, there are IPR covering Germany that exist on the basis of international treaties 14
and which are subject to a centralized examination and/or registration procedure, but that afford segmented protection according to the laws of Germany and the other contracting states
for which the protection was sought by the rights owner. These are international registered
designs,14 international trademarks,15 and European patents.16 Copyright, which is basically
a right that comes into existence by operation of the law, is a special category and governed
by international treaties17 that afford the mutual recognition of foreign copyrights by granting
the same protection as a copyright holder would have under German copyright law.
11
12
13
14
15
16
17
See e.g. http://www.epo.org/law-practice/unitary/unitary-patent.html; REGULATION (EU) No

1257/2012 of 17 December 2012 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:
361:0001:0008: EN:PDF; REGULATION (EU) 1260/2012 http://eur-lex.europa.eu/LexUriServ/
LexUriServ.do?uri=OJ: L:2012:361:0089:0092:en:PDF.
See Agreement on a Unified Patent Court http://www.epo.org/law-practice/unitary/patent-court.html;
http://documents.epo.org/projects/babylon/eponet.nsf/0/A1080B83447CB9DDC1257B36005AA
AB8/$File/upc_agreement_en.pdf; See also http://www.epo.org/law-practice/unitary/patent-court.
html, http:// www.unified-patent-court.org/, http://www.unified-patent-court.org/images/documents/draft-rules-of-procedure.pdf.
See Article 35 of the Agreement on a Unified Patent Court (Fn 12 above).
London Act of 02.06.1934; The Hague Agreement Concerning the International Deposit of Industrial
Designs of 06.11.1925; Additional Act of Monaco of 18.11.1961; Complementary Act of Stockholm of
14.07.1967 as amended on 02.09.1979; Geneva Act of The Hague Agreement Concerning the International Registration of Industrial Designs of 02.07.1999. For more information see <http://www.wipo.
int/hague/en/>.
Paris Convention for the Protection of Industrial Property (1883); Madrid Agreement Concerning the
International Registration of Marks of 14.04.1891, as revised at Brussels on 14.12.1900, at Washington
on 02.06.1911, at The Hague on 06.11.1925, at London on 02.06.1934, at Nice on 15.06.1957 and at
Stockholm on 14.07.1967 and as amended on 28.09.1979; Protocol Relating to the Madrid Agreement
Concerning the International Registration of Marks (as signed at Madrid on 28.06.1989); For more
information see <http://www.wipo.int/madrid/en/>.
Convention on the Grant of European Patents (EPC) signed in Munich 1973; for more details see
<http://www.epouropean-patent-office.org/index.en.php>; Patent Cooperation Treaty (PCT) done at
Washington on 19.06.1970, amended on 28.09.1979, modified on 03.02.1984 and on 03.10.2001; for
more information see <http://www.wipo.int/patentscope/en/>.
WIPO Copyright Treaty adopted in Geneva on 20.12.1996 (WCT); for more detailed information see
<http://www.wipo.int/copyright/en/>; Berne Convention for the Protection of Literary and Artistic
912
15 This very rudimentary sketch of the interplay of legal sources of IPR and the territorial scope
of their application cannot deal with the complex and sometimes difficult legal and factual issues which may need to be addressed in arbitral proceedings. However, it is relevant in regard
to the issue of determining the applicable law in arbitral proceedings if the existence or scope
of protection of an IPR is being disputed.
II.
The Arbitrability of IP Related Disputes
16 The main legal issue distinguishing IPR related arbitration from other disputes that are submitted to arbitration is the arbitrability of claims that concern the validity of IPR, because it
may affect the validity, recognition and enforcement of an award depending on the affected
territory and irrespective of whether the seat of arbitration is located in Germany. The principle of territoriality adds complexity, because the issue of arbitrability may be dealt with differently depending on the affected national IPR. This aspect may need to be considered when
drafting the agreement to arbitrate, when phrasing the prayers for relief and when eventually
dealing with the parties prayers for relief during the proceedings.
A.
IPR in Force in Germany
17 In principle, all issues arising in connection with contracts relating to intellectual property
are of an economical nature18 and therefore arbitrable in Germany.19 When deciding such issues, the arbitral tribunal may (or eventually must) also apply antitrust law, which may affect
the validity of certain contractual clauses or agreements that are relevant for compensation/
damage claims.
18 As in other countries,20 the issue of arbitrability may arise in Germany, if the validity of examined and granted IPR is contested. This issue is crucial because pursuant to 1059 (2) No.
2 (a) Code of Civil Procedure (Zivilprozessordnung ZPO),21 an award may be annulled if
the subject matter of the dispute was not arbitrable under German law, i.e. 1030 (3) ZPO.
19 The wording of 1030 ZPO does not explicitly address the issue. There are no recent reported court cases22 that could provide guidance. The explanatory section of the legislative
act by which the new German arbitration law was enacted and which may have a certain
relevance for construing 1030 (3) ZPO addresses the issue.23 The authors of the explanatory section to the 10th Book of the ZPO note that under the German arbitration law, the
simple fact that the ZPO provides for an exclusive jurisdiction of a state court as such can
no longer be considered as being the decisive argument against arbitrability, because these
18
19
20
21
22
23
Works 1886 (Berne Convention).

The German term is vermgensrechtliche Ansprche, i.e. claims concerning assets.
Cf. 1030 (1) ZPO.
DIS-Materialien Schiedsgerichtsbarkeit und Gewerblicher Rechtsschutz, DIS MAT XIII (2006),
Schweyer, Zustndigkeit internationaler Schiedsgerichte zur Entscheidung ber Fragen der Nichtigkeit
und Verletzung von Patenten, GRUR 1983, 149 (partially outdated); see also the WIPO online bibliography on Intellectual Property Arbitration and Mediation at <http://www.wipo.int/amc/en/center/
bibliography/general.html>.
Cf. Part II, Krll/Kraft, 1059 para. 80.
BGH 25.01.1983, BGHZ 86, 330-337, which is sometimes citied in this context, concerned the competence of the BPatG on one hand and of the Dsseldorf courts on the other hand and not arbitration. Its
reasoning may therefore not be directly transposed.
913
rules only address the competence ratione materiae between state courts.24 However, the
explanatory section then notes with express reference to patents that if there are special
courts for specific disputes relating to the revocation or nullity of rights that were granted
through an act of government (Verwaltungsakt), such rights are excluded from the parties
power of contractual disposition wherefore a decision must be taken by the competent state
court with effects erga omnes. However, the issue is disputed in commentary literature that
has a certain authority. Some commentaries still adhere to the traditional approach of a full
lack of arbitrability of the validity of granted intellectual property rights under 1030 ZPO.25
However, other authoritative commentaries26 and the ICC arbitral tribunal in case No. 6097
(1989)27 (with a German federal judge as presiding arbitrator) consider these validity issues
as being arbitrable with effect among the parties (inter partes).
To understand the explanatory section for the German arbitration law, it is important to note 20
that unlike in other countries, an action to annul or declare as invalid a German patent or the
German part of a European patent must be brought before the German Federal Patent Court
(Bundespatentgericht BPatG), where judges with a technical background will decide. The
German trial courts that have exclusive jurisdiction over patent infringement matters may
not entertain the defence of invalidity. Thus, if this defence is being raised, the defendant
must file a nullity action before the BPatG and the infringement judge will examine upon
request whether or not to suspend the proceedings. In the case of a utility model, the request
for annulment is to be filed with the Federal Patent and Trademark Office (Deutsches Patentund Markenamt DPMA).28 However, the trial court may entertain the defence of invalidity
because the registration of the utility model was not preceded by an examination of the material requirements for protection.29 If a request for radiation from the register was filed with
the DPMA, the trial court may alternatively suspend the infringement proceedings.30
A nullity action against a patent or utility model may be brought by any party on absolute 21
grounds of lack of validity. However, the rejection of the nullity action has no effects erga
omnes. Any other party may commence such an action irrespective of the decision. Only a
full or partial annulment of the patent or utility model has effects erga omnes.
The situation will be different in regard to Unitary Patents with the Unitary Patent Court, 22
since this court shall be exclusively competent for infringement and annulment actions31 and
24
25
26
27
28
29
30
31
This consideration must be taken serious, especially in the light of the ECJ 13.07.2006, Case C-4/03,
(Gesellschaft fr Antriebsmittel mbH& Co. KG v. Lamellen und Kupplungsbau Beteiligungs KG); see Heinze/
Roffael, Internationale Zustndigkeit fr Entscheidungen ber die Gltigkeit auslndischer Immaterialgterrechte, GRUR 2006, 787 with further references.
Putzo/Reichold-Reichold (2013), 1030 para. 6; Baumbach/Lauterbach (2014), 1030 para. 12;
and probably also Musielak-Voit (2013), 1030 para.3, good references to other sources at fn 23-24;
Busse(2013), vor 143 para.19-21.
Zller-Geimer (2014) 1030 paras14 seq.; Schwab/Walter (2005), Chap. 4 para. 11; Stein/Jonas-Schlosser
(2012), 1030 para.3; Benkard (2006), 143 para.13; see also summary in Pfaff/Osterrieth (2010), at
No. 386; Peter Ruess, Schiedsgerichtsvereinbarungen im Gewerblichen Rechtsschutz Eine Einfhrung,
SchiedsVZ 2010, 23-25.
(1993) 4(2) ICC ICArb. Bull. 76 et seq.
15, 16 GbmG.
Bhring (2007), 11 para.27; in regard to exclusive competence ratione materiae see 27 GbmG.
19 GbmB; Bhring (2007), 19 para.8.
See fn nos 11-13 above; Article 32 of the Agreement on a Unified Patent Court. REGULATION (EU)
N 1257/2012
914
the Agreement On A Unified Patent Court32 explicitly states in Article 35(2) that where the
Patent Mediation and Arbitration Centre is established: however, a patent may not be
revoked or limited in mediation or arbitration proceedings. Insofar as mediation proceedings are concerned, this sentence states what is legally obvious. Concerning arbitration, one
could argue that due to the context, the sentence only governs the future competence of
the EU Mediation and Arbitration Centre to which the Court may refer disputes.33 Furthermore, it could also be argued that since Article 31 establishes International Jurisdiction
of the Unitary Patent Court by reference to Regulation EU No. 1215/2012 and / or the
Lugano Convention only, that other (international) arbitral tribunals are not considered by
the system. However, it could be preferable to understand the cited sentence to exclude the
competence of arbitral tribunals to revoke or limit any Unitary Patent with effects erga omnes.
At the same time, the wording chosen indicates that a decision declaring with effects inter
partes that a Unitary Patent is fully or partially invalid, or a decision that implicitly deals with
this type of issue as question precedent, is likely to fall within the competence of an arbitral
tribunal. Future case law will tell.
23 For German registered trademarks, the situation is more complex. While an action for the
annulment on absolute grounds (e.g. lack of distinctiveness, etc.) must be brought before
the German Patent and Trademark Office,34 a nullity action on relative grounds (non-use,
older third party rights, agent mark) is to be filed with the ordinary courts, albeit with the
chambers at the Regional Courts (Landgericht LG) having exclusive jurisdiction ratione
materiae.35 In regard to registered community trademarks annulment, proceedings on absolute36 or relative37 grounds may be filed either with the Office for the Harmonization in the
Internal Market (Trade Marks and Designs (OHIM) in Alicante, Spain) or with the exclusively competent national Community Trademark Court38 as a counterclaim in infringement
proceedings.
24 Concerning trade names (trade designations39 which are not registered as trademark and
not examined) the trial courts have full competence to deal with issues relating to existence
(i.e. validity) and scope of protection. The same applies to copyright. Concerning German
registered designs, the trial courts (e.g. Regional Courts) are exclusively competent.40 The
validity of registered community designs may, as is also the case for community trademarks,
be challenged before the OHIM or a national Community Design Court that has exclusive
jurisdiction ratione materiae.41
32
33
34
35
36
37
38
39
40
41
http://documents.epo.org/projects/babylon/eponet.nsf/0/A1080B83447CB9DDC1257B36005AA
AB8/$File/upc_agreement_en.pdf
See draft Procedural Rules for the Unified Patent Court, Rule 11, at http://www.unified-patent-court.
org/images/documents/draft-rules-of-procedure.pdf
54 MarkenG.
55, 140 MarkenG.
Art. 51 Council Regulation (EC) No. 422/2004 of 19.02.2004 amending Regulation (EC) No. 40/94 on
the Community Trademark (CTMR).
Arts 50, 52 CTMR.
Arts 91-93 CTMR, in Germany a limited number of Regional Courts are Community Trademark
Courts.
5 MarkenG, Art. 8 Paris Union Treaty.
36 (1) No. 5, 52 GeschmMG.
Arts 24, 81 CDREG; Council Regulation (EC) No. 6/2002 of 12.12.2001 on Community Designs
(consolidated version).
915
An analysis based on the explanatory section of the German arbitration law (where it is stated 25
that the mere existence of exclusive jurisdiction42 of state courts is no longer to be considered
as a decisive argument against objective arbitrability) seems to also indicate that all issues
relating to the existence and validity of intellectual property rights that may (also) be decided
by a Regional Court are arbitrable. This would in the first place apply to all IPR that were not
materially examined (except for utility models that may only be annulled by the DPMA) but
in regard to which a defence of nullity could be entertained by an arbitral tribunal. In regard
to registered trademarks, nullity on relative grounds or based on non-use would be arbitrable, while this would not be possible concerning nullity on absolute grounds. Concerning
community trademarks, the said criteria would lead to the full arbitrability of validity issues,
since the Community Trademark Courts43 are also competent. However, this is EU law and
the draft directive on community patents explicitly excludes such issues from arbitrability;
thus, there is a risk that in regard to community IPR a restrictive approach will be adopted.
A closer scrutiny of the argument that issues submitted to the exclusive jurisdiction of a 26
special court (e.g. the BPatG for German patents)44 are not arbitrable reveals that it is not
convincing, even if only patents are explicitly mentioned. It is true that patents and registered
trademarks are granted by an act of government subsequent to a material scrutiny process;
nonetheless, the statement that the rights are not at the disposition of the parties by way of
agreement is not persuasive.
A patent or trademark owner may fully or partially relinquish the IPR at any time. If, for 27
example, the alleged infringer in a patent or trademark infringement action brings a nullity
action before the competent court, the principles of general German civil procedure will apply, e.g. the parties must adduce all facts and evidence. There is no representative of the public
interest as such. A plaintiff in a nullity action may therefore withdraw the action at any time.
There is a considerable number of infringement cases that settle under such circumstances
after an annulment proceeding was commenced or threatened. Thus, in the light of current
practice, the argument sounds hollow on which the explanatory grounds of the new German
arbitration law rely.
Moreover, one may doubt whether public interest reaching beyond the parties of the case 28
would be adversely affected by arbitrability. As stated above and irrespective of whether this
is a decision of the DPMA, the Federal Patent Court, a Higher Regional Court (Oberlandesgericht OLG), or for that matter an arbitral tribunal, if an IPR is upheld this has effects
inter partes only. The rights of other parties are not affected thereby. If, on the other hand, an
IPR is fully or partially annulled, the freedom to operate and compete with others is legally
enhanced. The only other group that could in part be adversely affected are licensees of the
IPR owner. If the owner of an IPR agrees to also submit disputes concerning the validity of
his IPR to an arbitral tribunal, there is no public policy reason to prevent him from doing so.
Finally, the concept of certain issues relating to the validity of examined and registered IPR 29
does not serve the expeditious administration of justice. As mentioned in the introduction,
agreements to arbitrate are normally included in complex middle or long term agreements
relating to IP. It is therefore probable that the validity of an IPR will be challenged within
42
43
44
Since the exclusive jurisdiction of the specialized chambers of the Regional Courts in intellectual property matters is wide, this criterion is clearly unsustainable, since its application would exclude matters
from arbitrability that are unanimously being considered as arbitrable under the German arbitration law.
These are a specifically designated number of Regional Courts.
See supra, note 24.
916
the context of other claims in regard to which the agreement to arbitrate will remain fully
enforceable. Declining to entertain the defence of invalidity for lack of objective arbitrability
would then lead to a procedurally awkward situation, especially if the arbitration would be
suspended and the concerned party would not file a nullity action.
30 The above considerations lead to the conclusion that, irrespective of the IPR concerned, the
validity or the nullity of IPR should be objectively arbitrable in all respects.45 As set forth
above, neither 1030 ZPO nor the Patent-, Trademark-, or other applicable Acts explicitly
address the issue of objective (non-) arbitrability. Recent authoritative case law46 also fails to
provide guidance in either direction.
31 Under such circumstances, the approach adopted by the majority of German legal scholars
should in practice be followed, pursuant to which all issues concerning the invalidity or inexistence IPR are arbitrable insofar as the relation inter partes is concerned47 (unless the arbitral
tribunal is requested to declare the IPR at issue null and void and to order its radiation from
the register). According to the majority of the proponents of the inter partes approach, the
arbitral tribunal would, however, not be prevented from ordering the IPR owner with inter
partes effect to fully or partially relinquish the IPR by making the appropriate representations to the DPMA48 or other competent authority. As it is the claimants responsibility to
adequately phrase its prayers for relief, he bears the risk of the validity and enforceability
of the decision in this regard. The claimant should also be aware that, especially insofar as
patents are concerned, enforcing such an award may prove to be difficult for the sole reason
that the DPMA or other competent authority has not provided for internal regulations that
deal with such enforcement in the sense that the award as such would replace the explicit
declaration of the relinquishing party.49 Thus, such an award would contain in common law
terminology an order for specific performance.
B.
IPR in Force in Other Countries
32 In regard to IPR that are in dispute but exist under the laws of another country and are not
community trademarks, community designs, or unitary patents, the issue of objective arbitrability is also not settled by precedents. 1059 (2) No. 2 (a) ZPO refers to arbitrability
45
46
47
48
49
This view is shared by Schwab/Walter (2005), Chap. 4 para.11; Frost (2001), p.55; Adolphsen (2005),
para.1197.
Reported cases until 31.08.2006 were considered.
This applies particularly if the issue of validity is to be addressed on a secondary level (Vorfrage) for reaching a decision on the principle issues; see Zller-Geimer (2014), 1030 para.6a. However, it remains
relative settled that compulsory license matters are subtracted to arbitration. Furthermore IP (contract)
related matters as affected by the exercise of certain rights of a receiver in insolvency proceedings may
not be subjected to the defense of the existence of an agreement to arbitrate that was concluded by the
insolvent entity and a third party BGB III ZB 59/10 30.06.2011 Cross Patent License Agreement,
GRUR 2012, 95; KG Berlin 23.04.2012 20 SchH 03/09.
Ochmann, GRUR 1993, 255 (256 et. seq.); Wittenzellner, Errichtung eines Schiedszentrums bei der
WIPO Alternative fr die Beilegung von Streitigkeiten im Bereich des gewerblichen Rechtsschutzes?,
Mitt. 1995, 147 (151 et seq.); Adolphsen (2005), para.1198; Gaudian/Hasselbladt/Lrcher (2012), 7
para.109.
In Germany a court decision ordering a party to make a declaration directly affecting rights (Willenserklrung) such as relinquishing a trademark is substituted by the judgement as soon the decision is firm
and may no longer be appealed; see 894 (1) ZPO, Baumbach/Lauterbach (2014), 894 paras1-21. See
also 887, 888 ZPO; Ochmann, GRUR 1993, 255 (257). Practical problems may especially arise, when
IPR namely patents are only partially found to be invalid.
917
under German law as decisive criterion and seems to indicate that, if the place of arbitration
is in Germany, the foreign legal situation is irrelevant. There are two basic scenarios that need
to be addressed.
1.
The Validity of the IPR at Issue is Fully Arbitrable in the Country for Which It Was Granted
The first scenario would, for example, be relevant if a request for the annulment of a US or 33
Swiss patent were filed with an arbitral tribunal sitting in Germany. Legal literature indicates
that in both countries such claims are arbitrable,50 meaning that in both countries an award
declaring the nullity of a national patent could be enforced, provided there are no other
grounds for refusing recognition and enforcement. In such a circumstance, there is no compelling public interest or public policy reason for a German court to annul the award.
As explained above, IPR are governed by the principle of territoriality. This implies that from 34
the perspective of the German courts, German law does not govern foreign IPR, which are
granted by act of a foreign government according to local law. Moreover and more importantly, a German court would not have the jurisdiction to decide on the validity of such
IPR.51 As mentioned above, the issue of the objective arbitrability in regard to IPR arises
in the context of 1030(3)ZPO, i.e. in relation to the provisions of other laws, such as the
German Patent Act, the German Trademark Act, or the Community Trademark and Design
Regulations. These govern only IPR that directly affect German territory and not foreign
IPR. Consequently, the object of the dispute (Gegenstand des Streites mentioned in 1059
(2) No. 2 (a) ZPO) is not governed as such IPR by German law and, consequently, German
law does and can not determine whether or not it is arbitrable.
2.
The Validity of the IPR at Issue is Not Arbitrable in the Country for Which It Was Granted
The second scenario would be relevant if a request for the annulment of a registered IPR were 35
filed with an arbitral tribunal sitting in Germany, and this IPR would exist under the laws of
a country that excludes such matters from arbitrability on a stricter standard than would be
applicable in Germany. Available information seems to indicate that this is likely to be the
case in many Latin American countries, as well as some other regions of the world.52
In regard to an action for the annulment of the award, a stringent application of the above 36
considerations would also exclude the application of 1059 (2) No.2(a) ZPO in this type
of case. However, the issue could theoretically also be considered under 1059 (2) No. 2 (b)
ZPO as a matter of public policy (ordre public). The answer would then depend on whether
the court being seized with an action to set aside the award would follow the more liberal approach to objective arbitrability suggested herein, or adopt a conservative restrictive attitude.
50
51
52
In general see Halket (2012), Chap. 2, IV, D; Cook/Garcia (2010); Jaques de Werra Arbitrating International Intellectual Property Disputes: Time to think beyond the issue of (non-) arbitrability RDAI/
IBLJ N3, 2012, 299-317; for the USA see Frost (2001), p.131. For Switzerland see Khner, Die Schiedsfhigkeit von Streitigkeiten ber die Rechtsbestndigkeit von eingetragenen Schutzrechten im internationalen Vergleich aus franzsischer und schweizer Sicht, in: Schiedsgerichtsbarkeit und Gewerblicher
Rechtsschutz, DIS Materialien XIII, 2006, pp.4244, 68 seq.
ECJ 13.07.2006, Case C-4/03 (Gesellschaft fr Antriebstechnik mbH & Co. KG v. Lamellen und Kupplungsbau Beteiligungs KG); id. 13.07.2006, Case C-539/03 (Roche Nederland BV v. Frederick Primus, Milton
Goldenberg).
See footnotes Nos 20, 50.
918
37 In the first case, where the court shares the position adopted herein, the foreign rules
governing arbitrability should not affect the validity of the award in Germany because the
relevant53 German public policy would not be adversely affected. In this context, the notion
of international public policy as a sort of supranational standard is irrelevant since by its very
nature it will be less strict.54 This result does not raise fundamental concerns because strictu
sensu a decision by which an IPR is declared null and void and an order for its radiation from
the register is issued, requires a recognition and enforcement of the award in the country
concerned. The courts of this country may then take the appropriate decision in accordance
with local law and domestic public policy.
38 In the second case, where the court adopts a restrictive attitude, it should still consider that
the exclusion from objective arbitrability (1030 (3) ZPO) and the ground for setting aside
the award (1059 (2) No. 2 (a) ZPO) results from public policy considerations applicable
only in regard to IPR granted in Germany. However, from a purely pragmatic viewpoint, it
may not be fully excluded that in such an event a German court could be tempted to set the
award aside.
C.
Impact of Arbitrability on the Arbitration Agreement
1.
Drafting the Arbitration Agreement
39 When drafting an agreement to arbitrate issues relating to a transaction involving IPR, there
is no reason to deviate from the general recommendation to keep such agreement as simple
and straightforward as possible without including conditions precedent or subsequent, if
possible.55 Because the issue of validity of an IPR becomes only relevant in a small fraction of
disputes submitted to arbitration, it may be impracticable to appropriately address it in the
arbitration agreement. Nonetheless, if all or most of the relevant IPR covers territories with
a more restrictive approach to arbitrability than is the case for Germany, it could be desirable
to explicitly state in the arbitration agreement that disputes concerning non-arbitrable matter
may be submitted to the competent national court without thereby violating the agreement
to arbitrate and that only in regard to such an issue shall the arbitral tribunal have no jurisdiction. However, such a clause should be used only in case of justified exceptions and after
thorough analysis, not on a regular basis.
2.
The Defence of Non-Arbitrability
40 Before examining a defence of non-arbitrability in regard to issues concerning the validity of

IPR, the arbitral tribunal will always have to ascertain that the agreement to arbitrate as such
may be construed as also providing the arbitrators jurisdiction in this regard.
41 As set forth above, under German law there is no question that the vast majority of issues
related to IPR are objectively arbitrable. From the perspective of German law, it would not be
acceptable if a potentially non-arbitrable issue that rarely arises would make the agreement
to arbitrate fully inoperative under 1030 ZPO for the sole reason that it could eventually
arise in the future. Thus, the ground of non-arbitrability need only be considered according
to German law if the arbitral tribunal is requested to declare null and void an examined and
53
54
55
See Zller-Geimer (2014), 1030 para.24, 1059 para.47; Schwab/Walter (2005), Chap. 24 para.37,
Chap.57 paras32-34; Musielak-Voit (2013), 1059 paras25 seq., 1030 para. 10.
See Part II, Trittmann/Hanefeld, 1029 paras 17 et seq. and Trittmann/Hanefeld, 1031 paras 7 et seq.
919
registered IPR as explained in more detail above. If such a situation does arise, the agreement could only be considered as inoperative insofar as the objectively non-arbitrable issue
is concerned. Except for unique cases, it would remain operative and fully enforceable in all
other respects.56
Nonetheless, an agreement to arbitrate is not automatically submitted to German law for the 42
sole reason that the place of arbitration is in Germany and German law applies as lex arbitri.
How the law applicable to the agreement to arbitrate is determined is discussed elsewhere in
this book.57 It is therefore sufficient to mention that, if under the laws of the foreign country
governing the agreement to arbitrate relevant issues concerning IPR are objectively not arbitrable and this law therefore provides that the agreement to arbitrate is fully null and void,
this would in all likelihood be a ground for setting aside an award retaining jurisdiction under
1059 (1) No. 1 (a) ZPO or a ground to refuse recognition and enforcement under 1061
(1) ZPO. For this purpose, a German court would apply German conflict of laws rules,58
which generally do enforce the choice of law by the parties, if any.
If arbitrators sitting in Germany are faced with the defence that they lack authority to decide 43
because IPR related issues are not arbitrable under the laws of an affected country, wherefore
the agreement to arbitrate is allegedly fully or partially null and void,59 German conflict of
laws rules will not automatically apply. If German law is applicable since it was chosen by the
parties or determined by the arbitrators as being applicable, the above considerations apply.
If a foreign law is found to be applicable, the result will depend on the construction of this
law by the arbitral tribunal. When construing such a choice of law, the arbitral tribunal will
normally bear in mind that the parties, when choosing the law, tend to make such choice by
having their mutual contractual obligations (but not mandatory non-contractual provisions)
of the concerned country in mind. Moreover, the tribunal may wish to consider that the parties intended to enter into a valid agreement wherefore it is unlikely that they intended to also
choose legal provisions that render their agreement inoperative.
The determination of this issue by the arbitral tribunal will, however, not exclude an inde- 44
pendent determination by the court in annulment proceedings on the ground of 1059 (1)
No. 1 (a) ZPO.60
III. The Substantive Law Applicable to IPR

The territoriality of IPR may give rise to issues that do not commonly surface in most 45
other areas of international commercial arbitration. Firstly, even if the same work, invention,
56
57
58
59
60

See Part II, Trittmann/Hanefeld, 1029 paras 11 et seq. and Schmaltz, 1051.
These are contained in the Introductory Law to the German Civil Code (Einfhrungsgesetz zum Brgerlichen Gesetzbuch EGBGB); in particular see Arts 27, 28, 6 EGBGB.
Regarding the consequences of lacking arbitrability see also Part II, Trittmann/Hanefeld, 1030 paras
6 et seq. However, it results from the opinion sustained in section II. A. of this chapter, that in regard
to Germany all IP related disputes are fully arbitrable, and challenges to the validity of examined and
registered IPR are arbitrable at least inter partes. In section II. B. 2. the opinion sustained herein results in
the agreement to arbitrate not being affected by non-arbitrability of IPR that are not in force in Germany.
In any event, it would be inappropriate to declare an agreement to arbitrate fully null and void for the
sole reason that one of many other fully arbitrable issues is not arbitrable under the laws of a country the
territory of which is covered by relevant IPR. As ultima ratio the appropriate solution for such a setting
would be to find the agreement to arbitrate only partially inoperative.
920
trademark, or trade designation is protected in all concerned countries, the actual scope
of protection may vary depending on the specification of goods and services, the branch
of commercial activity in the case of names and trademarks, and the claims in the case of
patents and utility models. Secondly, the owner may have protected the IPR in some affected
countries only, but not in others. Thirdly, in the field of trademark and names, third parties
may have older conflicting rights only in some but not all countries where the owner has
secured protection. Fourthly, the scope of protection in a relevant country may differ from
that in another because the laws under which the national IPR exist are different.
46 This situation prompts the question whether the substantive law or rules of law chosen by the
parties in their contract or duly determined by the arbitral tribunal61 in regard to contractual
claims (or other obligations resulting out of or in relation to the subject matters encompassed
by the agreement to arbitrate) should also apply to the above mentioned issues. Seeing that
IPR are basically a monopoly for use62 granted by an act of government, this question should
be answered in the sense that the existence and scope of any IPR is governed by the lex rei
sitae or lex cartae sitae/lex libri sitae (for registered IPR certificates are issued).63 Furthermore,
because the existence, nature and scope of protection of IPR towards third parties such as
competitors are determined by the law in force in the concerned territory, applying this
law to such issues seems to be appropriate to avoid a legally incongruent situation. Thus, a
dpeage (Sonderanknpfung) seems to be appropriate as long and insofar as the parties have
not agreed otherwise.
IV. Specific Procedural Aspects of IPR Related Arbitration in Germany

47 Generally, arbitral proceedings dealing with IP are not subject to any specific mandatory legal
requirements, nor does procedural practice deviate from what is explained in this regard in
the general sections of this book. Nonetheless, the following aspects may acquire a specific
significance for IP related arbitration.
A.
48 There are no special provisions in the German arbitration law governing the constitution of
the arbitral tribunal in IP related cases. It is, however, important that the parties carry out an
analysis with the view to ascertain whether the disputed issues are more of a legal, technical,
and/or IP focussed nature when looking for prospective arbitrators. Appointing an arbitrator
with only a general legal arbitration track record may cause the fact finding and the determination of crucial technical or IP related issues to be substantially dependant on expert evidence,
because of the arbitrator(s) lack the required understanding. On the other hand, appointing
technical experts as arbitrators entails certain risks for the efficient and satisfactory conduct
of the arbitral proceedings. If technical or IP related issues are crucial,64 it is therefore usually
61
62
63
64
See Part II, Trittmann/Hanefeld, 1029 paras 11 et seq. and Schmaltz, 1051.
As explained in the introductory part this monopoly is a right to exclude others from using but not an
absolute right with effects against other owners of older IPR.
In regard to German conflict of laws rules see Art. 43 EGBGB, MnchKommBGB-Wendehorst (2014),
Art. 43 EGBGB paras1-4, 35, 205; Hellstadius/Meier-Ewert, Jurisdiction and Choice of Law in Intellectual Property Matters Perspectives for the Future (EU and World-Wide), ICC 2005, 313; Buchner, Rom
II und das Internationale Immaterialgter- und Wettbewerbsrecht, GRURInt 2005, 1004.
Especially, if the validity and/or the scope of a patent or utility model are an issue, it is crucial to have
arbitrators who are fully familiar with such issues. Any lack of sound experience of the arbitrators in
this field considerably increases the risk of unforeseeability in regard to the final outcome and tend to
921
appropriate to consider appointing an arbitrator with a legal background and a certain arbitration experience who is also experienced in technical or IP related disputes.65 Appointing
technical experts will normally only be considered in cases where there is a panel of arbitrators with a chairperson with legal background and arbitration experience.66
B.
Interim Injunctions
Traditionally, ex parte interim injunctions play an important role in IPR related court cases 49
in Germany.67 Unless the parties have excluded this power, an arbitral tribunal may also issue such injunctions in accordance with 1041 (1)ZPO.68 The tribunal may also make the
enforcement of the injunction contingent on the petitioner providing adequate security.
Interim injunctions are enforced in Germany in accordance with 1041 (1) ZPO. If neces- 50
sary, the German court will adjust the injunction to the German requirements governing
enforcement. A party enforcing such an order should be aware that, according to 1041 (4)
ZPO, it may be subject to a claim for damages caused by enforcement if the injunction is
lifted or annulled at a later date because it should not have been granted ab initio.69
Notwithstanding, because the arbitral tribunal is often not constituted and seized with the 51
file70 when the need for an interim injunction arises and because arbitral tribunals will only
entertain ex parte injunctions in very special circumstances, a petitioner may prefer to request
such relief from a German court of law. This is admissible and the defence that an agreement
to arbitrate exists will not be entertained in such a case.71 The procedure will be governed by
other sections of the German Code of Civil Procedure, i.e. not the 10th Book. In this regard,
the petitioner should be aware that (presently) German courts will refrain from cross-border
injunctions and that it will have to establish the urgency (Dringlichkeit) of the matter. This
requires immediate action by the petitioner after it has learnt about the relevant facts. The
65
66
67
68
69
70
71
put arbitrators at the mercy of experts whose opinion they cannot competently validate or refute. The
decisions of the OLG Mnchen 12.12.1999, 4 Sch 23/99 and 22.01.2007, 34 Sch 18/06, exemplify this
problem category.
For example, in Germany this could be an attorney at law specializing in IP or a patent attorney, who
both have usually litigation experience. It may also be possible to consider appointing a German (retired)
judge of a chamber specialized in IP in a Regional Court (Landgericht LG), Higher Regional Court
(Oberlandesgericht OLG), or the Federal Court of Justice (Bundesgerichtshof BGH), however, appointing active judges is subject to specific professional rules that should be borne in mind (see Part II,
Nacimiento/Abt/Stein, 1035 paras 11 et seq.)
In regard to the question whether and under which circumstances the arbitral tribunal needs to advise the
parties of the intention to decide on the basis of its own expert knowledge see Part II, Krll/Kraft, 1059
paras 63 et seq.
Because in Germany IP Cases are submitted to highly specialized chambers who competently handle a
high yearly volume of request for ex part injunctive and other interim relief such as inspections within
exceptionally short periods of time, recourse to such a German court if it has jurisdiction may for
objective reasons often be the better choice if enforcement is to take place in Germany or an EU member
state. This may also apply, where the parties have agreed on an emergency arbitrator as is available under
many institutional rules such as the current ICC or the WIPO Arbitration Rules.
See Part II, Schfer, 1041 paras 6 et seq.
This may not be the case where the parties have stipulated for an emergency arbitrator as is possible
under certain arbitration rules.
See Part II, Kreindler/Schmidt, 1033 paras 12 et seq.; see also Part II, Schfer, 1041 paras 18, 19 et seq.
922
period of time may vary depending on the Court seized with the petition. As a general rule, a
window of four weeks time should be observed.
C.
Interim Relief for Establishing or Preserving Evidence
52 Under 1041 (1) ZPO,72 arbitral tribunals are also authorized to order other interim measures aiming at obtaining or preserving evidence or the status quo of certain matters. Such
orders may also be enforced in Germany, as described above.
53 To the extent provided by German procedural law, such relief may also be requested from
a German court of law, provided that it has the required subject matter jurisdiction (e.g. the
object or evidence is physically located in Germany). The defence of an existing agreement
to arbitrate will also not be entertained in such a case.73
54 Taking into consideration that especially before or during the very early stages of arbitral
proceedings it remains open as to whether and to which extent the parties will be under duty
and ordered to disclose information (discovery),74 obtaining evidence with the assistance
of local courts may be crucial for preparing the case. Prior to the commencement of the
arbitral proceedings, such interim measures may be obtained from German courts pursuant
to 485 et seq. ZPO if the other side agrees, if there is a relevant risk that evidence will
be lost or that its use will become more difficult in subsequent proceedings. The petitioner
will have to show a sufficient legally recognized interest. This possibility is not available if
measures for examining the concerned evidence were already ordered. However, in the latter
case the arbitral tribunal could always refer to a German court to obtain assistance in accordance with 485 ZPO, given that the German court has jurisdiction in regard to the evidence.
Especially if the unauthorized use of a patent is concerned, this procedure may be important
for establishing the facts. The court will normally appoint an expert to carry out the on-site
inspection. This expert will often be a patent attorney who has both the required technical
background and legal knowledge.
55 To the extent that German law applies (see supra), the petitioner may also have a claim for
an inspection by an expert under 809 BGB. This claim may also be enforced by an ex parte
interim injunction ordering, inter alia, the examination by a court appointed expert.75 If required, such an order will also comprise measures for protecting technical and commercial
72
73
74
75

See Part II, Kreindler/Schmidt, 1033 paras 14 et seq., 24 et seq.
See Part II, Sachs/Lrcher, 1047 paras 20 et seq. Whilst in internal German arbitration proceedings document disclosure is likely to be the exception, in international arbitration proceedings with seat in Germany document disclosure as characterized by the IBA Rules on the Taking of Evidence in International
Arbitration (2010 http://www.ibanet.org/Publications/publications_IBA_guides_and_free_materials.aspx) is more frequently practiced. Further guidance concerning disclosure between parties in the
digital age may be found in the ICC Arbitration Commission Report Techniques for Managing Electronic Document Production When it is Permitted or Required in International Arbitration, ICC Publication 860E (2010 http://www.iccwbo.org/Advocacy-Codes-and-Rules/Document-centre/2012/
ICC-Arbitration-Commission-Report-on-Managing-E-Document-Production/).
BGH 02.05.2002, BGHZ 150, 377-390; id. 08.01.1985, BGHZ 93, 191-213; OLG Dsseldorf 30.01.2003,
GRUR-RR 2003, 327; Pitz (2010), Nos 38-38a; Mellulis, FS-Tilmann (2003), p.843; Musiol, in: Gaudian/Hasselbladt/Lrcher (2012), 26 para.49; MnchKommBGB-Hffner (2013), 803; Schwippert, in:
Gloy/Loschelder/Erdmann (2010), 82 nos 38-43; Kraer (2009), 36 III a) b); Pitz (2010), Part 3
nos 12.
923
secrets of the other party.76 Moreover, such a claim may be based on Articles 43, 50 of the
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)77 insofar as
the courts of contracting states are concerned, and if these provisions are directly or indirectly binding on these courts.
D.
Protecting Confidential Information
1.
Confidentiality of the Arbitration
IP related arbitral proceedings frequently concern confidential information. The German 56

arbitration law and most institutional arbitration rules78 do not afford specific or sufficient
safeguards for protecting such information. Internationally, the legal provisions dealing with
confidentiality of arbitral proceedings represent a patchwork of diverging results. Thus, the
crucial source for rules that protect confidentiality are the existing contractual arrangements
between the parties, the use of which is good practice79 in the field of IP. To the extent that
such agreements do not exist or are insufficient in scope, the agreement to arbitrate may be
supplemented by appropriate provisions. These agreements protecting confidential information will be implemented by the parties and the arbitral tribunal during the proceedings. This
is an important advantage in comparison with court proceedings that are public.
2.
Confidentiality of Evidence inter partes
It may occur in IP related arbitration that a party intends to rely on evidence in regard to 57
which it has a legitimate interest to maintain such evidence or information also confidential
insofar as the other side is concerned. Or a party may request the production of certain evidence from the other side that has a legitimate interest not to disclose such information to the
requesting party. Dealing with such a situation requires balancing the legitimate interest not
to disclose to the other side on the one hand, and the principles of the right to be heard80 on
the other. It would appear to be inconceivable to allow an arbitral tribunal to render its decision on the basis of information that is unknown to one party and could not be commented
by that party prior to the closing of the hearings.
After having heard the parties, there are basically two available approaches for the arbitral 58
tribunal, if such a confidentiality issue arises: (i.) Either it causes the parties to enter into the
appropriate specific contractual arrangements for protecting the information that shall then
be disclosed or issues an order for procedural directions with the same effect; or (ii.) the
tribunal appoints and directs a so called confidentiality advisor. The confidentiality advisor,
who shall be bound to keep strict confidentiality, will have full access to the subject matter
confidential information. He shall then report to the arbitral tribunal on specific issues as
directed by the latter. This report will be communicated to all parties without disclosing the
76
77
78
79
80
Depending on the circumstances, such measures may, however, not be available; Nieder (2004), pp.123
131 with further references.
Tilman/Schreibbauer, FS-Erdmann (2002), p.901. For Information on TRIPS see <http://www.wto.
org/english/tratop_e/trips_e/trips_e.htm>.
The WIPO Arbitration Rules (Arts 73-76 /) deal with confidentiality in detail. These rules may be used as
reference when drafting the appropriate contractual agreements; see <http://arbiter.wipo.int & http://
www.wipo.int/amc/en/arbitration/rules/>.
Pre-contractual confidentiality agreements and confidentiality clauses in IP related contracts are common good practice.
See Part II, Krll/Kraft, 1059 paras 63 et seq.
924
confidential information at issue. The report can deal with matters needed to determine
whether and to what extent a legitimate interest to keep the information confidential exists,
or which measures to protect the information falling short of complete non-disclosure exist.
The report may also contain answers on factual issues required for deciding the case, without
disclosing the secret information as such.81
59 Which approach is more appropriate depends on the specific circumstances of the case. On
one hand, the principle of the right to be heard is constitutionally enshrined82 and must be
observed. Its violation can lead to the annulment of the award or the denial of recognition
and enforcement. On the other hand, the German Constitutional Court has explicitly stated
that under certain circumstances restrictions of the principle of the right to be heard may
be justified for protecting confidentiality and that the right to be heard may be restricted,
if this is sufficiently justified by objective reasons.83 The following guidance can be given:
(i.)the arbitral tribunal should endeavour to adopt the solution that less affects the access
to the concerned information, (ii.) the tribunal should prefer an agreed solution rather than
deciding the issue, and (iii.) if no consensus can be reached the arbitral tribunal should give a
reasoned decision which may also be summarized in the award. In the reasoning the tribunal
should identify the criteria that are relevant to its decision, especially the legally protected
interests of each party, and explain how these were considered and balanced when arriving
at the decision.
E.
Using Experts
60 IPR related disputes often require the arbitral tribunal to rule on facts that are technically
complex. The ruling as such may also often require in-depth knowledge of certain aspects of
intellectual property law. This requires that the parties and, as the case may be, the institutions
that select and appoint the tribunal pay special attention to IPR related skill of the arbitrators.
Be that as it may, even experienced arbitrators in the IPR field may need to refer to experts
to fully comprehend the facts. As a general rule, the extent to which an expert opinion alone
will be decisive for the outcome of the dispute and to which an arbitral tribunal will be able
to independently assess the quality of the experts finding will increase with the tribunals
own expertise.84
81
82
83
84
Art. 46 WIPO Arbitration Rules; The neutral expert approach is also used by German courts in cases
concerning inspection of premises or devices (see footnote No. 83).
Art. 103 (1) of the German Constitution (Grundgesetz GG) protecting the right to be heard v.
Art.12(1)GG protecting property.
These requirements are exemplified from the Deutsche Telekom AG case BVerfG 14.03.2006, 1 BvR
2087/03; 1 BvR 2111/03 at paras94-98, para.112, last line, very instructive the dissenting opinion by
Gaier at paras155 et seq.; While the constitutional rights are not directly binding on private parties and
arbitrators, they directly affect the construction of the law and must be implemented by the German
judiciary when dealing with arbitration cases. In regard to IP the following cases provide guidance: OLG
Dsseldorf 17.08.1981, GRUR 1983, 741 et seq. (Geheimhaltungsinteresse und Besichtigungsdanspruch
I); BGH 02.05.2002, GRURInt 2002, 1046 (1049) (Faxkarte); LG Nrnberg 26.05.2004, MMR 2004,
627 (Berichtigungsanspruch bei vermuteter Urheberrechtsverletzung); Khnen, Die Besichtigung im
Patentrecht Eine Bestandsaufnahme zwei Jahre nach Faxkarte, GRUR 2005, 185 (190-193); Ahrens,
Gesetzgebungsvorschlag zur Beweisermittlung bei Verletzung von Rechten geistigen Eigentums, GRUR
2005, 837 (839-840); de lege ferenda (11/2006) see EU Directive 2004/48/EU (Enforcement Directive); Spindler/Weber, Der Geheimnisschutz nach Art. 7 der Enforcement-Richtlinie, MMR 2006, 711.
Schfer, in: Nicklisch (2006), p.165.; Schfer/Wilson et al. ICC Commission Report, Issues for Experts
Acting Under the ICC Rules for Expertise or the ICC Rules of Arbitration, ICC International Court
925
German arbitration law is neutral insofar as expertise proceedings are concerned. This means 61
that the parties may adduce expert witness testimony and could agree before or during the
arbitral proceedings that they intend to rely on such evidence only without the arbitral tribunal having the power to appoint and direct an independent expert. Such an agreement would
still require that it permits equal treatment of the parties and their having an opportunity to
present their respective case (1042 (1) ZPO). To exclude the arbitral tribunals power to
appoint an expert by agreement may be unwise.
If the parties have not agreed otherwise, the arbitral tribunal has the power (1042 (4), 62
1049 (1) ZPO) to appoint and direct an expert. Under common continental European procedural tradition, this would be the usual approach. Normally, an expert will be appointed to
establish certain facts. However, 1049 (1) ZPO also allows the appointment of experts in
regard to legal issues. Certain types of expertise, such as accounting expertise, will comprise
(at least indirectly) legal issues in addition to factual ones. The expertise procedure will normally be set in motion by an order for procedural directions that clearly defines the issues
and the scope of the experts mission. While 1049 (1) ZPO allows the arbitral tribunal to
directly issue such an order on the basis of the parties prior submissions, it would appear
commendable practice to provide them with the draft order for comments before issuing
it. While this entails a certain risk of an entrenched debate about the wording of the order,
which may be difficult for the arbitral tribunal to manage, it serves as a safeguard against
misunderstandings and is likely to increase the quality of the expert mission. Considering
that the expert will in most cases not be involved at this stage, it is also recommended practice
to include wording that allows and requires the expert to raise issues which may require a
later amendment or change of the mission and which authorizes the arbitral tribunal to issue
the corresponding directions after having heard the parties.
Because German universities, research institutions and professional patent attorneys provide 63
a valuable pool of prospective experts, finding the right expert on technical and IPR related
issues in Germany should not pose a major problem. The DIS can provide parties and arbitrators with information as to who may be contacted to find the appropriate expert.
V.
Conclusion
Most IP related disputes concern complex facts that often involve technical issues. Irrespec- 64
tive of the country where a state court is sitting, it may not be taken for granted that such state
court will have the time and expertise required for deciding the matter in a way that satisfies
the parties, who expect a fair and full opportunity to argue their respective cases. Arbitration
usually yields such an opportunity wherefore it is the better choice and not simply the lesser
evil, as is often perceived by the parties to international transactions.
German arbitration law and German court practice not only provide a set of rules guarantee- 65
ing procedural predictability, they also allow IPR related disputes to be decided by arbitrators
in the scope required for settings where IPR is concerned and in force in more than one
country. Furthermore, it accommodates different approaches to fact finding. This conclusion
is continuously confirmed by the absence of stable adverse precedent in relation to arbitrating IP in Germany.
of Arbitration Bulletin Vol. 20/12009, S. 23 ff.; Schfer/Wilson et al. ICC Commission Report, Issues
for Arbitrators to Consider Regarding Experts, ICC International Court of Arbitration Bulletin Vol.
21/12010, S. 31 ff.
926
66 With the European Patent Office, a closely knit community of international professional IP
experts, specialized judges and the logistical infrastructure, Germany is able to provide parties an ideal environment for arbitrating their IP cases.
Arbitration of Corporate Law Disputes in Germany

Christian Duve / Philip Wimalasena
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302; Nolting, Schiedsfhigkeit von Beschlussmngelstreitigkeiten bei der GmbH, SchiedsVZ 2011,
319; Roth, Schiedsklauseln in Gesellschaftsvertrgen, in: Habscheid/Schwab (eds), FS-Nagel,
1987, p. 318; Raeschke-Kessler, 60 Jahre hchstrichterliche Rechtsprechung zur Schiedsfhigkeit
von Beschlussmngelstreitigkeiten und neue offene Fragen, in: Habersack/Hommelhoff (eds),
FS-Goette, 2011, p.381; Raeschke-Kessler, Gesellschaftsrechtliche Schiedsverfahren und das Recht
der EU, SchiedsVZ 2003, 145; Reichert/Harbarth, Statutarische Schiedsklauseln Einfhrung,
928
Aufhebung und umwandlungsrechtliche Behandlung, NZG 2003, 379; Reichert, Beschlussmngelstreitigkeiten und Schiedsgerichtsbarkeit Gestaltungs- und Reaktionsmglichkeiten, in:
Habersack/Hommelhoff/Hffer/Schmidt (eds), FS-Ulmer, 2003, p.511; Riegger/Wilske, Auf dem
Weg zu einer allgemeinen Schiedsfhigkeit von Beschlussmngelstreitigkeiten?, ZGR 2010, 733;
Sandrock, Wirkungen von Schiedsvereinbarungen in Konzernen, in: Bckstiegel/Berger/Bredow
(eds), Die Beteiligung Dritter am Schiedsverfahren, Kln 2005, p.93; Schmidt, Schiedsfhigkeit von
GmbH-Beschlssen Eine Skizze mit Ausblicken auf das Recht der AG und der Personengesellschaften, ZGR 1988, 523; Schmidt, Neues Schiedsverfahrensrecht und Gesellschaftsrechtspraxis
Gelste und ungelste Probleme bei gesellschaftsrechtlichen Schiedsgerichtsprozessen, ZHR
1998, 265; Schmidt, Schiedsklauseln und Schiedsverfahren im Gesellschaftsrecht als prozessuale
Legitimationsprobleme Ein Beitrag zur Verzahnung von Gesellschafts- und Prozessrecht, BB
2001, 1857; Schmidt, Schiedsklagen gegen Hauptversammlungsbeschlsse, AG 1995, 551; Schmidt,
Gesellschaftsrecht, Kln 2002; Schumann, Auf dem Weg zur Schiedsrichterlizenz, NJW 1992,
2065; Schwab, Das Prozerecht gesellschaftsinterner Streitigkeiten, Tbingen 2005; Schwab/
Walter, Schiedsgerichtsbarkeit, Mnchen 2005; Schwab/Weth, ArbGG, Kln 2011; Spindler/Stilz,
Aktiengesetz, Mnchen 2010; Sudhoff-Liebscher, GmbH & Co. KG, Mnchen 2005; Trittmann, Die
Auswirkungen des Schiedsverfahrensgesetzes auf gesellschaftsrechtliche Streitigkeiten, ZGR 1999,
340; Ulmer/Schfer, Gesellschaft brgerlichen Rechts und Partnerschaftsgesellschaft, Systematischer Kommentar, Mnchen 2013; Weber, Anfechtung von Gesellschafterbeschlssen bei Versto
gegen side letter-Abreden, DStR 1997, 824; Westermann, Gesellschaftsrechtliche Schiedsgerichte,
in: Lutter/Fischer (eds), FS-Fischer, 1979, p.855; Wilske/Arnold/Grillitsch, Streitbeilegungsklauseln
in Vorstands- und Geschftsfhrer-vertrgen Vorzge und Gestaltungsmglichkeiten, ZIP 2009,
2425; Witte/Hafner, Schiedsfhigkeit von Beschlussmngelstreitigkeiten im Recht der GmbH
am Mastab der neuen BGH-Rechtsprechung und ihre Auswirkungen, DStR 2009, 2052; Zilles,
Schiedsgerichtsbarkeit im Gesellschaftsrecht, Neuwied 2002; Zllner, Zur Problematik der aktienrechtlichen Anfechtungsklage, AG 2000, 145.
I.
II.
Para.
Introduction: The Significance of
Arbitration in Corporate Law . . . . . . . . . . . . 1
Arbitrability of Corporate Disputes
(Schiedsfhigkeit gesellschaftsrechtlicher
Streitigkeiten) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
A. Disputes between the Company
and Shareholders or Among the
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . 10
1. Arbitrability of Corporate
Disputes Involving an
Economic Interest within a
Limited Liability Corporation . . . . 11
Disputes Involving an
Economic Interest within a
Stock Corporation . . . . . . . . . . . . . . . 16
Disputes Not Involving an
Economic Interest . . . . . . . . . . . . . . . 17
4. Arbitrability of Disputes
in Partnerships
(Personengesellschaften) . . . . . . . . . . . 48
Para.
5. Arbitrability of Disputes within
a European Economic Interest
Grouping (EEIG) . . . . . . . . . . . . . . . . 55
a Societas Europaea . . . . . . . . . . . . . . 58
an Entrepreneurial Company . . . . . 62
Mixed Companies . . . . . . . . . . . . . . . 64
Foreign Companies with a Place
of Arbitration in Germany . . . . . . . . 67
B. Disputes between the Company
and its Organs . . . . . . . . . . . . . . . . . . . . . . 71
1. Disputes between the Company
and its Organs in a Limited
Liability Corporation . . . . . . . . . . . . 72
2. Disputes between the Company
and its Organs in a Stock
Corporation . . . . . . . . . . . . . . . . . . . . . 81
III. Extension of the Arbitration
Agreement to Non-Signatory Parties . . . . 89
Arbitration of Corporate Law Disputes in Germany Duve/Wimalasena

Para.
A. Claims of a Creditor of the General
Commercial Partnership against an
Individually Liable Partner . . . . . . . . . . 90
B. Claims of an Individually Liable
Partner against a Debtor of the
Partnership (Schuldner) . . . . . . . . . . . . . 92
C. Claims of a Creditor of a Corporation
against a Shareholder of the
Corporation . . . . . . . . . . . . . . . . . . . . . . . . 93
IV. Arbitration Agreement . . . . . . . . . . . . . . . . . . 97
A. Contractual Arbitration Agreement . . 98
B. Statutory Arbitration Clause. . . . . . . .102
1. Arbitration Clause in the Articles
of Association of a Corporation. .107
2. Arbitration Clause in the Articles
of Association of a Partnership. . .111
3. Notarial Aspects of Statutory
Arbitration Clauses . . . . . . . . . . . . .115
C. Scope of Statutory Arbitration
Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . .119
I.
929
Para.
1. Scope of an Arbitration Clause . .120
2. Scope of the Arbitration
Agreement. . . . . . . . . . . . . . . . . . . . . .121
D. Subsequent Introduction of an
Arbitration Clause into the Articles
of Association (nachtrgliche
Schiedsklausel) . . . . . . . . . . . . . . . . . . . . .122
1. Introduction of an Arbitration
Clause into the Articles of a
Corporation . . . . . . . . . . . . . . . . . . . .124
2. Introduction of an Arbitration
Clause in the Partnership
Agreement of a General
Commercial Partnership . . . . . . . .127
E. Joining and Retiring of Members . . .128
V. Composition of the Arbitral Tribunal
and Organisation of Proceedings . . . . . . .132
VI. Applicable Law (1051 ZPO) . . . . . . . . .136
VII. Arbitral Award (1055 ZPO) . . . . . . . . . .138
VIII. Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .140
Introduction: The Significance of Arbitration in Corporate Law1
In todays corporate world, arbitration is a widely used means of dispute resolution. Ad- 1
vantages of arbitration, such as the opportunity to stipulate the applicable procedural and
substantive law, the designation of a seat in a preferred country, the confidentiality of the
proceedings and the absence of an appeal procedure are particularly appealing to corporate
decision-makers in a global business world. Given the international dimension and complexity of many transactions, as well as the international constituency of companies and
partnerships, parties also appreciate being granted the opportunity to nominate an arbitrator
with specialised knowledge of the matter in dispute, as it is advisable to have arbitrators with
corporate expertise decide upon such disputes.2 Accordingly, a large and still rising number of corporate contracts and numerous articles of association contain arbitration clauses.3
According to estimates, one third of arbitral proceedings in Germany are related to corporate
disputes.4
In Germany, commercial partnerships (Personenhandelsgesellschaften), limited liability cor- 2
porations (Gesellschaften mit beschrnkter Haftung) and, to the extent that they have only a
limited number of shareholders, stock corporations (Aktiengesellschaften) may benefit from
the advantages of corporate arbitration.5 Practical assistance to parties and arbitrators alike
in this regard is regularly offered by arbitral institutions such as the German Institution of
Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit e.V. DIS).
1
2
BGH 10.10.1991, NJW 1992, 575 (577); Trittmann, ZGR 1999, 340 (360); Schumann, NJW 1992,
2065.
Raeschke-Kessler/Wiegand, Schiedsvereinbarung und verfahren fr Gesellschafterstreitigkeiten, AnwBl
2007, 396; Raeschke-Kessler, SchiedsVZ 2003, 145 (146).
Borris, in: Bckstiegel/Berger/Bredow (2005), p.109 (110); Reichert, FS-Ulmer (2003), p.511; Westermann, FS-Fischer (1979), p.855.
Borris, in: Bckstiegel/Berger/Bredow (2005), p.109 (110).
930
3 As there is no doubt about the fact that arbitration is generally the dispute resolution method
of choice for a broad array of corporate matters, this chapter mainly explores the limits of
arbitration. Since other contributions in this book deal with particular issues, such as the
arbitrability of disputes or form requirements, this contribution intends to focus generally on
the impact of arbitration in corporate matters. Thus, the first section analyses the arbitrability
of corporate disputes in general and with respect to particular controversies, such as disputes
regarding shareholders resolutions (infra II.). The following section subsequently explores
whether the scope of an arbitration agreement may be retrospectively extended or supplemented with regard to non-signatory parties in corporate disputes (infra III.).
4 As corporate disputes typically involve a great number of participants, the following section
initially sets out the limits of contractual arbitration agreements before it subsequently examines the possibility of statutory arbitration clauses (infra IV.). At the same time, arbitration
clauses demand careful drafting, the composition of the tribunal and the organisation of the
proceedings careful handling (infra V.). As opposed to other areas of law, the parties freedom
to freely choose the law applicable to arbitral proceedings may be restricted by mandatory
provisions (infra VI.). Once an arbitral award has been rendered by an arbitral tribunal in
a dispute regarding the validity or nullity of a shareholders resolution, it must be declared
enforceable before the decision may be entered into the commercial register (infraVII.).
II.
Arbitrability of Corporate Disputes (Schiedsfhigkeit gesellschaftsrechtlicher

Streitigkeiten)
5 When parties and their respective lawyers consider the availability of arbitration as a dispute
resolution mechanism for a corporate dispute, they first need to determine whether the
specific dispute at hand is arbitrable or not. Only if the dispute is arbitrable would arbitration
be an option for the parties to pursue.
6 Under German law, a dispute is arbitrable from a (presumed or so-called) objective perspective (objektive Schiedsfhigkeit) if the matter in dispute could be part of an award of an arbitral
tribunal (1030 Code of Civil Procedure, Zivilprozessordnung ZPO6).7 Any claim involving an economic interest (vermgensrechtlicher Anspruch) can be the subject of an arbitration
agreement (1030(1) sentence1ZPO). Since the reform of the ZPO in 1998, the arbitrability of claims no longer depends on the legal ability of the parties to conclude a settlement
on the matter in dispute. The legislator now considers all disputes involving an economic
interest as arbitrable. According to the legislator, the notion of an economic interest has to
be interpreted broadly8 and covers claims for payment as well as claims with a different aim
(such as the right to revoke an agreement or the right to request somebody to refrain from
doing so).9
7 While the ability of the parties to conclude a settlement is not decisive in the context of economic interests, it continues to be of significance for those claims not involving an economic
interest: to the extent that the parties could conclude a settlement on the subject matter,
6
7
8
9
Available in English at <www.gesetze-im-internet.de/englisch_zpo/englisch_zpo.html>

See Baumbach/Lauterbach-Hartmann (2014), 1030 para. 4; Stein/Jonas-Schlosser (2002), 1030
para.2.
931
arbitration agreements are valid even if the disputes do not involve an economic interest
(nichtvermgensrechlicher Anspruch, see 1030 (1) sentence2 ZPO).
A claim lacks objective arbitrability if, due to the nature of the claim, it can only be enforced 8
in front of a public authority. In particular matters (such as marriage or childhood status
proceedings), the law provides for the exclusive jurisdiction of the state courts and denies
individuals recourse to alternative dispute resolution mechanisms with a view to protect
individual or public interests. Accordingly, only an ordinary court can make a decision in a
matter that is not arbitrable.10
As a general rule, corporate disputes are objectively arbitrable. In most corporate disputes, 9
there is no need to protect individuals or to deprive them of the disposition of claims as a
consequence of a state monopoly on judicial power. However, in specific corporate disputes
the arbitrability of the matter in dispute is debated intensely among legal scholars and judges
alike. Therefore, the arbitrability of corporate disputes will be discussed for the respective
legal corporate entities in detail in the first chapter. In a first step, difficulties concerning
the arbitrability of disputes between a company and its shareholders, as well as between or
among shareholders, shall be addressed (infra A.) before disputes between the company and
its organs will be discussed (infra B.).
A.
Disputes between the Company and Shareholders or Among the Shareholders
This section addresses the arbitrability of disputes between the company and its sharehold- 10
ers or between and among the shareholders. It first addresses the arbitrability of disputes
involving an economic interest with respect to the limited-liability corporation (1.) and stock
corporation (2.). The following section relates to the arbitrability of disputes not involving an
economic interest, e.g. regarding the nullity or validity of a shareholder resolution for limited
liability companies and stock corporations (3.). Finally, the arbitrability of disputes within
general commercial partnerships (4.), European Economic Interest Groupings (EEIG) (5.)
or within a Societas Europaea (SE) (6.), an entrepreneurial company (7.), a mixed company
(8.) and of disputes within foreign companies with a place of arbitration in Germany (9.)
will be explored.
1.
Arbitrability of Corporate Disputes Involving an Economic Interest within a Limited Liability

Corporation
In Germany, more than one million limited liability corporations exist as of January 2013.11 11
It is not unusual for the articles of association of these companies to encompass arbitration
clauses.12 Given their significance in practice, claims for payment of the initial contribution
(Einbringung der Stammeinlage) (a.) and rights to demand and receive information (b.) will
be addressed as disputes of particular relevance.
a. Arbitrability of Claims for Payment of the Original Capital Contribution (Einbringung der 12
Stammeinlage): Typical disputes arising between the company and a shareholder relate
10
11
12
See BGH 29.03.1996, NJW 1996, 1753 (1754); id. 06.06.1991, NJW 1991, 2215 (2216); OLG Frankfurt
30.01.2004, SchiedsVZ 2004, 97 (98).
According to Kornblum, Bundesweite Rechtstatsachen zum Unternehmens- und Gesellschaftsrecht,
GmbHR 2013, 693 (694), a total of 1,098,222 limited liability companies were registered in Germany as
of January 1, 2013.
Reichert/Harbarth, NZG 2003, 379; Bayer, ZIP 2003, 881; Reichert, FS-Ulmer (2003), p.551; Westermann, FS-Fischer (1979), p.855; Raeschke-Kessler, SchiedsVZ 2003, 145 (146).
932
to, for example, claims for payment of the original capital contribution (19 (2) Limited
Liability Companies Act, Gesetz betreffend die Gesellschaften mit beschrnkter Haftung GmbHG13). The original capital contribution requirement intends to secure the existence of the
nominal capital (Stammkapital). As previously stated, prior to the introduction of the new
Arbitration Act in 1998 the arbitrability of disputes used to depend on the legal ability of the
parties to conclude a settlement (1025 (1) ZPO pre-1998).
13 The purpose of the original contribution is to ensure the protection of creditors (Glubigerschutz) by guaranteeing the existence of a minimum capital (Garantie der Mindestkapitalausstattung).14 Based on the need to protect creditors, it has been argued in the past that the
state had to exercise a monopoly of judicial power (Rechtsprechungsmonopol der staatlichen
Gerichte) over disputes relating to the payment of the original capital contribution.15 Thus, as
a consequence, the parties were not entitled to conclude a settlement on such matters.16 With
the introduction of the new Arbitration Act, however, this argument has become obsolete
as it ignores the fact that claims for payment of the original capital contribution regularly
involve an economic interest.17 Therefore, today they are considered arbitrable (1030 (1)
sentence1ZPO). Similarly, claims for payment of the original capital contribution after a
concealed non-cash capital contribution (verschleierte Sacheinlage) in a limited liability company are arbitrable18 as such claims also involve an economic interest.
14 b. Arbitrability of Rights to Demand Information (Auskunftsrechte) and Rights to Receive
Information (Informationsrechte): One of the basic rights of minority shareholders is the
right to demand and to receive information. In particular, such rights arise from 51a, 51b
GmbHG. These provisions require a company to grant a shareholder access to all accounting
information and written documents (Bcher und Schriften) of the corporation. Given the
relevance of rights to demand and to receive information as a major means of control, the
arbitrability of these rights is of particular significance to shareholders. With a view to the
implications of these rights for the conduct of business, it is certainly fair to argue that rights
to demand and to receive information are arbitrable19 as they involve an economic interest in
the sense of 1030 (1) sentence1 ZPO.20 Even if one considered certain information and,
accordingly, the claim not to be one of economic value, it would nonetheless be arbitrable as
the company and the partner asking for information could conclude a settlement concerning
the details and the scope of the information to be revealed (1030 (1) sentence2 ZPO).21
13
14
15
16
17
18
19
20
21
An English version of the GmbHG is provided by Jungmann/Santoro, German GmbH-Law = Das deutsche GmbH-Gesetz (2011).
OLG Dsseldorf 16.09.2003, SchiedsVZ 2004, 262; Haas, DStR 2006, 993.
OLG Dsseldorf 16.09.2003, SchiedsVZ 2004, 262; OLG Kln 28.02.1997, GmbHR 1998, 143 (144).
BGH 19.07.2004, DNotZ 2004, 920 (922), with the comments by Krll, BGHReport 2004, 1437; OLG
Frankfurt 30.01.2004, SchiedsVZ 2004, 97 (98); Habersack, SchiedsVZ 2004, 261 (262); Schlosser, JZ
2005, 156. See also Schiedsgericht der Handelskammer Hamburg 16.07.2007, GmbHR 2008, 935.
See OLG Frankfurt 30.01.2004, SchiedsVZ 2004, 97 (98 et seq.); Habersack, SchiedsVZ 2004, 261 (262);
rejected by OLG Kln 28.02.1997, GmbHR 1998, 143 (144).
OLG Hamm 07.03.2000, BB 2000, 1159 (1160); Trittmann, ZGR 1999, 340 (348); Westpfahl, EWiR
2000, 863; Emde, GmbHR 2000, 678 (679).
Baumbach/Hueck-Zllner (2013), 51b para.3; MnchKommGmbHG-Hillmann (2012), 51b para.31.
See OLG Hamm 07.03.2000, BB 2000, 1159 (1160); OLG Koblenz 21.12.1989, NJW-RR 1990, 1374;
rejected by LG Mchengladbach 15.01.1986, JZ 1987, 99, 100.
933
Although statutory law provides for the exclusive jurisdiction of the state courts regarding 15
information rights, the arbitrability of information rights is not affected: The Regional Court
(Landgericht LG) in the area of the seat of the company has jurisdiction over disputes
concerning the rights to demand or receive information (51b sentence1 GmbHG in connection with 132 (1) sentence1 German Stock Corporation Act, Aktiengesetz AktG22).
However, this exclusive jurisdiction does not rule out recourse to arbitration. A provision
that determines an exclusive jurisdiction does not stipulate a monopoly of legal authority
for the state. It solely applies if an action is brought before ordinary courts.23 Consequently,
the jurisdiction clause does not affect the arbitrability of rights to demand and receive
information.
2.
Arbitrability of Corporate Disputes Involving an Economic Interest within a Stock

Corporation
Arbitration clauses appear far less frequently in the articles of association of stock corpora- 16
tions than in the articles of association of limited liability corporations and partnerships
because such clauses are particularly suitable for companies with a limited number of
shareholders.24 Nevertheless, arbitral proceedings concerning corporate disputes within
stock corporations are conceivable notably in stock corporations with a small number of
shareholders. The distinction between economic and non-economic interests pursuant to
1030 (1) sentence1 ZPO, also applies. Accordingly, claims involving the duty to pay the
original capital contribution (Einlageverpflichtung, 54 AktG), or regarding the liability for
the incorporation (Grnderhaftung, 50AktG), or claims pertaining to the distribution of
profits (Gewinnbezugsrechte, 58 (4) AktG), which are of paramount financial importance
to the corporation and its shareholders, include an economic interest within the meaning of
1030 (1) sentence1 ZPO and are therefore arbitrable. 25
3.
Arbitrability of Corporate Disputes Not Involving an Economic Interest
The following section deals with disputes not involving an economic interest within limited 17
liability and stock corporations. These disputes are arbitrable if the parties are legally capable
of concluding a settlement on the subject matter. This requirement is particularly relevant in
the context of the corporate decision-making process. Both limited liability corporations and
stock corporations reach their decisions by passing shareholders resolutions.
Pursuant to 241 et seq. AktG, the rights of minority shareholders in the decision-making 18
process are protected, as they are entitled to bring an action for annulment or for rescission
against the stock corporation. Such an action is an effective remedy to protect the interests
of the outvoted shareholder, as the execution of the disputed shareholders resolution is
impossible while the action is pending. After a shareholders meeting is held, particularly in
publicly owned stock corporations, shareholders frequently bring actions for annulment or
for rescission against the stock corporation. In recent years, there has been a noticeable trend
some legal scholars have even used the term industry of shareholders to bring abusive
22
23
24
25
Available in English at <www.nortonrosefulbright.com/files/german-stock-corporation-act-2010-english-translation-pdf-59656.pdf>

OLG Hamm 07.03.2000, BB 2000, 1159 (1160); Emde, GmbHR 2000, 678 (680); Ebbing, NZG 1998,
281 (288).
Westermann, FS-Fischer (1979), p.855.
Zilles (2002), pp.105 seq.
934
annulment or rescission actions against shareholders resolutions with the sole objective of
having their claims bought off by the corporation at the expense of the other shareholders.26
19 To combat this trend, the German legislator has implemented a number of legal reforms with
the view to raise the requirements for a valid action.27 However, it is not unusual that shareholders abuse the right to bring an action of annulment or rescission against a shareholders
resolution. Accordingly, the question arises as to whether abusive shareholder actions could
effectively be restricted by a statutory arbitration clause.28 In this context, it is necessary to
explore as a first step whether disputes regarding the validity or nullity of a shareholders
resolution are arbitrable or not, both with a view to limited liability corporations (a.) as well
as to stock corporations (b.).
20 a. Arbitrability of Disputes Regarding the Validity or Nullity of Shareholders Resolutions within a
Limited Liability Corporation: The arbitrability of disputes concerning the validity or nullity
of shareholders resolutions has been intensely debated for many years.29 This debate has culminated in two much-commented upon decisions by the German Federal Court of Justice
(Bundesgerichtshof BGH), rendered in 1996 and 2009 respectively, that have laid out the
preconditions for the arbitrability of disputes pertaining to the validity or nullity of shareholders resolutions. According to the BGH, the arbitrability of an action for declaration of
invalidity (Nichtigkeitsklage) or an action for rescission (Anfechtungsklage) may not per se be
assumed or denied, but depends on the manner in which certain structural and legal issues
are being addressed in the individual case. With a view to the multitude of parties, practical
difficulties may arise regarding the organisation of the proceedings and the legal effects of an
award. The debate concerning these actions arises because these actions affect a change of the
legal status or the legal rights of the parties (Gestaltungsklage).
21 In 1996, the BGH passed its first ruling concerning the arbitrability of disputes regarding the
validity or nullity of shareholders resolutions (SchiedsfhigkeitI).30 In this case, the BGH
had to determine whether an arbitration agreement in the articles of association of a limited
liability corporation was sufficient to validly exclude the jurisdiction of the state courts. In
its judgment, the BGH denied the arbitrability since the clause did not sufficiently reflect
the multi-party situation of the dispute. Moreover, according to the BGH, the clause did
not provide for the extension of the res judicata effect of the award and did not safeguard
the participation of each shareholder in the arbitral proceedings. These structural deficits
according to the Court could only be corrected by the German legislator. The German
legislator, however, refused to intervene, holding that, due to its complexity, the arbitrability
issue was for the courts to solve.31
26
27
28
29
30
31
Gummert/Weipert-Semler (2007), 41 paras62 et seq.

See Habersack/Stilz, Zur Reform des Beschlussmngelrechts, ZGR 2010, 710 (712 et seq.) with further
references.
See also Vetter, Schiedsklauseln in Satzungen von Publikumsgesellschaften: Noch ein Vorschlag zur
Eindmmung missbruchlicher Anfechtungsklagen, DB 2000, 705.
For an overview see Raeschke-Kessler, FS-Goette (2011), pp.381 et seq.
BGH 29.03.1996, NJW 1996, 1753; commented by Berger, ZHR 2000, 295; Bredow, Die Zukunft der
Schiedsklausel fr GmbH-Beschlussmngelklagen Anmerkungen zum BGH-Urteil vom 29.03.1996, II
ZR 124/95, DStR 1996, 1653; Ebenroth/Bohne, BB 1996, 1393; Schlosser, Anmerkung zur Entscheidung
des BGH vom 29.03.1996, JZ 1996, 1020.
935
Thus, in 2009, the BGH was once again required to decide upon the validity of an arbitra- 22
tion agreement in the articles of association of a limited liability corporation. In its judgment
(SchiedsfhigkeitII),32 the Court clarified that disputes concerning the validity or nullity of
shareholders resolutions were indeed arbitrable, provided the arbitral procedure respected
certain minimum standards comparable to those in state court proceedings.33 Consequently,
a dispute regarding the validity or nullity of a shareholder resolution is arbitrable if:
the arbitration clause is incorporated by unanimous consent of the shareholders into the
articles of association or into a separate agreement (i.);
every shareholder is informed in advance of the proceedings and, if he or she so desires,

is able to join the proceedings as an intervener (ii.);
all shareholders may participate in the selection and appointment of the arbitrators, unless the arbitrators are designated by a neutral authority (iii.); and
the arbitration agreement provides for an ex ante mechanism concentrating all claims
pertaining to the same subject-matter with the same arbitral tribunal (iv.).
i. Unanimous Consent of Shareholders: As a first precondition of arbitrability, the BGH re- 23

quires the unanimous consent of all shareholders to the arbitration agreement. Such consent
is compulsory because the decision of the arbitrators must have an inter omnes effect, i.e. be
binding on all shareholders (res judicata). This is, however, not the rule: Generally, the res
judicata effect only applies to the parties in litigation (inter partes) or to assignees of a party
after the filing and service of process (Rechtshngigkeit) (325 (1) ZPO). There are only a
few exceptions where the res judicata effect is extended. For example, if a shareholders resolution of a stock corporation is nullified by a final judgment of an ordinary court, the latter
has res judicata effect for all shareholders, the members of the board of directors (Vorstand)
and the supervisory board (Aufsichtsrat), regardless of whether or not they participated in
the proceedings (248 (1) sentence1 AktG). The purpose of this provision is legal certainty
(Rechtssicherheit) and legal clarity (Rechtsklarheit). The shareholders resolution must not be
void for the parties participating in the proceedings and at the same time valid for the parties
not participating in the proceedings.34
248 (1) sentence1 AktG, however, applies only to court proceedings, but not to arbitration 24
proceedings. Generally, an award therefore has no res judicata effect for the other (non-party)
shareholders. Instead, 1055 ZPO provides that a final award rendered by an arbitral tribunal has the same effect as a final judgment by a state court, thus limiting its res judicata effect
to the ambit of 325 (1) ZPO.
However, the shareholders may, by agreement, confer upon the arbitral tribunal the power to 25
render awards with binding effect for all shareholders. The legal capacity of the shareholders
to create a contractual duplicate of 248 (1) sentence1 AktG was initially denied by the
BGH in Schiedsfhigkeit I due to public policy considerations, but subsequently accepted in
Schiedsfhigkeit II, provided that the agreement is concluded before the dispute and that the
32
33
34
BGH 06.04.2009, NJW 2009, 1962; commented by Riegger/Wilske, ZGR 2010, 733; Albrecht, NZG
2010, 486; Goette, GWR 2009, 103; Krll, SchiedsVZ 2010, 144; id., Die Entwicklung des Schiedsrechts
2009-2010, NJW 2011, 1265; Hilbig, SchiedsVZ 2009, 247; Gz/Peitsmeyer, DB 2009, 1915; Witte/
Hafner, DStR 2009, 2052; Wolff, Beschlussmngelstreitigkeiten im Schiedsverfahren, NJW 2009, 2021;
Bttcher/Helle, NZG 2009, 700.
BGH 06.04.2009, NJW 2009, 1962 (1964 seq.).
MnchKommAktG-Hffer (2011), 248 para.8.
936
arbitral procedure respects certain minimum standards implied by the rule of law. In this
context, the Court also alluded to the fact that the provisions regarding the binding effect of a
decision (248, 249 AktG) apply directly only to stock corporations and that the extension
of these principles to limited liability corporations in past decisions constituted a clear, albeit
generally accepted, example of case-law developed by courts (Richterrecht). Therefore, a further extension of the scope of these rules to arbitral proceedings by way of judicial decisions
would not, as a matter of principle, be prohibited.
26 As regards the mode of implementation of the arbitration agreement, the BGH allows both
the incorporation in the articles of association and the conclusion of a separate agreement.
In practice, the former will likely be more advantageous as it binds both current and future
shareholders, as well as the organs of the corporation.35
27 ii. Information of Shareholders and Possibility to Join: Typically, a decision-making dispute is a
multi-party situation. The ZPO contains provisions for multi-party situations in state court
proceedings, e.g. concerning the interpleader summons (Hauptintervention) and intervention (Nebenintervention) (64, 66 ZPO) as well as the right of third party notice (Befugnis
zur Streitverkndung) (72 et seq. ZPO). These provisions or mechanisms are, however, not
available as such in arbitral proceedings. As the 10th Book of the ZPO does not provide for
any mechanisms concerning multi-party situations in arbitral proceedings, the multitude of
parties may create difficulties.36
28 Accordingly, the parties must stipulate an individual solution for a multi-party situation in
the arbitration agreement. The agreement must according to the BGH consider the opportunity of each shareholder to participate in the proceedings and provide the shareholders
with an opportunity to join the defendants or the claimants.37
29 In practice, the shareholders must be notified of the initiation of arbitral proceedings as early
as possible to give them the opportunity to make an informed decision as to whether or
not to join the proceedings, be it as claimants or defendants. The managing director has a
corresponding legal duty to inform the shareholders.38 In particular, this requires notification
in advance of the constitution of the arbitral tribunal, as all shareholders must be able to participate in the selection and the appointment of the arbitrators (see infra). After notification,
the shareholders must within a reasonable time limit declare their intention to participate
in the proceedings. Failure to observe the time limit entitles the remaining participants to
proceed independently with the arbitration.
30 iii. Participation in Selection and Appointment of Arbitrators: The right of the parties to equally
participate in the selection and the appointment of the arbitrators constitutes one of the fundamental principles of arbitration. Classic two-party arbitrations implement this principle
by either requiring the parties to agree to a single arbitrator or, if the arbitration agreement
provides for a panel of arbitrators, by allowing each side to nominate an arbitrator (1035
ZPO). In the latter case, it is common practice for the claimant and the respondent to each
nominate his arbitrator in the statement of claim or in the statement of defence respectively.
35
36
37
38
OLG Kln 20.03.2008, 18 U 98/07; Hauschild/Bttcher, DNotZ 2012, 577 (596 et seq.); Riegger/Wilske,
ZGR 2010, 733 (742).
See Part II, Nacimiento/Abt/Stein, 1035 paras36 et seq.
BGH 06.04.2009, NJW 2009, 1962 (1964).
BGH 20.01.1986, NJW 1986, 2051 (2052); Nolting, SchiedsVZ 2011, 319 (321); Hilbig, SchiedsVZ
2009, 247 (255).
937
If, however, there is a multitude of parties on either or both sides, the nomination procedure
is bound to become more complicated.
Thus, to assure the equal participation of all shareholders, the arbitration agreement must first 31
of all provide that the claimant may not unilaterally nominate an arbitrator in the statement of
claim.39 Instead, the agreement may either stipulate that the nomination of the arbitrator(s) is
effected by a neutral third party, e.g. an arbitral institution, or provide an internal mechanism
for the designation of the arbitrator(s), for instance, as has been suggested, by majority vote.40
However, in the latter case it is likely that the nomination process will often be controversial,
especially if there is a greater number of claimants and/or defendants involved. Moreover,
many questions regarding the validity of majority decisions and the precise majority requirements are still unsettled, increasing the risk of additional disputes. In the interest of a speedy
procedure and with a view to the overall legitimacy of the arbitral tribunal, it therefore seems
preferable to confer the task of nominating the arbitrator(s) upon an arbitral institution such
as the DIS.
iv. Concentration of Proceedings and inter omnes Effect of Awards: Another core requirement 32
upon which the BGH insisted in SchiedsfhigkeitII is the concentration of the arbitral proceedings in a single venue. In ordinary court proceedings, the Regional Court at the seat of
the corporation enjoys exclusive jurisdiction for disputes regarding the validity of shareholders resolutions (246 (3) sentence1 AktG). As the scope of this stipulation is limited to
state court proceedings and does not extend to arbitrations, the arbitration agreement must
contractually re-create this effect by expressly excluding jurisdiction of the ordinary courts
and concomitantly stipulating exclusive jurisdiction of a single arbitral tribunal. The BGH
has explicitly confirmed the legal ability of the shareholders to conclude such an agreement
in SchiedsfhigkeitII.
As a result, once an arbitration has commenced, subsequent claims pertaining to the same 33
subject-matter are inadmissible in analogous application of 261 (3) no.1 ZPO. In practice,
this means that a state court must reject claims by shareholders pertaining to a subject-matter
for which an arbitral tribunal already has jurisdiction under a valid arbitration clause. However, the inadmissibility of subsequent actions is not considered ex officio by the state court,
but must be explicitly contested by the managing directors of the limited liability corporation, who are under a corresponding duty vis--vis the shareholders.41
v. Summary: In summary, the BGH has considerably increased legal certainty by stipulating 34
the minimum criteria which need to be fulfilled in order to arbitrate disputes pertaining to
the validity of shareholders resolutions. Several Higher Regional Courts (Oberlandesgerichte
OLG) and Regional Courts (Landgerichte LG) have interpreted the validity preconditions stipulated by the BGH in SchiedsfhigkeitII rather strictly. They ruled that the arbitration agreements in the disputes at hand did not satisfy the respective requirements, as they
failed to ensure the prompt notification and the equitable participation of all shareholders
39
40
41
BGH 06.04.2009, NJW 2009, 1962 (1965); Bttcher/Helle, NZG 2009, 700 (701); Hilbig, SchiedsVZ
2009, 247 (253).
BGH 06.04.2009, NJW 2009, 1962 (1963). Heskamp, RNotZ 2012, 415 (433 et seq.); Albrecht, NZG
2010, 486 (489).
Bttcher/Helle, NZG 2009, 700 (702); Duve/Keller, NJW 2009, 1962 (1967). See also the new DIS
Model Clause for Corporate Law Disputes, available at <www.dis-arb.de>.
938
in the constitution of the arbitral tribunal.42 Furthermore, some questions have yet to be
answered, including, inter alia, the implications of SchiedsfhigkeitII on existing arbitration
agreements, the consequences of a partial nullity of the arbitration agreement and a possible
fiduciary duty of the shareholders (gesellschaftsrechtliche Treuepflicht) to accordingly amend
the agreement.43
35 vi. The DIS Supplementary Rules for Corporate Law Disputes: Shortly after the Schiedsfhigkeit II judgment, in autumn of 2009 the DIS introduced its new Supplementary Rules for
Corporate Law Disputes (Ergnzende Regeln fr gesellschaftsrechtliche Streitigkeiten).44 These
rules provide a framework designed specifically to administer disputes within limited liability
corporations45 and are accompanied by a new model clause that caters to the specific needs of
multi-party proceedings and stipulates:
1. All disputes arising between the shareholders or between the corporation and
its shareholders in connection with these articles of incorporation or their validity shall be finally settled according to the Arbitration Rules (DIS-SchO) and the
Supplementary Rules for Corporate Law Disputes (DIS-SRCoLD) of the German
Institution of Arbitration (DIS) without recourse to the ordinary courts of law.
2. The effects of an arbitral award extend also to those shareholders, who have been
identified as Concerned Others within the time limits provided, irrespective whether
they have made use of their opportunity to join the arbitral proceedings as a party or
as an intervenor (section 11 DIS-SRCoLD). The shareholders named as Concerned
Others within the time limits provided, commit to recognize the effects of an arbitral
award rendered in accordance with the DIS-SRCoLD.
3. Former shareholders remain bound by this arbitration agreement.
4. The corporation shall always raise the existing arbitration agreement as defence
against any claim that is filed in the ordinary courts of law and that relates to disputes
in the meaning of No. 1.
36 The Supplementary Rules contain detailed provisions regulating the information and the
joinder of shareholders (2-4), the nomination of the arbitrator(s) (7-8), the treatment
of parallel proceedings (9) and the consolidation of claims, the extension of the legal effects
of the award (11) and costs (12). Unless otherwise agreed, the Supplementary Rules in
effect on the day of the commencement of the proceedings will apply to the dispute (1.2),
thus permitting more flexibility with regard to procedural changes. Overall, the Supplementary Rules reflect the criteria laid out by the BGH in SchiedsfhigkeitII, the only major difference being that the initiators of the claim, not the managing directors of the corporation,
42
43
44
45
OLG Bremen 22.06.2009, NZG 2010, 230, commented by Krll, SchiedsVZ 2010, 144; OLG Frankfurt 09.09.2010, SchiedsVZ 2010, 334, commented by Nolting, SchiedsVZ 2011, 319; OLG Mnchen
24.08.2010, NJOZ 2011, 413; LG Berlin 10.12.2012, NZG 2013, 500; LG Mnchen I 02.09.2010, NJW
2011, 162;
Riegger/Wilske, ZGR 2010, 733 (744 et seq.); Albrecht, NZG 2010, 486; Witte/Hafner, DStR 2009, 2052
(2055 et seq.); Duve/Keller, NJW 2009, 1962 (1967).
For an overview see von Hase, BB 2011, 1993; Borris, SchiedsVZ 2009, 299; Schwedt/Lilja/Schaper,
Schiedsfhigkeit von Beschlussmngelstreitigkeiten: Die neuen Ergnzenden Regeln fr gesellschaftsrechtliche Streitigkeiten der DIS, NZG 2009, 1281.
According to DIS, the Supplementary Rules may also be applied to partnerships, while their application
to stock corporations remains doubtful, see Borris, SchiedsVZ 2009, 299 (304 et seq.); von Hase, BB 2011,
1993 (1994 et seq.).
939
have to make sure that all concerned shareholders are being duly notified of the proceedings
by providing the DIS with a list of shareholders and their respective addresses. In practice,
this requirement is likely to make the Supplementary Rules less attractive to larger corporations especially stock corporations with many shareholders.46 At least until 2013, the
number of proceedings following this approach has been limited: Between 2010 and 2012,
a total of seven proceedings have been commenced under the DIS Supplementary Rules for
Corporate Law Disputes.47
b. Arbitrability of Disputes Regarding the Validity or Nullity of a Shareholders Resolution within 37
a Stock Corporation: The arbitrability of disputes concerning the validity or nullity of a shareholders resolution is also a topic of debate regarding stock corporations.48 In this context,
the same issues regarding the participation of all shareholders and the extension of the res
judicata effect may arise. However, in contrast to limited liability corporations, German Stock
Corporation Law is governed by the principle of strictness in articles of association (Prinzip
der Satzungsstrenge) laid down in 23(5) AktG. According to this rigid standard, only if
the law does not contain any provision to the contrary may the shareholders provide for
particular arrangements in the articles of association.
A majority of legal scholars argues that the principle of strictness (23 (5) AktG) excludes 38
the arbitrability of the validity or nullity of a shareholders resolution, as this principle must
be read in connection with 246 (3) sentence1AktG.49 This statutory rule provides that
the Regional Court at the seat of the corporation enjoys exclusive jurisdiction for disputes
regarding the validity of shareholders resolutions.50 Thus, the first issue regarding the arbitrability of disputes concerning a shareholders resolution in a stock corporation is whether
the principle of strictness in articles of association prohibits statutory arbitration clauses.
The related second issue is whether the jurisdiction of the court at the seat of the company
constitutes a guarantee of access to ordinary courts for disputes concerning shareholders
resolutions.51
As we will see, it is not the purpose of the principle of strictness to exclude arbitration as a 39
means of dispute resolution (i.). Such a limitation does not follow from the case-law either
(ii.). Therefore, arbitration clauses may also be entered into the articles of association of stock
corporations (iii.).
i. Purpose of the Principle of Strictness: The purpose of the principle of strictness (23 (5) 40
AktG) clearly is to provide for the protection of minority shareholders (Minderheitenschutz),
legal certainty (Rechtssicherheit) and the protection of investors (Anlegerschutz).52 Statutory
arbitration clauses do not affect any of these goals. As a matter of fact, whether minority
shareholders are properly protected depends on the safeguards provided for by the arbitration clause, as has been expressly acknowledged by the BGH in SchiedsfhigkeitII.53
46
47
48
49
50
51
52
53
Borris, NZG 2010, 481 (486).

DIS Statistics 2010-2012, available at <www.dis-arb.de>.
For an overview see Borris, NZG 2010, 481.
Hauschild/Bttcher, DNotZ 2012, 577 (587); Gz/Peitsmeyer, DB 2009, 1915 (1916); Schmidt, BB 2001,
1857 (1860); Schmidt, AG 1995, 551 (553); Reichert, FS-Ulmer (2003), p.511 (528).
Schmidt, BB 2001, 1857 (1860); Schmidt, AG 1995, 551 (553).
Schmidt, BB 2001, 1857 (1860); Schmidt, AG 1995, 551 (553); Reichert, FS-Ulmer (2003), p.511 (530).
Hffer (2012), 23 para.34; Spindler/Stilz-Limmer (2010), 23 para.28; Lke/Blenske, ZGR 1998, 253
(258).
Lke/Blenske, ZGR 1998, 253 (258).
940
41 Those who largely rely on the literal meaning of 23 (5) AktG in connection with 246 (3)
AktG argue that these provisions do not allow for an exception.54 In their view, the principle
of strictness does not allow for any deviation from the German Stock Corporation Act and
its jurisdictional provisions.55
42 If one takes the intention of the legislator into account, one recognises, however, that the
provision seeks to enable the marketability and fungibility of shares.56 Shareholders need
to trust that the articles of association of a stock corporation do not contain exceptional
provisions.57 Accordingly, the norm attempts to avoid surprises which might arise if a future
shareholder was to study the articles of association before buying or selling a share. Such an
obligation would make it difficult for shareholders to trade shares in practice.58 Another argument supporting this view is the interpretation of the intention of the legislator. There is no
indication that the legislator intended to exclude disputes concerning the nullity or validity
of shareholders resolutions from arbitration. In fact, it appears as if the legislator did not
consider an exclusion of the arbitrability at the time of enacting 23 (5) AktG in connection
with 246 (3) sentence1 AktG.
43 Accordingly, a growing number of legal scholars and practitioners among them the former
Presiding Judge of the BGH senate that rendered the SchiedsfhigkeitII judgment do not
consider the principle of strictness to be an absolute barrier to the arbitrability of disputes
relating to shareholders resolutions in stock corporations.59 Some authors even doubt the
raison dtre of the principle altogether, arguing that arbitral tribunals are not incapable per se
of ensuring a level of protection for minority shareholders comparable to that in state courts.60
44 ii. The Case-Law: The decision of the BGH in SchiedsfhigkeitI did not resolve the uncertainty
of statutory arbitration clauses covering disputes concerning shareholders resolutions. On
the one hand, the BGH argued that the statutory provision regulating jurisdiction (246
(3) sentence1 AktG) is a provision concerning the subject matter and territorial jurisdiction
(sachliche und rtliche Zustndigkeit).61 On the other hand, the Court stated that, as a consequence of the absence of a provision regulating the principle of strictness (23(5)AktG)
in limited liability corporate law, one could not conclude that ordinary courts would have
exclusive jurisdiction for disputes concerning shareholders resolutions.
45 By contrast, the judgment in SchiedsfhigkeitII concerned the arbitrability of disputes relating to the validity of shareholders resolutions in limited liability corporations, not in stock
corporations. Accordingly, the Court did not rule on the admissibility of such arbitrations
within a stock corporation. However, the judges made it clear that the question of the arbitrability of corporate disputes must not be reduced to an alleged clash of irreconcilable
principles, but rather be solved by careful drafting of the arbitration agreement. Especially
with a view to smaller stock corporations with a shareholder structure comparable to that of a
54
55
56
57
58
59
60
61
Schmidt, BB 2001, 1857 (1861).

Khn, FS-Bckstiegel (2001), p. 445; Zllner, AG 2000, 145 (150 et seq.); differentiating Heskamp,
RNotZ 2012, 415 (425 et seq.): principle of strictness prohibits statutory arbitration clauses, but allows
contractual arbitration agreements.
MnchKommAktG-Pentz (2008), 23 para.150.
Goette, GWR 2009, 103 (105); see also Riegger/Wilske, ZGR 2010, 733 (748).
Borris, NZG 2010, 481 (487); Schmidt, BB 2001, 1857 (1861).
BGH 29.03.1996, NJW 1996, 1753 (1754).
941
limited liability corporation (personalistisch strukturierte Aktiengesellschaft), there are no convincing reasons why disputes within such corporations should not be arbitrable.62 Against
this background, it is not unlikely that the BGH will adopt a more arbitration-friendly approach towards stock corporations in the future.
iii. Use of Arbitration Clauses in Articles of Association: The use of an arbitration clause in the 46
articles of association covering disputes concerning the validity or nullity of a shareholders
resolution in a multi-party situation is possible if the requirements set out by the BGH in its
Schiedsfhigkeit decisions and the multi-party situation is respected. A statutory arbitration
clause protects minority shareholders by providing for the opportunity to participate in the
constitution of the arbitral tribunal (e.g. nomination of the arbitrators) and in the arbitral proceedings by joining the defendant or claimant.63 Accordingly, rights of minority shareholders
are not violated by the introduction of an arbitration clause covering disputes concerning
the nullity or validity of shareholders.64 The exclusive jurisdiction of the Regional Court at
the seat of the company (246 (3) sentence1 AktG) has no impact if the parties agree to
submit their dispute to arbitration. In addition, there is no reason why arbitral proceedings
and ordinary court proceedings should be treated differently.65 Thus, the parties have the opportunity to submit disputes concerning the validity or nullity of a shareholders resolution
in a stock corporation to arbitration.
Another aspect having an impact on the execution of arbitral proceedings concerning the 47
validity of a shareholders resolution is the size of the stock corporation. As a matter of practice, the sheer number of shareholders in a large stock corporation may significantly limit
the practicability of an arbitration concerning shareholders resolutions in two ways. First,
the introduction of an arbitration clause in the articles of association requires the consent of
all shareholders. Second, the practical execution of the opportunity for each shareholder to
participate in the arbitral proceedings, e.g. the opportunity of each shareholder to participate
in the nomination of the arbitrators and the arbitral proceedings by joining as claimant or defendant, might make the proceedings quite cumbersome. Furthermore, the extension of the
res judicata effect must be taken into consideration. This requirement would raise the same
difficulties for limited liability corporations. By contrast, none of the above reasons would
militate against the arbitrability of such disputes in smaller stock corporations (see supra).
4.
Arbitrability of Disputes in Partnerships (Personengesellschaften)
In general commercial partnerships, partnership agreements frequently include arbitration 48

agreements.66 As a result, the arbitrability of disputes is of great interest to the respective
partners. Therefore, the following section addresses the arbitrability of disputes arising
within partnerships. There are different types of disputes which could arise between the
partnership and the partners or among the partners. While the following comments apply to
general commercial partnerships (offene Handelsgesellschaften oHG), they can also largely
62
63
64
65
66
Riegger/Wilske, ZGR 2010, 2010, 733 (748 et seq.); Borris, NZG 2010, 481 (486); Goette, GWR 2009,
103 (105).
Lke/Blenske, ZGR 1998, 253 (258).
Zllner, AG 2000, 145 (150); Bender, Schiedsklagen gegen Gesellschafterbeschlsse im Recht der Kapitalgesellschaften nach der Neuregelung des Schiedsverfahrensrechts, DB 1998, 1990 (1991); Lke/
Blenske, ZGR 1998, 253 (258).
Lke/Blenske, ZGR 1998, 253 (258).
Zilles (2002), p.106; Westermann, FS-Fischer (1979), p.855; Habersack, SchiedsVZ 2003, 241.
942
be applied to civil law partnerships (Gesellschaften brgerlichen Rechts GbR), as well as to

limited partnerships (Kommanditgesellschaften KG).
49 Typically, disputes within partnerships take place between both the partnership itself and its
partners or among partners without participation of the partnership as a party to the dispute.
Payment obligations by and against the partnership, such as claims for profits or reimbursement of expenses, may be brought by or against the partnership.67 Under special circumstances, a partner may be able to sue on behalf of the partnership (actio pro socio).68 Generally,
disputes between the partnership and a partner or among the partners are arbitrable. Most of
the disputes involve an economic interest within the meaning of 1030 (1) sentence1 ZPO
and are, hence, arbitrable (a.). Other disputes may be arbitrated if the partners are legally
capable of concluding a settlement on the subject matter (b.).
50 a. Arbitrability of Claims Involving an Economic Interest: Many disputes within partnerships
or between the partnership and a partner involve payment claims or obligations of financial
significance. They obviously involve an economic interest.
51 Disputes involving an economic interest within a general commercial partnership are, for
example, claims concerning the duty of the initial contribution (Erbringung der Einlage), the
distribution of profits (Gewinnausschttungsanspruch, 120 (1) Commercial Code, Handelsgesetzbuch HGB), the withdrawal of payment (Entnahmerechte, 122 (1)HGB) or the
reimbursement of expenses (Aufwendungsersatz, 110 (1) HGB). In all of those disputes,
the claims either involve a payment of some sort or obligations of particular pecuniary
importance. Thus, in general, such claims are arbitrable because of the economic interest
involved.
52 In principle, the same standards apply to limited partnerships and civil law partnerships.
Thus, all claims involving an economic interest arising in connection with the partnership
agreement either brought by or against the partnership are arbitrable.69 Such claims include,
e.g., claims for the contribution to the civil law partnership (706 Civil Code, Brgerliches Gesetzbuch BGB) or claims for the withdrawal of a payment in a limited partnership (161
(2), 122 (1) HGB).
53 b. Arbitrability of Claims Not Involving an Economic Interest: Disputes within a partnership
not involving an economic interest may include for example partnership resolutions
(Gesellschafterbeschlsse).70 The following disputes can either not definitely be classified
as claims involving an economic interest or are claims not involving an economic interest.
Therefore, the entitlement of the parties to reach a settlement is decisive. All these disputes
67
68
69
70
See, e.g. Ulmer/Schfer (2013), 705 paras 197 et seq.; Baumbach/Hopt-Hopt (2012), 110 para.5. Since
the BGH has decided that all civil law partnerships possess a legal personality if they participate in legal
relations, there is no need to distinguish between general commercial partnerships and limited partnerships one the one hand and civil law partnerships on the other hand. See in more detail Ulmer/Schfer
(2013), 705 paras197 et seq. and paras301 et seq.; Gummert-Unger/Friel (2005), 5 paras46 et seq.,
especially paras 91 et seq.
See in more detail, Schwab (2005), pp.104 et seq.; Ebenroth/Boujong/Joost-Weipert (2008), 163 paras39
et seq.; Baumbach/Hopt-Hopt (2012), 109 paras32 et seq.
See, for example, OLG Hamm 30.03.1999, NZG 1999, 1099 et seq. for a dispute involving a limited
partnership.
BGH 28.05.1979, NJW 1979, 2567 (2568); OLG Celle 31.07.1998, NZG 1999, 167; OLG Hamm
29.04.1992, DB 1992, 2180; Henze, ZGR 1988, 542; Schmidt, ZGR 1988, 523 (525); Khn, FS-Bckstiegel (2001), p.443 (445).
943
are arbitrable. Such disputes may pertain to the withdrawal of the power of management
(Entzug der Geschftsfhrungsbefugnis, 117 HGB), the expulsion of a partner (Ausschluss
eines Gesellschafters, 140 HGB), rights to demand or receive information (118 HGB71) and
rights of objections of limited partners of a limited partnership (164 sentence1 HGB).72
Within a partnership, disputes concerning the validity of a partners resolution are arbitrable. 54
Defective decisions of the partners in a partnership are ipso jure void.73 Hence, neither an
action for declaration of invalidity (Anfechtungsklage) nor an action for rescission (Nichtigkeitsklage) is needed. In order to ascertain that a decision of the partners is void, a partner
can raise an action for a declaratory judgment (Feststellungsklage) before an ordinary court
(256 ZPO).74 As partnerships are communities of joint owners (Gesamthandsgemeinschaften), actions regarding the validity or nullity of a partners resolution must be filed against all
partners respectively denying the validity or nullity of the partners resolution.75 The resulting
declaratory judgment does not cause a change in the legal status or rights, but rather confirms
the validity or nullity of the resolution.76 The assessment, therefore, differs from the situation
in a limited liability and stock corporation. As opposed to disputes about a shareholders
resolution of a corporation, there is no need to provide for a res judicata effect for all partners
and the partnership. As a consequence, previously discussed issues arising in connection
with arbitration agreements and actions for annulment or actions for rescission do not exist
within partnerships. Accordingly, courts and legal scholars alike agree that disputes about the
validity of partners resolutions are arbitrable, as the parties could conclude a settlement on
the subject matter.77
5.
Arbitrability of Disputes within a European Economic Interest Grouping (EEIG)
For supranational types of companies like the European Economic Interest Grouping 55
(EEIG) (Europische Wirtschaftsvereinigung EWiV), arbitral proceedings offer many advantages. Arbitration is favoured by supranational companies because foreign shareholders
71
72
73
74
75
76
77
For limited Partners in limited Partnerships see 166 HGB.

Transferring the reasoning of the Reichsgericht and the concurring legal scholars, no argument against the
Partners ability to conclude a settlement is visible; RG 22.05.1909, RGZ 71, 254, (256).
BGH 11.12.1989, NJW-RR 1990, 474 (475); OLG Hamm 29.04.1992, DB 1992, 2180; KG 23.03.1995,
NJW-RR 1995, 1442 (1443); Baumbach/Hopt-Hopt (2012), 119 para.32; Schmidt (2002), p.1396;
Weber, DStR 1997, 824 (825).
See BGH 07.06.1999, NJW 1999, 3113 (3115); KG 21.03.2011, ZIP 2011, 659; OLG Stuttgart
31.03.2010, DB 2010, 1058 (1061); MnchKommBGB-Schfer (2013), 709 para.113.
See BGH 13.07.1967, NJW 1967, 2159; id. 13.07.1981, NJW 1981, 2565 et seq.; id. 30.04.1984, NJW
1984, 2104; id. 26.09.1994, NJW 1995, 1218 (1219); id. 07.06.1999, BB 1999, 1835; Weber, DStR 1997,
824 (825). The articles of association may, however, include a provision providing for those claims to be
brought against the partnership as well. See BGH 07.06.1999, NJW 1999, 3113 (3115); OLG Mnchen
22.12.2000, NZG 2001, 558 (559).
BGH 28.05.1979, NJW 1979, 2567 (2569); OLG Hamm 29.04.1992, DB 1992, 2180 (2180); Ebbing,
NZG 1998, 281 (284); Ebenroth/Bohne, BB 1996, 1393; Henze, ZGR 1988, 542; Schmidt, ZGR 1988,
523 (525); Schmidt, AG 1995, 551 (553).
BGH 28.05.1979, NJW 1979, 2567 (2568); OLG Hamm 29.04.1992, DB 1992, 2180; Hauschild/
Bttcher, DNotZ 2012, 577 (588); Henze, ZGR 1988, 542; Schmidt, ZGR 1988, 523 (525); Khn, FSBckstiegel (2001), p.443 (445); Ebbing, NZG 1998, 281 (284); Ebenroth/Bohne, BB 1996, 1393. In
commercial partnerships, partnership resolutions involve an economic interest and, therefore, disputes
regarding such resolutions are arbitrable. Trittmann, ZGR 1999, 340 (349); see also Part II, Trittmann/
Hanefeld, 1030 paras 16 et seq.
944
are frequently sceptical about unknown legal systems and foreign ordinary courts.78 In
contrast, they may have gained experience with arbitration over a long period of time.79
European Economic Interest Groupings are similar to general commercial partnerships.
Only the provisions concerning the managing director differ materially between EEIGs and
general commercial partnerships. Whereas the partners of a general commercial partnership
are entitled to manage the company, the partners of the EEIG are not allowed to manage
the company. EEIGs have external managing directors as most limited liability companies.80
Potential disputes may arise concerning the legality of a decision of the partners (Rechtmigkeit von Gesellschafterbeschlssen), regarding management matters and rights of recourse
between the partners (Regressansprche).81
56 Primarily, the Council Regulation (EEC) No. 2137/85 of 25 July 1985 on the European
Economic Interest Grouping contains provisions which apply to the EEIG. Subsequently,
the Act for the Implementation of the EU Regulation applying to the European Economic
Interest Association (Gesetz zur Ausfhrung der EWG-Verordnung ber die Europische wirtschaftliche Interessenvereinigung EWiVAG) stipulates the details concerning the EEIG.
The provisions regarding a general commercial partnership (105 et seq. HGB) apply to
European Economic Interest Groupings being domiciled in Germany, unless the EWiVAG
provides otherwise (1 EWIVAG).82
57 As a result of the reference to 1 EWiVAG and the similarities of the EEIGs structure to
the structure of general commercial partnerships, claims not involving an economic interest
(e.g. disputes regarding decisions of the partners, the withdrawal of the power of management, the elimination of a partner, etc.) are arbitrable, as are claims involving an economic
interest (e.g. disputes regarding the duty of the initial contribution, claims for the distribution of profits (Art. 21 (1) Council Regulation No. 2137/85, rights of recourse (Art. 24 (1)
sentence1 Council Regulation No. 2137/85), compensation for the violation of the restraint
of competition and claims of compensation of the partners (1 EWiVAG in connection with
112, 113 (1) HGB).83
6.
Arbitrability of Disputes within a Societas Europaea
58 The Societas Europaea (SE) is another supranational type of company. A Societas Europaea
is a European stock corporation and is an independent entity of rights and duties. Its liability
is limited to the nominal capital of the company which is divided into shares.84
59 The arbitrability of corporate disputes arising in a Societas Europaea depends on the law
concerning the Societas Europaea. Article 9 of the Council Regulation (EC) No. 2157/2001
of 8 October 2001 on the Statute for a European Company (SE) stipulates the applicable
78
79
80
81
82
83
84
Zilles (2002), p.125.

See also Zilles (2002), p.125.
Baumbach/Hopt-Hopt (2012), Anh 160 para.1.
Roth, FS-Nagel (1987), p.319.
See in general Bhringer, Europische wirtschaftliche Interessenvereinigung (EWiV), BWNotZ 1990,
129 et seq.; Mller-Gugenberger, EWIV Die neue europische Gesellschaftsform, NJW 1989, 1449 et
seq.; Schlter, Die EWIV: Modellfall fr ein europisches Gesellschaftsrecht?, EuZW 2002, 589 et seq.
See supra, paras 50 et seq.
In general see Hirte, Die Europische Aktiengesellschaft ein berblick nach In-Kraft-Treten der
deutschen Ausfhrungsgesetzgebung (Teil I), DStR 2005, 653 et seq.; Thoma/Leuering, Die Europische
Aktiengesellschaft Societas Europaea, NJW 2002, 1449 et seq.
945
rules for this type of company. Pursuant to Article 9 (1) (c)(ii) Council Regulation (EC) No.
2157/2001, the applicable provisions of the member state where the Societas Europaea has
its seat also govern the legal relationships of the Societas Europaea. Within a Societas Europaea, disputes similar to those within a stock corporation could arise between the company
and its shareholders and between the shareholders themselves.
Accordingly, claims involving an economic interest are arbitrable (1030 (1) sentence1 60
ZPO). Such claims may, analogous to possible legal disputes within a stock corporation,
relate to the duty of the original cash contribution (54 AktG), the liability for the incorporation (50 AktG), claims for distribution of profits (58 (4) AktG) and the right to
demand and receive information (131 AktG).
Likewise, the arbitrability of claims not involving an economic interest depends on the legal 61
ability of the parties to conclude a settlement on the subject matter. Pursuant to Article 9 (1)
(c)(iii) Council Regulation (EC) No. 2157/2001, the provisions of the articles of association of a Societas Europaea are subject to the same restrictions as those of a stock corporation in the state where the Societas Europaea has its domicile. The arbitrability of disputes
concerning the validity or nullity of a shareholders resolutions, thus, is subject to certain
restrictions under the principle of strictness (23 (5) AktG), which prescribes, among others, the exclusive jurisdiction of a single arbitral tribunal and additional safeguards to ensure
an equitable participation of all shareholders in the constitution of the arbitral tribunal and
the subsequent arbitral proceedings. Notwithstanding these limitations, corporate disputes
within a Societas Europaea are arbitrable.85
7.
Arbitrability of Disputes within an Entrepreneurial Company (Limited Liability)
The entrepreneurial company (limited liability) (Unternehmergesellschaft (UG) (haf- 62

tungsbeschrnkt)) is not an independent legal form, but a modification of the limited
liability corporation (GmbH) which features, among others, significantly lower minimum
capital requirements. Whereas the incorporation of a GmbH requires a minimum capital of
EUR25,000 (5 (1) GmbHG), the UG requires only EUR1 (5a (1) GmbHG). With only
a few minor exceptions, the UG is governed by the same provisions as the limited liability
corporation. The UG was introduced by the German legislator in 2008 and is intended to
provide entrepreneurs with little capital with a domestic alternative to the English Limited
Company.86 Overall, the UG has been a success, especially in the Internet and IT start-up
scene, with a total of roughly 78,000 incorporations by January 2013.87
As regards the arbitrability of disputes within the UG, the standards previously developed for 63
limited liability corporations apply. Thus, claims involving an economic interest are generally
arbitrable. Claims not involving an economic interest, particularly disputes relating to the
validity or nullity of shareholders resolutions, are equally arbitrable, provided that the arbitration agreement fulfils the criteria stipulated by the BGH in SchiedsfhigkeitII (see supra).
8.
Arbitrability of Disputes within Mixed Companies (Gemischte Gesellschaften)
Under German law, a number of mixed companies (gemischte Gesellschaften) that combine 64
elements from both partnerships and corporations exist, the most widely used being the
85
86
87

Cf. Baumbach/Hueck-Fastrich (2013), 5a para.1.
Kornblum, GmbHR 2013, 693 (695).
946
GmbH & Co. KG (limited partnership with a limited liability company as general partner).
With regard to the arbitrability of disputes within mixed companies, it is important to bear in
mind that there are two distinct legal entities. Consequently, two separate arbitration agreements (one for the limited liability company, one for the limited partnership) are required to
ensure that all disputes within the mixed company are being referred to arbitration.
65 If the articles of association of both companies include arbitration clauses, disputes within
the companies are arbitrable. This is true for disputes involving an economic interest, but
also for disputes not involving an economic interest. Before SchiedsfhigkeitII, legal scholars
had expressed doubts whether it was possible to synchronise arbitral proceedings in both
companies as the arbitrability of disputes regarding the validity of shareholders resolutions
in limited liability companies albeit not in partnerships was an issue of controversy.88
Following the decision of the BGH in SchiedsfhigkeitII, it is now widely accepted that such
disputes are arbitrable, thus making it practically possible to arbitrate disputes pertaining to
the validity of shareholders resolutions within mixed companies.
66 In practice, it is advisable to harmonise both arbitration agreements with regard to the
competent arbitral tribunal as well as to the applicable procedure to avoid delays and other
possible irregularities.
9.
Arbitrability of Disputes within Foreign Companies with a Place of Arbitration in Germany
67 With regard to foreign companies whose articles of association provide for the arbitration
of disputes within Germany, it is controversial which substantive law should govern the
arbitrability of disputes within the company.
68 Generally, if the place of arbitration is in Germany, German arbitration law applies (1025
(1) ZPO). Under German law, the arbitrability of a dispute generally requires that the matter in dispute involves an economic interest (1030 (1) ZPO). The question, therefore, is
whether the arbitrability of disputes in foreign companies also depends on the existence of
an economic interest or some foreign law requirement. In this context, it is controversial
whether the arbitrability of the dispute must be determined according to German substantive law or according to the law applicable to the arbitration agreement.89
69 Generally, one might tend to adopt an arbitration-friendly approach. This view would be
advisable and is also consistent with the intentions of the German legislator.90 If shareholders intend to submit their disputes to arbitration, they should also be able to determine
freely which law should govern the arbitration agreement and, consequently, the question
of arbitrability.
70 Nevertheless, such an approach entails the risk of producing contradictory results, particularly with regard to subsequent enforcement proceedings. If, for instance, the law applicable
to the arbitration agreement provides for the arbitrability of disputes that are not arbitrable
under German law (e.g. employment-related disputes), an award made on the basis of this
arbitration agreement might be annulled by the competent Higher Regional Court for lack
of arbitrability under German law (1059 (2) no.2 lit.a) ZPO). The application of foreign
88
89
90
See Sudhoff-Liebscher (2005), 17 paras 95 et seq.

For the mandatory application of German substantive law Zller-Geimer (2014), 1030 para. 24;
MnchKommZPO-Mnch (2013), 1030 para.22; Stein/Jonas-Schlosser (2002), 1030 para.19 (all with
reference to 1059 (2) no.2 a) ZPO); dissenting Musielak-Voit (2014), 1030 para.10.
947
law standards to the question of arbitrability could therefore lead to a situation, where a
dispute would initially be considered arbitrable, but where a subsequent award could not
be enforced. Such a diversity in the treatment of awards would not be desirable. It therefore
seems to be eventually in the parties interest to determine the question of arbitrability of a
dispute according to German substantive law if the parties agreed on an arbitration place in
Germany. By applying the law of the arbitration site, potential inconsistencies which might
arise due to public policy (ordre public) considerations at the enforcement stage might be
prevented.
B.
Disputes between the Company and its Organs
Having discussed the issue of disputes between the company and its shareholders or between 71
the shareholders, the following section will analyse the arbitrability of disputes between the
company and its organs. It will first deal with potential disputes between a limited liability
corporation and its organs (1.) and afterwards with disputes between a stock corporation
and its organs (2.). For partnerships, due to their structure, the following considerations are
of no significance.
1.
Disputes between the Company and its Organs in a Limited Liability Corporation
A recurring source for disputes is the relationship between a limited liability corporation and 72
its managing directors (Geschftsfhrer). Due to the structure of corporations as legal entities,
a corporation is an independent entity of rights and duties (Trger von Rechten und Pflichten).
A corporation acts through its organs, e.g. the managing directors. The relationship between
the company and its managing directors is two-fold: it consists of an employment relationship and an institutional relationship. The institutional relationship between the company
and its managing directors stipulates the rights and duties of the managing directors, such as
the power to manage the company and the relationship to the company as well as the power
of representation of the managing director (Vertretungsmacht). The institutional rights and
duties are granted by the appointment of the managing director. The appointment of the
managing director may be withdrawn at any time. In contrast, the employment agreement
stipulates the payment of the managing directors, the scope of the duties to perform, as well
as the termination of the employment.
Thus, a distinction has to be made between disputes concerning the employment of man- 73
aging directors (anstellungsrechtliche Konflikte) (a.) and disputes concerning the managing
director as an organ of the company (organschaftliche Konflikte) (b.).
a. Arbitrability of Disputes Concerning the Employment of Managing Directors (anstellungs- 74
rechtliche Konflikte): An arbitration clause in the articles of association of a limited liability
corporation does not cover employment matters concerning managing directors because
these disputes are not related to the relationship between the company and the managing
director as an organ.91 Whether disputes concerning the employment of a managing director
may be submitted to arbitration thus depends on the existence of an arbitration clause in
the employment contract or a separate arbitration agreement with the managing director.
Moreover, the arbitrability of employment matters must not interfere with mandatory legal
provisions and requires the existence of an economic interest according to 1030 (1) sentence1 ZPO.
91
Zilles (2002), p.140.
948
75 In this context, it may initially be doubtful whether employment matters are arbitrable at all.
Pursuant to 101 (3) of the Act governing the Employment Courts (Arbeitsgerichtsgesetz
ArbGG), the provisions of the ZPO regarding arbitration, including 1030 ZPO, do not
apply to employment matters.92
76 Employment matters in this context is a technical term that covers only the relationship
between the employer and the employees. 5 (1) sentence3 ArbGG stipulates that legal representatives of a company are not employees under the scope of the ArbGG.93 Consequently,
101 (3) ArbGG does not preclude employment matters regarding managing directors of a
limited liability corporation from arbitration.
77 Disputes in employment matters include disputes relating to the scope of the managers
duties to perform or the payment of a managing director, as well as the termination of the
managers contract.
78 In general, disputes about the payment of managing directors involve an economic interest.94 Disputes regarding the scope of duties to perform or about the termination could also
involve an economic interest.95 Accordingly, these disputes could be settled and, therefore,
arbitrated. As a consequence, disputes between the managing director and the limited liability corporation are arbitrable.
79 b. Arbitrability of Disputes Concerning the Managing Directors as an Organ (organschaftliche
Konflikte): Disputes between a limited liability corporation and the managing director concerning the managing director in his capacity as an organ of the company could likewise be
subject to arbitral proceedings. A relevant dispute might arise, for example, if a managing director refuses to follow the issue instructions (Weisungen) of the shareholders meeting. The
dispute about the validity or nullity of an issue instruction may be settled by a shareholders
resolution.96 Hence, such disputes are arbitrable. Disputes about the validity of a withdrawal
of the appointment of a managing director by the shareholders meeting (38 (1) GmbHG)
may also be settled by arbitration. The shareholders meeting has the power to withdraw the
appointment of the managing director (46 (1) No.5 GmbHG). Therefore, the withdrawal
lies within the discretion of the shareholders meeting, whose members could conclude a
settlement with the managing director. As a result, the withdrawal could form part of a settlement concluded by the parties.
80 Claims for damages of a company against managing directors in the event of a violation of an
obligation (Obliegenheitsverletzung, 43 (2)GmbHG) are equally arbitrable as they clearly
involve an economic interest.
2.
Disputes between the Company and its Organs in a Stock Corporation
81 Disputes between a stock corporation and its organs focus on disputes between the stock
corporation and the managing board of directors (Vorstand) or the supervisory board (Aufsichtsrat). With a view to the structure of a Societas Europaea, similar disputes could arise in
92
93
94
95
96
See Part II, Trittmann/Hanefeld, 1030 para.20; Haas/Hofeld, FS-Schneider (2011), p.407 (418).
See Herresthal, Die Wirksamkeit von Schiedsabreden mit Vorstnden und Geschftsfhrern, ZIP 2014,
345 (346); Schwab/Weth (2011), 5 paras287 et seq.
Umbeck, Managerhaftung als Gegenstand schiedsgerichtlicher Verfahren, SchiedsVZ 2009, 143 (144);
Wilske/Arnold/Grillitsch, ZIP 2009, 2425 (2428).
See Part II, Trittmann/Hanefeld, 1030 para.11; Wilske/Arnold/Grillitsch, ZIP 2009, 2425 (2428).
See Zilles (2002), p.136.
949
this type of company. Thus, the following issues may also be of relevance in a Societas Europaea. A distinction could be drawn between disputes concerning an organ (a.) or disputes
regarding employment matters (b.).
a. Arbitrability of Disputes with an Organ in a Stock Corporation: The organs of a stock corpora- 82
tion are the board of directors and the supervisory board. Between the stock corporation
and the board of directors, similar disputes as between the limited liability corporation and
its managing directors may arise. These disputes are, at a minimum, arbitrable as the parties
would be legally capable of concluding a settlement.
A withdrawal of the appointment of a member of the board of directors (84 (3) AktG) 83
requires a valid shareholders resolution. An arbitral tribunal may verify the validity of the
shareholders resolution because the principle of strictness (23 (5) AktG) does not prohibit
to arbitrate disputes regarding the validity or nullity of a shareholders resolution (see supra).
Claims for compensation of damages in the meaning of 93 (3) AktG involve an economic 84
interest.97 Consequently, these claims are arbitrable (1030 (1) ZPO).
For further details, reference is made to the comments regarding the arbitrability of disputes 85
between a limited liability corporation and the managing directors as an organ.98
Furthermore, parties may prefer arbitration for disputes between the stock corporation 86
and the supervisory board because of the confidentiality of the arbitral proceedings. For
example, the stock corporation may not want issues such as the dismissal of a member of
the supervisory board (Abberufung eines Aufsichtsratsmitglieds) or claims for compensation
or damages to become public. The dismissal of a member of the supervisory board does not
involve an economic interest, but the shareholders meeting and the member of the supervisory board could conclude a settlement on the dismissal. Accordingly, such disputes are
arbitrable. Likewise, the stock corporation might bring claims for compensation or damages
based on a breach of the duty of care against the supervisory board member (cf. 116 AktG).
Such claims for compensation for damages are monetary claims and are therefore arbitrable
(1030 (1) sentence1 ZPO).
b. Disputes in Employment Matters in a Stock Corporation: Disputes in employment matters 87
in stock corporations such as disputes regarding the scope of contractual duties to perform
or payment matters and the termination of the employment could arise between a company
and a member of the board of directors, as well as between the company and a member of
the supervisory board.
With respect to disputes concerning the board of directors in a stock corporation, the 88
considerations regarding a limited liability corporation and managing directors may apply.
The functions of the board of directors are similar to the functions of managing directors
in limited liability companies.99 Accordingly, disputes concerning the payment of a member
of the organ of a stock corporation are arbitrable because such a claim directly involves an
economic interest. Disputes concerning the scope of the duties to perform of a member of
the board of directors or the supervisory board and the termination of the employment of
such a board member do not involve an economic interest. However, the parties would be
97
98
99

950
entitled to conclude a settlement concerning these disputes pursuant to 1030 (1) sentence2 ZPO.100
III. Extension of the Arbitration Agreement to Non-Signatory Parties

89 Despite the considerable advantages of arbitration, certain limitations arise from the fact that
arbitral proceedings cannot easily be extended to non-signatory parties. As the following section shows, the case-law regarding general commercial partnerships has extended the scope
of an arbitration agreement between a creditor and the partnership as a whole (1.). Likewise,
an individual partner could bring a claim against a creditor on behalf of the partnership (2.).
Finally, claims of a creditor of a corporation against a shareholder of the corporation are addressed (3.).
A.
Claims of a Creditor of the General Commercial Partnership Against an Individually

Liable Partner
90 As a rule, in general commercial partnerships (oHG) the partners are individually liable
(persnlich haftender Gesellschafter) for the liabilities (Verbindlichkeiten) of the partnership
(128 sentence1 HGB). In the case of an arbitration agreement between a creditor and the
general commercial partnership, the creditor may be interested in extending the scope of the
arbitration agreement to a particular partner in order to hold him individually liable for the
liabilities of the partnership. However, generally, an arbitration agreement is legally binding
only on the parties concluding the agreement.101
91 The BGH made an exception to this rule according to 128 sentence1 HGB, as this rule
lays down the individual liability of the partners for liabilities of the partnership.102 Pursuant
to the BGH, the arbitration agreement between the general commercial partnership and the
respective contracting party affects the partners too. This exception is based on the particular
situation of the partner who is individually liable for obligations against the partnership.
Therefore, if an arbitration agreement exists between the company and a creditor, an arbitral
tribunal may also render a decision against the participating partner who is individually
liable.103
B.
Claims of an Individually Liable Partner against a Debtor of the Partnership

(Schuldner)
92 If an individually liable partner relies on claims owned by the partnership against the debtor,
the dispute may also be covered by an arbitration agreement between the debtor and the
partnership. In 1991, the BGH decided that claims owned by the partnership that are
brought forward by an individually liable partner against a debtor of the partnership are likewise covered by an arbitration agreement between the general commercial partnership and
the debtor.104 However, if a partner were to bring forward his own individual claims, which
do not arise out of the relationship between the partnership and the debtor, against a debtor
of the partnership, the situation is obviously different. In this case, there is no reason for an
100
101
102
103
104
See Part II, Trittmann/Hanefeld, 1030 paras 11 et seq.

BGH 12.11.1990, NJW-RR 1991, 423 (424).
BGH 12.11.1990, NJW-RR 1991, 423 (424).
BGH 12.11.1990, NJW-RR 1991, 423 (424).
951
extension of the scope of application of an arbitration agreement between the partnership

and the debtor.105
C.
Claims of a Creditor of a Corporation against a Shareholder of the Corporation
In principle, shareholders of corporations, stock corporations and limited liability companies 93

alike are not liable to creditors of the corporation. However, in business disputes creditors
often attempt to enforce arbitration agreements against corporate shareholders of companies
although the shareholders have not agreed to arbitration with the creditors. At the same
time, creditors will try to hold the shareholders liable for the debts of the company (piercing
the corporate veil or following the German concept of Durchgriffshaftung), especially if
the shareholders and the company contracting with the creditors belong to the same corporate group. Under these circumstances, the scope of the arbitration agreement may be
extended: Pursuant to the group of companies doctrine, an arbitration agreement signed by
one company in a group of companies may be considered as binding on the non-signatory
companies, as far as the intention of the signing parties can at all be interpreted, to call for
such interpretation.106
Nevertheless, precedents by arbitral tribunals or ordinary courts deciding explicitly upon the 94
application of the group of companies doctrine under German arbitration law, as of today, do
not exist.
However, in 2001, the OLG Hamburg107 had to decide on a case where a purchase agreement 95
between a subsidiary as buyer and a third party as seller included an arbitration agreement.
The parent company of the buyer had declared prior to trial and in writing vis--vis the seller
that it itself, not the subsidiary, would fulfil the obligations arising from the agreement. When
a dispute arose between the parties, the seller commenced arbitral proceedings against the
parent company. The arbitral tribunal considered that, in light of the circumstances, the
arbitration agreement could be extended to the parent company and condemned the latter
to pay damages to the seller. The parent company subsequently applied for annulment of
the award on the grounds that the arbitral tribunal lacked jurisdiction. The OLG Hamburg
concurred and annulled the award, stating that [t]he arbitration agreement dated [] was
not concluded with the applicant [the parent company], but with its subsidiary. The subsidiary is
an independent legal entity. Therefore, the arbitration agreement could not at the same time bind
the applicant. Without making explicit reference to the group of companies doctrine, the Court
thus clearly opposed the extension of an existing arbitration agreement to companies within
a corporate group.
The lively academic discussion has led to a group of supporters of an incorporation of the 96
group of companies doctrine in German arbitration law on the one hand and scholars favouring
the application of concepts and standards of German contract and corporate law including
105
106
107
BGH 12.11.1990, NJW-RR 1991, 423 (424).

See in general Woolhouse, Group of Companies Doctrine and English Arbitration Law, Arb.Int. 2004,
434; Busse, SchiedsVZ 2005, 118; Sandrock, in: Bckstiegel/Berger/Bredow (2005), p.93 and id., The
Group of Companies Doctrine Forms no Part of English Law Ein bemerkenswertes Urteil der Queens
Bench, IDR 2005, p.51.
OLG Hamburg 08.11.2001, OLGReport 2002, 305.
952
the concept of piercing the corporate veil (Durchgriffshaftung)108 on the other hand.109 Thus,
it is somewhat uncertain whether an arbitral tribunal applying German arbitration law will
employ the group of companies doctrine or apply German corporate or contract law to solve
the issue. With a view to the decision of the OLG Hamburg and the rising number of critical
voices in legal doctrine,110 however, it is not unlikely that future arbitral tribunals will adopt
a more critical approach to the group of companies doctrine in order to avoid the risk of an
annulment of the award.
IV. Arbitration Agreement

97 In order to exclude a corporate dispute from the jurisdiction of ordinary courts, the parties
can rely either on a contractual arbitration agreement (A.) or on a statutory arbitration clause
(B.).
A.
Contractual Arbitration Agreement
98 The shareholders or partners of an association can arrange for an arbitration agreement in the
event of disputes. The ZPO provides for two options to exclude the jurisdiction of ordinary
courts the parties can either conclude an arbitration agreement (Schiedsabrede) or introduce an arbitration clause (Schiedsklausel) into the main contract (1029 ZPO). Whereas
the term arbitration agreement stipulates an arbitration independent of the contract, an
arbitration clause within the meaning of 1029 ZPO has to be incorporated into the actual
contract to which it refers. The formal requirements for arbitration agreements on the one
hand and arbitration clauses on the other hand differ. These requirements must be fulfilled
in order to be able to raise the affirmative defence that an arbitral tribunal must judge on the
matter in dispute (Einrede der Schiedsgerichtsbarkeit).
99 1029 ZPO requires a contractual arbitration agreement to cover several or all disputes arising out of the legal relationship of the parties signing the agreement. For contractual arbitration agreements, 1031 (1) ZPO stipulates that the agreement must provide a record of the
agreement. Such a record could be provided by a document signed by the parties or in an
exchange of letters, telefaxes, telegrams or other means of telecommunication. The arbitration clause must be stipulated in written form.
100 Given the strict distinction between entrepreneurs and consumers according to consumer
protection law, in many business transactions, one of the parties needs to be treated as a
consumer in the sense of 13 BGB. A consumer in the sense of 13 BGB is an individual (a
natural person) who concludes a transaction for purposes outside his trade or self-employed
profession and does not pursue a commercial activity. Investments and the administration of
investments are, according to the BGH, not considered as inherently commercial activities
108
109
110
German courts tend to be very reluctant to apply the concept of piercing the corporate veil. A good
comparison of the German and US-American concept (including an outline of the German case law
on piercing the corporate veil) can be found in von Arnim, U.S. Corporation und Aktiengesellschaft im
Rechtsvergleich, NZG 2000, p.1001. However, precedents applying the piercing the corporate veil concept
to arbitration agreements do not exist in Germany.
See the overview in Sandrock, in: Bckstiegel/Berger/Bredow (2005), p.93 (107); Busse, SchiedsVZ
2005, 118 (120).
See e.g. Musielak-Voit (2014) 1029 para.8; Zller-Geimer (2014) 1029 para.72; Lachmann, (2008),
para.368; Mller/Keilmann, Beteiligung am Schiedsverfahren wider Willen?, SchiedsVZ 2007, 113 (117
et seq.).
953
that can be attributed to a trade or a profession. Thus, shareholders can be consumers within
the meaning of 13 BGB.111
If one of the parties is a consumer, the arbitration agreement has to be incorporated in a 101
separate document (1031 (5) ZPO)). This document needs to be duly signed by the consumer. If a public notary certifies the arbitration agreement, it does not have to be signed in
a separate agreement.
B.
Statutory Arbitration Clause
Companies may also use arbitration clauses in the articles of association in order to exclude 102
the jurisdiction of ordinary courts for disputes between the company and its shareholders on
the one hand and among the shareholders on the other hand.
In this context, one may either classify an arbitration clause as a contractual arbitration agree- 103
ment in terms of 1029 ZPO or as a statutory arbitration clause in the scope of 1066 ZPO,
depending on whether the respective arbitration clause is part of the articles of association of
a corporation (then statutory) or a partnership (then contractual).112
Arbitral tribunals are required to be legitimised by a testamentary disposition or by other 104
non-contractual dispositions ( 1066 ZPO). Thus, this provision concerns situations in
which an arbitration clause has a binding effect on an individual who is neither a signatory of
an arbitration agreement nor otherwise contractually agreed to arbitration.
The shareholders could, for example, introduce an arbitration clause into the articles of 105
association providing for a permanent arbitral tribunal that is competent to decide on all
the disputes between the company and its shareholders or among the shareholders. As the
permanent tribunal would need to be independent and neutral, an organ of the company
that is constituted of shareholders might not be able to assume the responsibility of such
a tribunal.113 In principle, an advisory board consisting of shareholders could decide the
disputes within the company. Such an advisory board could likewise resolve pre-arbitration
disputes and encourage to settle the dispute without court actions. The area of responsibility of such an advisory board would, however, need to be clearly determined. Therefore, a
distinction between a pre-arbitration dispute solving mechanism and the introduction of an
arbitral proceeding in front of a permanent arbitral tribunal would need to be clearly drawn.
If a permanent arbitral tribunal is established, the arbitration clause must explicitly exclude
the jurisdiction of ordinary courts. As the requirements of independence and neutrality of
the arbitrators must be fulfilled,114 a cost-efficient and pragmatic way needs to be found to
establish a neutral board of company outsiders even before a specific dispute arises.
In order to decide whether a statutory arbitration clause must be subordinated to 1029 106
ZPO or to 1066 ZPO, one has to distinguish between corporations (1.) and partnerships
111
112
113
114
See Part II, Trittmann/Hanefeld, 1031 paras 23 et seq., BGH 23.10.2001, NJW 2002, 368 for civil law
partnerships; Palandt-Heinrichs (2014), 14 para. 2 with further references; Lachmann/Lachmann,
Schiedsvereinbarungen im Praxistest, BB 2000, 1633 (1634).
See Zller-Geimer (2014), 1066 paras 1, 13 and supra, paras 98 et seq. Differently, see generally Part II,
Haas, 1066.
BGH 27.05.2004, NJW 2004, 2226.
See BGH 27.05.2004, NJW 2004, 2226 and 1036 (1) ZPO which provides for a disclosure statement
and a right of objection.
954
(2.). Also, with regard to statutory arbitration clauses, a notarisation of the clause and the
applicable arbitration rules must be considered (3.).
1.
Arbitration Clause in the Articles of Association of a Corporation
107 The compatibility of arbitration clauses in the articles of association with the applicable corporate law and the classification as an agreement in the terms of 1029 ZPO or 1066 ZPO
differs for limited liability corporations (a.) and stock corporations (b.).
108 a. Arbitration Clause in the Articles of Association of a Limited Liability Corporation: According
to the prevailing opinion in legal literature, a statutory arbitration clause is treated as an arbitration clause in the sense of 1066 ZPO.115 A statutory arbitration clause has no contractual
character due to the corporate structure of the company. The shareholders do not sign an
arbitration clause in the articles of association. Therefore, a valid arbitration clause does not
require compliance with 1031 ZPO, which applies exclusively to contractual arbitration
clauses.116 In particular, the arbitration clause must not provide a record of the agreement.
The introduction of an arbitration clause into the articles of association of a limited liability
corporation is therefore possible.
109 b. Arbitration Clause in the Articles of Association of a Stock Corporation: An arbitration clause
in the articles of association of a stock corporation is also an arbitration clause in the meaning
of 1066 ZPO. Thus, no formal requirements pursuant to 1031 (1) ZPO e.g. a form,
which provides for a record of the agreement must be complied with.
110 The introduction of an arbitration clause into the articles of association of a stock corporation must, however, be evaluated in light of the principle of strictness (23 (5) AktG). This
provision enumerates circumstances under which the articles of association could differ
from or could amend other provisions of the AktG.117 Thus, the shareholders could generally stipulate an arbitration agreement in the articles of association.118 As the intention of the
principle of strictness is to guarantee legal certainty, to protect minorities and investors, these
objectives can be achieved just as effectively by recourse to arbitration. An arbitration clause
in the articles of association, therefore, does not violate the principle of strictness (see supra).
If arbitration and ordinary jurisdiction provide for equal levels of legal protection, there is no
reason to prohibit an arbitration clause in the articles of association of a stock corporation.
2.
Arbitration Clause in the Articles of Association of a Partnership
111 The BGH assumes that arbitration clauses in the articles of association of a partnership are
contractual arbitration agreements (1029 (1) ZPO), as partnerships lack an independent
corporate structure.119 Since statutory arbitration clauses qualify as arbitration agreements,
115
116
117
118
119
Hauschild/Bttcher, DNotZ 2012, 577 (580); Bttcher/Fischer, NZG 2011, 601 (603 et seq.); Ebbing,
NZG 1998, 281; Zller-Geimer (2014), 1066 para.2; Schmidt, ZHR 1998, 265 (275); id., BB 2001,
1857 (1862); Schwab/Walter (2005), Chap. 32 para.4; Rodloff, Einbeziehung und Ausgestaltung von
Schiedsabreden im Gesellschaftsrecht, DStR 1997, 1408 (1409).
MnchKommAkt-Pentz (2008), 23 para.148.
OLG Hamm 07.03.2000, ZIP 2000, 1013 (1014).
BGH 02.06.1966, NJW 1966, 1960 (1961); id. 11.10.1979, NJW 1980, 1049; Baumbach/Hopt-Hopt
(2012), Einl vor 1 para.90; Baumbach/Lauterbach-Hartmann (2014), 1066 para.5; Musielak-Voit
(2014), 1066 para. 7; Thomas/Putzo-Reichold (2014), 1066 para. 2; Schtze, Zur notariellen
Beurkundung von Schiedsvereinbarungen, BB 1992, 1877 (1879); Ebbing, NZG 1998, 281 (282);
955
they also have to comply with the formal requirements of 1031 ZPO. Thus, the arbitration
agreement must be in a written form in order to provide a record of the agreement. The form
requirement may for instance be fulfilled by reference to a document, other correspondence
or a telegram.
Some legal scholars argue that arbitration clauses in the articles of association of a partner- 112
ship must be qualified as non-contractual arbitration clauses (1066 ZPO) because of the
wording of this provision.120 According to this provision, arbitral proceedings having been
established lawfully by disposition are subject to the provisions on arbitration in the German
ZPO. Some authors point out that the term established lawfully (in statthafter Weise) is a
reference to corporate law.121
They argue that the validity of an arbitration clause in the articles of association depends 113
on the applicable corporate law.122 If the provisions of the applicable law provided for the
possibility to introduce an arbitration clause in the articles of association, such a clause would
be qualified as non-contractual (1066 ZPO).123 Legal scholars holding this view underline
the similarities between the organisation of a partnership on the one hand and corporations
on the other hand.124 Accordingly, these authors support the application of 1066 ZPO.125
Moreover, the distinction between a company as a community of joint owners and a legal
entity of its own is unknown in other legal systems. A further argument is the simplification
of the introduction of an arbitration clause in the articles of association of a partnership. The
clause would be binding as a consequence of the binding effect of the articles of association.
If the clause is regarded as a contractual clause, the binding effect would apply only to the
signing parties.
However, based on current case-law, arbitration agreements in partnership agreements have 114
to be treated as contractual agreements within the meaning of 1029 ZPO. Given the strong
arguments in favour of a statutory character of arbitration clauses in articles of association, it
is conceivable that the BGH will one day overrule its earlier case law.
3.
Notarial Aspects of Statutory Arbitration Clauses
If a statutory arbitration clause provides as it routinely will for the application of certain 115
institutional arbitration rules, the question may arise as to whether the arbitration clause
itself or the arbitration rules referred to in this clause must be notarised in order to be valid.
This requirement becomes primarily relevant in the context of corporations, as German
law stipulates a duty of notarisation regarding the articles of association of limited liability
120
121
122
123
124
125
rejected by Trotha, Zur Formproblematik bei Schiedsabreden von GmbH-Gesellschaftern, DB 1988,

1367 (1369).
Schmidt, Die Bindung von Personengesellschaften an vertragliche Schiedsklauseln Zur Bedeutung der
1027 Abs. 2, 1048 ZPO im Personengesellschaftsrecht, DB 1989, 2315 (2317); Schmidt, Formbedrftigkeit einer Schiedsabrede fr Streitigkeiten aus Personengesellschaftsvertrgen nach 1027 Abs. 1
ZPO?, DB 1991, 904; Schmidt, ZHR 1998, 265 (277); Ebbing, NZG 1999, 754; Habersack, SchiedsVZ
2003, 241 (243).
Schmidt, Statutarische Schiedsklauseln zwischen prozessualer und verbandsrechtlicher Legitimation, JZ
1989, 1077 (1082).
Ebbing, NZG 1999, 754 (756).
Ebbing, NZG 1999, 754 (756).
956
companies (2 (1) GmbHG) and stock corporations (23 (1) AktG). In contrast, the articles of association of a partnership do not require notarisation per se.126
116 With regard to corporations, however, the scope of the duty of notarisation must be assessed.
In this respect, German law distinguishes between mandatory provisions (obligatorischer Satzungsinhalt), which must be notarised, and optional provisions (fakulativer Satzungsinhalt),
which may be notarised, within the articles of association.
117 Statutory arbitration clauses are not mandatory provisions, as there is no legal duty of shareholders to submit their disputes to arbitration. Nonetheless, optional provisions that are
intended to have a binding effect on current and future shareholders (krperschaftsrechtliche
Wirkung) must be notarised if they are to achieve this result.127 By inserting an arbitration
clause into the articles of association, the shareholders wish, as a rule, to generally exclude the
jurisdiction of the state courts and to refer any future dispute within the corporation to arbitration. The arbitration clause therefore intends to bind both current and future shareholders
and must, consequently, be notarised. 128
118 The notarisation requirement for an arbitration clause raises the subsequent question
whether the arbitration rules referred to in such a clause must also be notarised. There are
different views on this topic.129 As German law does not expressly stipulate any legal duty
to notarise arbitration rules referred to in an arbitration clause,130 notarisation of arbitration
rules is optional and any decision on this issue must take into account the interests of the
shareholders in the individual case. If the shareholders wish to apply a specific set of rules
as in effect at the time of the notarisation (static reference), these rules should be notarised
to ensure that only this version governs future arbitral proceedings.131 To the contrary, if the
shareholders as in most cases simply wish to apply the arbitration rules of a certain arbitral
institution applicable at the time when the dispute arises (dynamic reference), notarisation
will not be required. In the latter case, the arbitral tribunal will determine which version of
the rules is to be applied to the dispute at hand (317 BGB).132 Generally, parties will want to
apply the arbitration rules in force at the commencement of the proceedings.133
C.
Scope of Statutory Arbitration Clauses
119 If the shareholders or partners of a company agree to exclude the jurisdiction of state courts
and introduce an arbitration clause in the articles of association or conclude an independent
arbitration agreement, consecutive questions about the scope of the arbitration clause (1.)
and the arbitration agreement (2.) may arise.
126
127
128
129
130
131
132
133
A duty of notarisation may, however, arise under specific legal provisions, e.g. if a partner makes a contribution in kind concerning real estate (311b (1) BGB) or company shares (15 (4) GmbHG), see
Hauschild/Bttcher, DNotZ 2012, 577 (592).
Baumbach/Hueck-Fastrich (2013), 2 para.12.
See Hauschild/Bttcher, DNotZ 2012, 577 (592).
For an overview see Bttcher/Fischer, NZG 2011, 601; Broichmann/Matthus, SchiedsVZ 2008, 274.
OLG Mnchen 10.09.2013, SchiedsVZ 2013, 287, 291; Bttcher/Fischer, NZG 2011, 601 (603).
For technical details regarding the notarisation of arbitration rules, see Bttcher/Fischer, NZG 2011, 601
(604).
Hauschild/Bttcher, DNotZ 2012, 577 (593); Heskamp, RNotZ 2012, 415 (426 et. seq.); Borris, SchiedsVZ 2009, 299 (310); Bttcher/Fischer, NZG 2011, 601 (604).
OLG Mnchen 10.09.2013, SchiedsVZ 2013, 287, 291; Bttcher/Fischer, NZG 2011, 601 (604).
1.
957
Scope of an Arbitration Clause
Statutory arbitration clauses pursuant to 1066 ZPO only affect disputes arising out of the 120
relationship between the company and its shareholders and among the shareholders.134 The
arbitrability of these disputes was discussed above.135
2.
Contractual arbitration agreements in the sense of 1029 (1) ZPO in general cover disputes 121
arising out of the relationship between the company and its shareholders and among the
shareholders as well as individual rights.136 Therefore, the scope of an arbitration agreement
in the meaning of 1029 (1)ZPO can be more extensive than a statutory arbitration clause.
D.
Subsequent Introduction of an Arbitration Clause into the Articles of Association

(nachtrgliche Schiedsklausel)
If the articles of association do not contain an arbitration clause at the time of the incor- 122
poration and the shareholders wish to introduce such a clause later, it can be included by
consensus of all members of the company.
The situation after the foundation is more difficult if the majority of shareholders wish to in- 123
troduce an arbitration clause against the opposition of a minority of shareholders or partners.
This question is assessed differently for partnerships and corporations. The introduction of a
new arbitration clause into the articles of association of a corporation will be discussed first
(1.). Subsequently, the introduction of an arbitration clause into the partnership agreement
(2.) will be explored.
1.
Introduction of an Arbitration Clause into the Articles of a Corporation
If and under which conditions the introduction of an arbitration clause into the articles of 124
association after the foundation of the corporation is valid is a topic of ongoing debate among
courts and legal scholars.
According to the prevailing opinion, the introduction of an arbitration clause after the foun- 125
dation of the corporation is possible solely with the consent of all shareholders.137 By contrast,
only few legal scholars contend that a resolution by a majority of shareholders should suffice
to introduce an arbitration clause into the articles of association.138
134
135
136
137
138
BGH 25.10.1962, NJW 1963, 203 (204); MnchKommZPO-Mnch (2013), 1066 paras 16 et seq.;
BGH 25.10.1962, NJW 1963, 203 (204); BGH 22.05.1967, NJW 1967, 2057 (2058); OLG Hamm
07.02.1990, OLGZ 1990, 453 (454); OLG Mnchen 09.02.1999, NZG 1999, 780 (781); MnchKommZPO-Mnch (2013), 1066 paras16 et seq.; Stein/Jonas-Schlosser (2002), 1066 para.6.
Roth, FS-Nagel (1987), p.318 (326); Schmidt, Schiedsklauseln in Gesellschaftsvertrgen der GmbH &
Co. KG. Thesen zur Anpassung des Satzungsrechts von Kommanditgesellschaft und KomplementrGmbH, GmbHR 1990, 16 (17); Reichert/Harbarth, NZG 2003, 379 (380 et seq.); Berger, ZHR 2000,
295 (301); Bayer, ZIP 2003, 881 (890).
Haas, Beruhen Schiedsabreden in Gesellschaftsvertrgen nicht auf Vereinbarungen i.S. des 1066 ZPO
oder vielleicht doch?, SchiedsVZ 2007, 1 (8); Ebbing, NZG 2000, 898 (899); Ebbing, NZG 1999, 754
(755).
958
126 The BGH139 confirmed that the consensus of all shareholders is necessary in a case dealing
with the introduction of an arbitration clause into the articles of a registered association
(eingetragener Verein) against the opposition of a minority. The court stated, concurring with
the prevailing opinion in literature,140 that the introduction of an arbitration clause into the
articles of a registered association against the opposition of a minority is invalid. As of today,
no other judgment has been rendered. Therefore, it has to be assumed that the BGH would
rule similarly in cases involving a limited liability or stock corporation. Thus, the consensus
of all shareholders is needed for the introduction of an arbitration clause after the foundation
of the corporation.
2.
Introduction of an Arbitration Clause in the Partnership Agreement of a General Commercial

Partnership
127 The introduction of an arbitration clause in the partnership agreement of a general commercial partnership requires the consensus of all partners (119 (1) HGB). A majority of
the partners may only introduce a new article if the partnership agreement provides for the
possibility of an amendment of the partnership agreement by the majority (119 (2) HGB).
Experience in practice shows that many partnership agreements lack such a provision.
E.
Joining and Retiring of Members
128 Further challenges may arise when a new member joins a company whose articles of association contain an arbitration clause. Can this arbitration clause have a binding effect on the new
member?
129 Arbitration clauses in limited liability corporations and stock corporations are statutory
arbitration agreements in the meaning of 1066 ZPO.141 Arbitration clauses in articles of
association of corporations are an integral part of the membership right.142 When a new
member joins the corporation and the membership right is transferred from a shareholder
to another person, the rights arising from the arbitration agreement are transferred to the
acquirer together with all other rights and obligations attached to the membership right.143
A separate legal transaction apart from the transfer of the membership right is not required.
130 Arbitration clauses in articles of association of a partnership are contractual arbitration agreements (1029 (1) ZPO). The arbitration clause is part of the terms of membership of a
partnership.144 When a new member joins the partnership, the arbitration clause accordingly
also applies to the new member by analogy (401 BGB) as well as the other rights and duties
attached to the membership.145
131 Under the case-law of the BGH, a retiring partner of a partnership is, moreover, bound by
the arbitration agreement in the partnership agreement as long as the dispute arises from
139
140
141
142
143
144
145
BGH 03.04.2000, NZG 2000, 897 (898).

Berger, ZHR 2000, 295 (300); Hachenburg-Raiser (1997), 13 para.18.
See Part II, Haas, 1066 paras 31 et seq.
BGH 28.05.1979, NJW 1979, 2567 (2567).
BGH 28.05.1979, NJW 1979, 2567 (2568).
BGH 03.02.1978, NJW 1978, 1585 (1586); id. 02.10.1997, NJW 1998, 371; id. 03.05.2000, NJW 2000,
2346; id. 01.08.2002, NZG 2002, 955.
BGH 03.02.1978, NJW 1978, 1585 (1586); id. 02.10.1997, NJW 1998, 371; id. 03.05.2000, NJW 2000,
2346; id. 01.08.2002, NZG 2002, 955; Hauschild/Bttcher, DNotZ 2012, 577 (588).
959
the former relationship between the partners.146 It seems likely that the German courts will
decide similarly if a comparable case would deal with a statutory arbitration clause in the
articles of association of a company.
V.
Composition of the Arbitral Tribunal and Organisation of Proceedings
When a valid arbitration agreement exists and a dispute is covered by the arbitration agree- 132
ment, the composition of the arbitral tribunal can be a challenge for the parties.
The composition of the tribunal does not per se constitute any problems as the parties are free 133
in determining the number of arbitrators and selecting them.
For corporate disputes, the parties may nominate arbitrators with specialised expertise in 134
corporate matters. Arbitrators for corporate disputes are typically attorneys, notaries, judges
or professors. To rely on the special knowledge of the arbitrator might be advisable.147 Being
the leading institutional service provider in Germany, the DIS offers a large panel of potential
arbitrators. A permanent arbitral tribunal with specialised knowledge in corporate law is
the Permanent Arbitral Tribunal of the Bar Association of Frankfurt am Main. This arbitral
tribunal consists of four chambers each with three members. One chamber is specialised
in corporate matters.148
Furthermore, the parties are generally free to agree on the procedure with respect to the con- 135
stitution of the arbitral tribunal (1035 (1) ZPO) and to the proceedings before the arbitral
tribunal to establish the facts of the case and to decide on the subject-matter of the dispute
(1042 (1) ZPO). However, this freedom is not without limits. Following the criteria laid
out by the BGH in SchiedsfhigkeitII, the parties must devote special care to the drafting of
the arbitration agreement, regardless of whether it is incorporated in the articles of association of the company or separately concluded. Since 2009, the DIS Supplementary Rules for
Corporate Law Disputes may offer additional guidance to shareholders and partners alike.
VI. Applicable Law (1051 ZPO)

In corporate law, the applicable law is determined in accordance with the company seat prin- 136
ciple (Sitztheorie). This principle was established by the European Court of Justice (ECJ)
for all companies within the European Union.149 In accordance with this jurisprudence, the
BGH has held that the law of the seat shall be applicable to companies in Germany.150 Therefore, German law will apply to companies having their seat in Germany.
If the parties agreed on the application of a foreign law, they might, therefore, violate the 137
company seat principle. Although 1051 (1) ZPO seems to allow the parties to choose any
law as the applicable law to the substance of the dispute, it is generally acknowledged that
there are limits to their choice of law. These limits are established by mandatory provisions
of law.151 For companies within the European Union, the application of the law of the seat is
146
147
148
149
150
151
See BGH 01.08.2002, NJW-RR 2002, 1462 (1463).

See Trittmann, ZGR 1999, 340 (360); Schumann, NJW 1992, 2065.
See Zilles (2002), p.14; Nolting, SchiedsVZ 2011, 319 (320).
ECJ 05.11.2002, Case C-208/00, (berseering BV v. Nordic Construction Company Baumangement
GmbH) NJW 2002, 3614 (berseering); ECJ 30.09.2003, Case C-167/01, (Kamer vom Koophandel
en Fabrieken voor Amsterdam v. Inspire Art Ltd.) NJW 2003, 3331 (Inspire Art).
BGH 13.03.2003, NJW 2003, 1461.
MnchKommZPO-Mnch (2013), 1051 paras18 et seq.
960
such a mandatory principle, as stated by the ECJ in its decisions Inspire Art and berseering.152
As the principle of the law of the seat requires this law to be applied when a company moves
the seat to another country,153 the company law of the law of the seat will have to be considered as a mandatory provision in cases involving companies from non-EU countries. As a
consequence, notwithstanding 1051 (1) ZPO, the parties will not be totally free to agree
on rules of a law that differ from the law of the seat of the company.
VII. Arbitral Award (1055 ZPO)

138 According to 1055 ZPO, an arbitral award has the same effect between the parties as a final
judgment of an ordinary court. Consequently, the arbitral award directly effects a change of
the legal status or legal rights and obligations between the parties to the dispute. An arbitral
award regarding the validity or nullity of a shareholders resolution provides the shareholders resolution in dispute with a legal effect.
139 However, while a shareholders resolution needs to be published in the commercial register,
the entry may not be based on an arbitral award. For the entry of the shareholders resolution,
a declaration of enforceability by an ordinary court is necessary, 1060 ZPO.154
VIII. Summary
140 This chapter focused on the adequacy of arbitration as a means of resolving corporate law
disputes with a view to different types of companies. In sum, all corporate disputes for all
types of companies are arbitrable.
141 Parties can, first of all, arbitrate claims involving economic interests both within corporations and within partnerships. As a result, claims involving a pecuniary dimension are always
arbitrable.
142 Parties may also arbitrate claims not involving an economic interest if they would hypothetically be able to conclude a settlement on the respective subject matter under German
law. The BGH has confirmed in SchiedsfhigkeitII that even corporate disputes regarding the
validity or nullity of shareholders resolutions may be arbitrated if the arbitration agreement
is binding on all shareholders and respects certain minimum standards implied by the rule
of law, such as the information of all shareholders concerning the arbitral proceedings, the
opportunity to nominate arbitrators and the possibility of a joinder for other shareholders.
Likewise, the res judicata effect of the subsequent award must be extended to all shareholders of the company irrespective of their participation in the arbitral proceedings. Although
SchiedsfhigkeitII concerned a case involving a limited liability corporation, its reasoning may
be applied to stock corporations as well. Especially with a view to small stock corporations,
cogent reasons militate for the arbitrability of disputes concerning shareholders resolutions
in stock corporations. In particular, the arbitrability of such disputes is not prohibited by the
principle of strictness (23 (5) AktG).
143 The arbitrability of disputes concerning shareholders resolutions in partnerships is undisputed. Likewise, disputes within other legal entities such as European Economic Interest
Groupings, SEs, entrepreneurial companies and mixed companies are, as a rule, arbitrable.
152
153
154
ECJ 05.11.2002, NJW 2002, 3614 (berseering); ECJ 30.09.2003, NJW 2003, 3331 (Inspire Art).
See Kropholler (2004), 55 I.
Concurring Schmidt, BB 2001, 1857 (1860); dissenting Musielak-Voit (2014), 1060 para.2; Schwab/
Walter (2005), Chap.21 para.12.
961
Disputes between a corporation and its organs can also be a subject matter of arbitral pro- 144
ceedings. In certain cases, the scope of an arbitration agreement may also be extended to
non-signatory parties. The agreement itself can either have a contractual or a statutory basis.
The BGH accepts statutory arbitration clauses in the articles of association of corporations,
but not of partnerships. A statutory arbitration clause must not observe the form requirements pursuant to 1031 ZPO and has the advantage of binding current as well as retiring
and future members. The subsequent introduction of an arbitration clause into the articles of
association after the foundation of the company is possible, but requires unanimous consent
of the shareholders. An introduction by way of majority decision is prohibited.
In sum, corporate disputes may be subject to arbitration in Germany with only minor re- 145
strictions concerning their arbitrability. German arbitration law provides a wide scope for
designing arbitral proceedings that is needed to settle corporate disputes. The advantages of
arbitration, e.g. the time efficient and particularly confidential settlement, cater to the specific
needs of corporate disputes. Advisors of new companies or of parties who want to found a
company should inform their clients of this opportunity in order to make use of the many
advantages of this dispute resolution mechanism.
Privacy and Confidentiality

Ulrich Haas / Heiner Kahlert
Short Bibliography: Brown, Presumption meets Reality:An Exploration of the Confidentiality Obligation in International Commercial Arbitration, 16 American University International Law Review
4 (2001), 969; Dimolitsa, Quid encore de la confidentialit, in: Mlanges en lhonneur de Franois
Knoepfler, 2005, p. 249; Fernandez-Armesto, The Time has come A plea for abandoning secrecy in
arbitration, Cahiers de lArbitrage 2012, 583; Gal, Die Haftung des Schiedsrichters in der internationalen Handelsschiedsgerichtsbarkeit, Tbingen 2008; Gleiss/Helm, Beratungsgeheimnis im Schiedsverfahren, MDR 1969, 93; Gottwald, Internationale Schiedsgerichtsbarkeit, Bielefeld 1997; Haas,
Internationale Sportschiedsgerichtsbarkeit und EMRK, SchiedsVZ 2009, 73; id., Vertraulichkeit im
Zusammenhang mit Schiedsverfahren, in: Geimer/Schtze (eds), FS-Kaissis, Mnchen 2012, p. 315;
Haller, Vorlagepflicht von Schiedsrichterakten im staatlichen berprfungsverfahren, SchiedsVZ
2011, 179; Hodges, The perils of complete transparency in international arbitration should parties
be exposed to the glare of publicity?, Cahiers de lArbitrage 2012, 589; Holder, Vertraulichkeit im
Schiedsverfahren nach deutschem Recht, Frankfurt am Main 2009; Hofmann, Vertraulichkeit in
der Mediation Mglichkeiten und Grenzen vertraglicher Beweisverwertungsverbote, SchiedsVZ
2011, 148; Kahlert, Vertraulichkeit im Schiedsverfahren (forthcoming); Knoblach, Sachverhaltsermittlung in der internationalen Wirtschaftsschiedsgerichtsbarkeit, Berlin 2003; Khn/Gantenberg,
Confidentiality in Arbitration, in: Bachmann et. al (eds), FS-Schlosser, Tbingen 2005, p. 461;
Khner, Geschftsgeheimnisse und Schiedsverfahren neuerdings ein Gegensatz?, IHR 2003, 202;
Leisinger, Vertraulichkeit in internationalen Schiedsverfahren, Baden-Baden 2012; Maier, Handbuch
der Schiedsgerichtsbarkeit, Herne/Berlin 1979; Mistelis, Confidentiality and Third Party Participation, 21 Arbitration International 2 (2005), 205; Oberhammer, Zur Vertraulichkeit von Schiedsverfahren, in: Nakamura et. al (eds), FS-Beys, Athen 2003, p. 1139; Prtting, Zur Rechtsstellung des
Schiedsrichters dargestellt am richterlichen Beratungsgeheimnis, in: Gottwald (ed.), FS-Schwab,
Mnchen 1990, 409; id., Vertraulichkeit in der Schiedsgerichtsbarkeit und in der Mediation, in:
Briner et al. (eds), FS-Bckstiegel, Kln 2001, p. 629; Oldenstam/von Pachelbel, Confidentiality
and Arbitration a few reflections and practical notes, SchiedsVZ 2006, 31; Peltzer, Die dissenting opinion in der Schiedsgerichtsbarkeit, Frankfurt am Main 2000; Ritz, Die Geheimhaltung im
Schiedsverfahren nach schweizerischem Recht, Tbingen 2007; Schmidt-Rntsch, Deutsches Richtergesetz, 6th edn, Mnchen 2009; Schtze, Dissenting Opinions im Schiedsverfahren, in: Heldrich/
Uchida (eds), FS-Nakamura, Tokyo 1996, p. 525; id., Das Zustandekommen des Schiedsspruchs,
SchiedsVZ 2008, 10; Spohnheimer, Gestaltungsfreiheit bei antezipiertem Legalanerkenntnis des
Schiedsspruchs, Tbingen 2010; Wagner, Sicherung der Vertraulichkeit von Mediationsverfahren
durch Vertrag, NJW 2001, 1398.
Para.
I. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. Privacy of Arbitral Hearings . . . . . . . . . . . . . . 4
III. Confidentiality of Obligations . . . . . . . . . . . . 6
A. Arbitrators . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1. General Duty of Confidentiality . . . 9
2. Secrecy of Deliberations. . . . . . . . . . 14
B. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
C. Other Persons . . . . . . . . . . . . . . . . . . . . . . 31
IV. Breaches of Confidentiality . . . . . . . . . . . . . 34
A. Legal Remedies . . . . . . . . . . . . . . . . . . . . . 35
Para.
B. Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . 40
V. Conflict of Laws . . . . . . . . . . . . . . . . . . . . . . . . 43
A. German Law as lex arbitri. . . . . . . . . . . . 44
B. German Law Applicable to the
Arbitration Agreement . . . . . . . . . . . . . . 48
1. Arbitrators . . . . . . . . . . . . . . . . . . . . . . . 50
2. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
C. German Law as lex causae . . . . . . . . 54
VI. Court Proceedings Related to
Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
964
I.
Introduction1
1 Confidentiality is regularly mentioned in Germany, as it is internationally, as one of the main

advantages of arbitration in comparison to litigation.2 Whether and to what extent confidentiality is in effect an advantage of arbitration is disputed among legal scholars.3 This section
will not try to give an answer to this controversial question but will instead take a closer look
at privacy and confidentiality in arbitration in Germany, as both concepts are far from clear.4
This is especially true for German law, which has no statutory provision and very few court
decisions concerning this issue. Additionally, German scholarly debate on confidentiality
in arbitration began relatively late as the Esso vs. Plowman judgment of the Australian High
Court in 1995 attracted much less attention in Germany5 than in many other jurisdictions,
where it led to a legitimate uproar throughout the arbitration community.6
2 An indication and reason for why the German debate on confidentiality still lags somewhat behind may be the inconsistency in terminology.7 In an international context, the
distinction between privacy and confidentiality is well-settled; this distinction is a question
of not only terminology but also of substance, given that privacy and confidentiality are
(rightfully) regarded as two different concepts. Privacy means that no outsider is allowed
to participate in arbitral proceedings, whereas confidentiality refers to an obligation not to disclose information acquired during the arbitration.8 While the legitimacy of this distinction
is also accepted by the majority of German commentators,9 the discussion in Germany still
suffers from the fact that it is at times hard to tell whether an author or court using the German term Vertraulichkeit is actually referring to privacy, confidentiality, or both. This should
be borne in mind when reading contributions in the German language.10
3 In line with the now well-settled approach, this chapter will strictly distinguish between
privacy (II.) and confidentiality (III.). Subsequently, it will be explained what legal consequences a breach of confidentiality obligations has (IV.) and under which circumstances
German law is applicable to questions of privacy and confidentiality (V.). Finally, it will be
discussed to what extent privacy and confidentiality of arbitral proceedings are protected in
ordinary court proceedings related to arbitration (VI.).
1
2
4
5
7
8
9
10
For Germany, see Glossner/Bredow/Bhler (1990), para. 286; Prtting (2001), p. 629; Leisinger (2012),
p.37 with further references for Germany and internationally; see also the references in Mistelis, 21 Arbitration International 2 (2005), 205.
Cf. in favour of more transparency Fernandez-Armesto (2012), pp. 583 et seq.; contra Hodges (2012), pp.
589 et seq.
See Oldenstam/von Pachelbel, SchiedsVZ 2006, 31 (32); internationally Born (2009), p. 2249.
Even six years later, Prtting (2001), p. 630 correctly stated that there was hardly any debate ongoing;
similarly Khner, IHR 2003, 202 (202).
See the editors foreword of Arbitration International 1995 (3) (dramatic decision); Redfern/Hunter
(2003), para. 1-44 (caused some fluttering in the dovecotes).
Oldenstam/von Pachelbel, SchiedsVZ 2006, 31 (32).
See Born (2009), pp. 2251 et seq. with further references.
See, e.g., Khner, IHR 2003, 202 (203); Khn/Gantenberg (2005), p. 462; Lachmann (2008), para. 146;
Oberhammer (2003), 1140; Haas (2012), p. 315.
See on the German terminology also Kahlert (forthcoming), 1C.
Privacy and Confidentiality Haas/Kahlert
II.
965
Privacy of Arbitral Hearings
Ordinary German court proceedings are generally open to the public.11 By contrast, there is 4
unanimous consensus that arbitral proceedings are in principle private,12 with the parties being free to agree otherwise.13 In spite of this consensus, the legal basis of the privacy principle
is somewhat controversial. While one commentator suggests that the privacy of arbitration
might be customary law,14 the more convincing and prevailing opinion is that absent any clear
evidence to the contrary, there is a tacit understanding between the parties of the arbitration
agreement that the proceedings shall be private.15 This is also the prevailing view in relation
to Art. 6 (1) of the European Convention on Human Rights (ECHR). The latter guarantees,
inter alia, access to state courts as well as the right to a public hearing. However, according to
the jurisprudence of the European Court of Human Rights (ECtHR), by referring a dispute
to arbitration, the parties not only waive their right to access to state courts, but normally
also waive implicitly the fundamental procedural right to a public hearing.16 Privacy is
thus based on an agreement on the procedure within the meaning of 1042 (3) ZPO and is
implied by fact in the arbitration agreement.17
Although the principle of privacy is undisputed, its scope is not clear-cut.18 While, for exam- 5
ple, there is no doubt that the parties to a dispute have a right to participate in the proceedings
and that unrelated third parties do not, the answer is not as obvious for mere advisers to the
parties (who are not party representatives) or assistants of the arbitral tribunal. To determine
whether and to what extent a given person may participate in the proceedings without the
express consent of all parties, a particular approach should be taken. First, all persons whose
participation is required in order to safeguard a partys right to be heard ( 1042 (1) ZPO)
must be allowed to participate (to the extent necessary) if this party so wishes.19 The most
obvious example is a party representative,20 but the same can be true for advisers, e.g. employees familiar with the factual background of the dispute.21 In addition to the parties right to be
heard, one should revert to their tacit agreement, which is the basis of the privacy principle.
Absent any clear indication that the parties had other intentions, they can be assumed to have
11
12
13
14
15
16
17
18
19
20
21
This principle is safeguarded by German constitutional law, but is also explicitly provided for in 169
GVG (Gerichtsverfassungsgesetz, German Judicature Act). There are, however, exceptions to this
principle, some of which will be dealt with below (VI.).
Prtting (2001), p. 632; Oberhammer (2003), p. 1139; Khn/Gantenberg (2005), pp. 462 et seq.; Haas
(2012), p. 318.
There is no mandatory law which would prevent the parties from stipulating that the arbitral proceedings
shall be public, OLG Mnchen 24.06.2010, 34 Sch 21/10, para. 152 (juris).
Lionnet (2005), p. 453.
Prtting (2001), p. 632; Oberhammer (2003), p. 1040 (in footnote 4); in more detail also Kahlert(forthcoming), 5B.I. with further references.
ECtHR 23.2.1999, Suovaniemi and others v. Finnland (Application no. 31737/96); Haas, SchiedsVZ
2009, 73 (78).
Kahlert (forthcoming), 5B.I. with further references.
Lachmann (2008), paras 144, 1602; cf. also Leisinger (2012), p. 42.
Kahlert (forthcoming), 5B.II.; narrower Geiben (2011), pp. 21 et seq., 23 et seq.; Holder (2009), p.19,
both of whom derive from a partys right to be heard only the right of this party to participate, not a right
to have other persons participate who are essential for this partys right to be heard (counsel, advisers
etc.).
It should be noted that attorneys-at-law may not be excluded as party representatives according to
1042(2) ZPO.
Kahlert (forthcoming), 5D.V.
966
agreed that privacy shall not prevent those persons from participating who are necessary
for the proper functioning of the proceedings.22 For instance, if the arbitral tribunal cannot
reasonably be expected to handle the case without the help of an assistant, the parties can
be assumed to have agreed to the assistants participation. However, it is always advisable for
the arbitral tribunal to seek the parties express agreement to the participation of any person
other than the arbitrators, the parties and their counsel.
III. Confidentiality Obligations

6 As already mentioned, there are no statutory provisions in Germany that specifically address
confidentiality obligations in arbitration. However, this does not mean that persons involved
in arbitral proceedings cannot be subject to statutory confidentiality obligations. Rather, such
obligations can arise from general statutory provisions not specifically related to arbitration.23
Arguably, the most relevant source for statutory confidentiality obligations in arbitration is
823 (1) BGB,24 the core provision of the German law of torts. It protects, inter alia, business secrets and personal information, but is subject to a balancing test to determine if the
harm to an individual is outweighed by the interests of the person causing the harm.25 Other
provisions with potential, but more limited relevance in arbitral proceedings, are 17 et
seq. UWG (protection of business secrets in the context of unfair competition), 203 StGB
(protection of personal secrets that were disclosed to members of certain professions, e.g.
attorneys or doctors) and 3 et seq. BDSG (protection of personal data).26
7 Whenever these general provisions do not apply, given the lack of arbitration-specific
statutory provisions, confidentiality obligations can in principle27 be derived only from party
autonomy. This needs to be assessed separately for arbitrators (Section A. below), parties
to the dispute (Section B.) and other persons involved in arbitral proceedings (Section C.).
Separate assessment is required because the persons whose party autonomy is in question
are not the same in these categories, and their interests can be quite different. This is also
one of the reasons why it does not make too much sense to refer to arbitration as a whole as
confidential or not confidential.
A.
Arbitrators
8 For ordinary court judges, there is a distinction under German law between a general duty
of confidentiality (pertaining to all information obtained as a judge) and the secrecy of deliberations. The same distinction is commonly made for arbitrators.28 There are good reasons
22
23
24
25
26
27
28
Lionnet (2005), p. 455; Kahlert (forthcoming), 5B.II.; same result, but slightly different reasoning
Geiben (2001), p. 23.
Haas (2012), 316.
Unofficial translation: A person who, intentionally or negligently, unlawfully injures the life, body, health,
freedom, property or another right of another person is liable to make compensation to the other party
for the damage arising from this. (read in conjunction with 1004 (1) BGB per analogiam, which provides for injunctive relief, whereas 823 (1) BGB itself only gives rise to a claim for damages).
See on confidentiality obligations in arbitration deriving from 823 BGB Holder (2009), pp. 35 et seq.;
Kahlert (forthcoming), 2F.II.and (regarding parties to arbitration) 6D. I.
See, also on other general statutory provisions, Kahlert (forthcoming), 2.
There is no customary law providing for such obligations, see below para. 24 and footnote 49. With
respect to confidentiality obligations imposed by the arbitral tribunal, see below para. 30.
See, e.g., Gleiss/Helm, MDR 1969, 93 (93); Prtting (1990), p. 413; Geiben (2001), p. 65; Leisinger
(2012), p.81.
967
for this, in particular that the secrecy of deliberations is (at least, also) a right of the arbitrator
vis--vis the parties, while the duty of confidentiality is merely an obligation.29 Therefore, first
the legal situation regarding the general duty of confidentiality (1.) and then the secrecy of
deliberations (2.) will be addressed.
1.
General Duty of Confidentiality
As in many other jurisdictions, there is general consensus in Germany that arbitrators are 9
bound by a duty of confidentiality towards the parties.30 In fact, it is one of the very few aspects of confidentiality in arbitration that has actually been addressed and confirmed by the
Bundesgerichtshof, Germanys Supreme Court for civil matters.31
As a legal basis for this duty of confidentiality, one commentator has suggested an analogy 10
to the statutory provisions obliging ordinary court judges to maintain confidentiality ( 46
DRiG,32 read in conjunction with 67(1) BBG33).34 However, the prevailing opinion, which
is more convincing and also in line with the approach taken in other jurisdictions, considers
this obligation to be implied in the arbitrators contract, absent any clear indication to the
contrary.35
The scope of the arbitrators duty of confidentiality is very broad. In effect, it covers all 11
information that the arbitrator has obtained in this capacity.36 This includes, inter alia, the
existence of the arbitration.37 The arbitrator remains bound to confidentiality even after the
arbitral proceedings have ended.38 Therefore, arbitrators are not allowed to disclose, be it on
their website or otherwise, their involvement in a current or past arbitration.
However, the duty of confidentiality is not without exemptions. An arbitrator may disclose 12
information from the arbitral proceedings if this is necessary (1) to pursue overriding personal interests, (2) to fulfil the arbitrators obligation of properly conducting the arbitration
or (3) to comply with mandatory laws requiring disclosure.39 Examples falling under these
three categories (respectively) are an arbitrators right to disclose information necessary to
win a lawsuit against a party for his fees,40 to disclose information to tribunal-appointed ex29
30
31
32
33
34
35
36
37
38
39
40
See Zller-Geimer (2014), 1035 para. 31.

See Gleiss/Helm, MDR 1969, 93 (93); Glossner/Bredow/Bhler (1990), para. 288; Prtting (1990), 413;
Gal (2008), pp. 330 et seq.; Lachmann (2008), para. 4294; Holder (2009), pp. 43 et seq.; Leisinger (2012),
pp. 84 et seq.
BGH 05.05.1986, BGHZ 98, 32 (35).
Unofficial translation: Except as otherwise provided in this Act the provisions applying to federal civil
servants shall apply mutatis mutandis to legal relations of judges in federal service until special provision is
made.
Unofficial translation: Civil servants shall preserve secrecy regarding any and all matters that came to
their knowledge through or on the occasion of their service. This applies [] also after the service has
ended. This provision applies only to federal civil servants, but there are corresponding provisions in the
German states.
Prtting (2001), p. 633.
Notably, this approach was taken by BGH 05.05.1986, BGHZ 98, 32 (35), but is also shared by those authors mentioned in footnote 30 above. In more detail on the legal basis Kahlert (forthcoming), 6A.I.1.
Schtze (2007), para. 67; Gal (2008), p. 331 with further references.
Gal (2008), p. 331. This may be the case even if no (valid) arbitrators agreement comes into existence, see
Kahlert (forthcoming), 6A.I.3. b).
Geiben (2001), pp. 87 et seq.; Gal (2008), p. 327.
See also Kahlert (forthcoming), 6A.I.3. c).
Gal (2008), p. 334.
968
perts41 or to testify as a witness before ordinary courts. Also, an exemption should be made if
there is not even the slightest risk that the dispute or rather the parties can be identified. This
is normally the case if the dispute is described in a very abstract fashion (e.g. dispute related
to the sale of IT equipment).
13 With respect to witness testimony, it must be stressed that according to the prevailing opinion, the arbitrators general duty of confidentiality does not entail a right of the arbitrator to
refuse to give evidence.42 Therefore, arbitrators can be made to testify as witnesses before
ordinary courts (or if questioned by the public prosecutor in criminal investigations) on all
circumstances of arbitral proceedings other than the tribunals deliberations.43
2.
Secrecy of Deliberations
14 Similar to ordinary court judges, arbitrators have the duty to maintain confidentiality with
respect to the deliberations of the arbitral tribunal, and even have a right to do so vis--vis
everyone, including the parties to the dispute. The secrecy of deliberations of arbitral tribunals is undisputed in the German doctrine and has been acknowledged in numerous court
decisions.44 It is meant to protect the arbitrators independence from external influence, to
facilitate an open and straight-forward exchange of opinions between the arbitrators and to
safeguard the authority of both the arbitral tribunal and its decision(s).45
15 However, the legal basis of this principle is controversial. While the courts have not bothered
to identify such legal basis, arguably the prevailing opinion in the German doctrine claims that
the secrecy of deliberations stems from an application per analogiam of 43 DRiG,46 which
provides for the secrecy of deliberations in ordinary court proceedings.47 Other approaches
trace the secrecy of deliberations back to an implied term of the arbitrators agreement,48 to
customary law49 or to a procedural agreement of the parties.50 While the latter opinion is
indeed more convincing, this argument regarding the legal basis lies outside the scope of
this treatise. Rather, it suffices to note that nearly all of those commentators applying 43
41
42
43
44
45
46
47
48
49
50
Gottwald (1997), pp. 829 et seq.

Geiben (2001), pp. 84, 88; MnchKommZPO-Mnch (2013), Vorbemerkungen zu den 1025 ff., para.
71; Schwab/Walter, Chap. 19 para. 5; Zller-Geimer (2014), 1035 para. 31; Leisinger (2012), p. 89; different view Prtting (2001), 633; Kahlert (forthcoming), 6A.I.3. d); arguably also Glossner/Bredow/
Bhler, para. 252.
In respect to the deliberations, a right to refuse to give evidence is accepted, see below para. 18.
See, ex multis, BGH 23.01.1957, BGHZ 23, 138 (140 et seq.); OLG Mnchen 23.10.2006, 34 SchH 38/06,
para. 13 (juris); Gleiss/Helm, MDR 1969, 93 (93 et seq.); Prtting (1990), 413; Stein/Jonas-Schlosser
(2002), Vorbemerkungen vor 1025 para. 13; MnchKommZPO-Mnch (2013), 1052 paras 3 et seq.;
See Kahlert (forthcoming), 6A.II.1. with further references; Dimolitsa (2005), p. 250.
Unofficial translation: A judge shall preserve secrecy regarding the course of deliberations and voting
also after his service has ended.
Notably Prtting (1990), pp. 414 et seq.; 633; Geiben (2001), pp. 68 et seq.; Knoblach (2003), p. 118;
Lachmann (2008), para. 4289; Baumbach/Lauterbach et al. (2014), 1052 para. 5; Leisinger (2012), pp.
82 et seq.
Stein/Jonas-Schlosser (2002), Vorbemerkungen vor 1025 para. 13; Lionnet (2005), pp. 456 et seq.
Gleiss/Helm, MDR 1969, 93 (94) and Peltzer (2000), p. 48. This is hardly convincing, see Prtting
(1990), p. 415; Geiben (2001), pp. 67 et seq. This is all the more true since the secrecy of deliberations
is not a common feature of all or even most procedural laws, cf. article 54(2) of the Swiss Code of Civil
Procedure which leaves it to the Swiss cantons to determine whether the deliberations shall be secret.
Kahlert (forthcoming), 6A.II.2. c).
969
DRiG per analogiam take a somewhat pragmatic approach and make crucial adjustments as
to how this provision is applied (as compared to its direct application to state court judges).
Therefore, the results do not differ greatly between the approaches.51
The secrecy of deliberations covers the entire content and progress of the deliberations.52 It 16
does not matter whether the deliberations take place as a meeting in person, a telephone conference or an email conversation.53 Likewise, it makes no difference whether the deliberations
are aimed at an arbitral award, a procedural order or a settlement proposal.54 The secrecy also
extends to documents which form part of the deliberations, e.g. handwritten notes that an
arbitrator made during or in preparation for the deliberations.55 From a time perspective, the
secrecy of deliberations must be maintained even after the arbitral proceedings have come to
an end, because the goal of safeguarding the arbitral awards authority is still at stake.56
Just as is the case for the general duty of confidentiality, there are also exemptions from the 17
secrecy of deliberations. In principle, these are the same three exemptions as already given
for the duty of confidentiality: overriding personal interest of the arbitrator, proper conduct
of the arbitration and mandatory law.57 A very obvious example for the second category is
that arbitrators are allowed (and in fact, absent an agreement of the parties to the contrary,
obliged) to reproduce the relevant arguments from the deliberations in the reasoning of the
award.58
However, with respect to the mandatory law exemption, there exists a stark contrast to 18
the duty of confidentiality: an arbitrator being called as a witness before ordinary courts (or
being questioned by the public prosecutor as part of a criminal investigation) does not per se
constitute an exemption from the secrecy of deliberations. Rather, there is broad consensus
that the secrecy of deliberations entails the right of arbitrators to refuse to give evidence.59
Therefore, unless the secrecy of deliberations has been lifted (see below para. 20) or the
circumstances of the specific case warrant an exemption (see above para. 17), an arbitrator cannot be made to testify, and in fact must not testify,60 on questions dealing with the
tribunals deliberations.
Whether or not the rendering of a dissenting (or concurring) opinion is permissible as an ex- 19
emption from the secrecy of deliberations is highly controversial and has yet to be decided by
a German court. Issuing such opinion affects the secrecy of deliberations because the arbitrator concerned makes known that he voted against the result and/or reasoning of the arbitral
award, along with why he did so.61 The German legislator did not see any need to introduce
a provision on dissenting opinions when amending the arbitration law in 1998, arguing in
51
52
53
54
55
56
57
58
59
60
61
See in detail on the different approaches Kahlert (forthcoming), 6A.II.2.

OLG Dsseldorf 14.01.1988, EWiR 1988, 623 (624) (Krber); Musielak-Voit (2013), 1035 para. 24.
Kahlert (forthcoming), 6A.II.3.a).
Prtting (1990), pp. 416 et seq.
OLG Celle 29.10.1929, JW 1930, 766 (767); Prtting (1990), p. 417; Geiben (2001), 71.
Kahlert (forthcoming), 6A.II.3.c); same result Geiben (2001), p. 72.
Kahlert (forthcoming), 6A.II.3.d).
Geiben (2001), p. 74.
BGH 23.01.1957, BGHZ 23, 138 (140 et seq.) with further references; Glossner/Bredow/Bhler (1990),
para.252; MnchKommZPO-Mnch (2013), 1052 para. 4; Musielak-Voit (2013), 1052 para. 3; cf. also
Dimolitsa (2005), pp. 251 et seq.
Kahlert (forthcoming), 6A.II.3.e).
Schtze (1996), p. 534; contra Schlosser (1989), para. 691, who is arguing that the secrecy of deliberations
is not a secrecy of voting.
970
the reasoning of the draft law that the (allegedly) prevailing opinion regarded dissenting
opinions as permissible.62 Notwithstanding this statement in the legislative materials, the
prevailing opinion in the German doctrine is that dissenting opinions are in principle63 not
permissible.64 However, according to most of the commentators, the fact that a dissenting
opinion was issued does not constitute ground for annulment of the respective award.65 This
is convincing because the dissenting opinion is not rendered prior to the award and therefore
cannot have had any effect on the award.66
20 According to the almost67 unanimous opinion in Germany, the secrecy of deliberations in
arbitration can be lifted68 in contrast to ordinary court proceedings.69 However, the vast
majority of commentators claim that this requires the consent of all parties and arbitrators
because the secrecy of deliberations protects not only the parties, but also one might add,
primarily the arbitrators.70 The Bundesgerichtshof has taken the same view, albeit only obiter
dictum.71
B.
Parties
21 Whether or not parties to arbitral proceedings are subject to an obligation of confidentiality is

certainly the most contentious aspect of confidentiality in Germany, as it is internationally.72
However, one should not overlook that there is broad consensus regarding the starting point:
it is undisputed under German law that there is no specific statutory provision imposing
62
63
64
65
66
67
68
69
70
71
72
BT-Drs. 13/1574, p. 56; critical on this reasoning Schtze, SchiedsVZ 2008, 10 (13).
However, there are many different views on whose consent is required to make dissenting opinions
permissible while some argue that the consent of the parties and the arbitrators is required (Lachmann
(2008), para. 1775), others regard the parties (Schtze, SchiedsVZ 2008, 10 (14)) or the arbitrators
(Peltzer (2000), p.69) consent as sufficient. According to MnchKommZPO-Mnch (2013), 1054 para.
23, the correct answer depends on whether the dissenting opinion is communicated only to the parties
(then, the arbitrators consent is sufficient) or also to third persons (then, the parties must also agree).
Schtze (1996), p. 534; id., SchiedsVZ 2008, 10 (13 et seq.); Peltzer (2000), pp. 67 et seq.; Lachmann
(2008), para. 1775; MnchKommZPO-Mnch (2013), 1054 para.22; Zller-Geimer (2014), 1052
para. 5; Musielak-Voit (2013), 1052 para. 3; Schlosser (1989), para. 691. While Leisinger (2012), p. 82
states that the prevailing doctrine allows dissenting opinions, he does not offer any references supporting
this statement.
MnchKommZPO-Mnch (2013), 1054 para. 22; Musielak-Voit (2013), 1052 para. 3; Schlosser
(1989), para. 691; contra Schtze (1996), pp. 535 et seq.; id., SchiedsVZ 2008, 10 (14).
See Musielak-Voit (2013), 1052 para. 3.
The only commentator opposing this view is Prtting (1990), p. 419.
BGH 23.01.1957, BGHZ 23, 138 (141) (obiter); Maier (1979), para. 388; Geiben (2001), pp. 75 et seq.;
Stein/Jonas-Schlosser, Vorbemerkungen vor 1025 para. 13; Lachmann (2008), para. 1695; Leisinger
(2012), p.89.
See Schmidt-Rntsch (2009), 43 para. 9.
See only the references in footnote 68 above; contra Gleiss/Helm, MDR 1969, 93 (94) (consent of all
arbitrators suffices); Zller-Geimer (2014), 1052 para. 5 (consent of all parties is sufficient to allow
arbitrator to render a dissenting opinion); Kahlert (forthcoming), 6A.II.4. (consent of the arbitrators
is required only to lift the secrecy of deliberations ex tunc).
BGH 23.01.1957, BGHZ 23, 138 (141) (obiter).
For an overview on the discussion see Khn/Gantenberg (2005), pp. 463 et seq.; Leisinger (2012), pp. 98
et seq., 129 et seq.
971
upon the parties obligations of confidentiality, or conversely prohibiting such obligations.

The parties are therefore free to decide one way or the other.73
Furthermore, there appears to be no dispute about the parties flexibility as to the form that 22
a confidentiality agreement for arbitration may take. Since a stipulation on confidentiality
is not a necessary component of an arbitration agreement,74 it is not subject to the formal
requirements of 1031 ZPO and can thus be entered into orally or in writing, explicitly or
tacitly.75 Moreover, such agreement can, but need not, be formally part of the arbitration
agreement; it can just as well be included in the main contract or form a stand-alone agreement.76 Furthermore, the parties can either enter into an individual agreement or make reference to institutional rules containing a provision on confidentiality obligations of the parties,
e.g. 43 DIS-SchO.77
The problem, however, is that the parties in practice often do not expressly address the issue 23
of confidentiality obligations, at least not specifically for arbitration.78 This reality gives rise
to the crucial question which is actually the core of the whole debate as to whether in the
absence of any express statements one can assume that broad confidentiality obligations exist
nonetheless. While the majority of scholars arguably still answer this question in principle
in the negative,79 there are quite a number of commentators arguing in favour of a broad
obligation of confidentiality.80
Due to the controversial discussion of this question, its answer certainly cannot be found in 24
customary law.81 Rather, one must interpret the existing agreements between the parties in
order to explore their will as to confidentiality.82
In the previous sentence, the term agreements was purposefully made plural because 25
parties to arbitration in the vast majority of cases are not only parties to an arbitration agreement, but also to a main contract. This contract can become relevant in three ways for the
question of confidentiality obligations in arbitration. First, it might contain a confidentiality
clause, the wording of which is broad enough to also encompass information gained through
arbitral proceedings.83 Second, even if the wording is not broad enough, the mere existence
of a confidentiality clause in the main contract (or a lack thereof) can be quite telling with
respect to the parties interests in maintaining confidentiality.84 These interests are crucial
73
74
75
76
77
78
79
80
81
82
83
84
See, ex multis, Prtting (2001), p. 435; Lachmann (2008), para. 148; Haas (2012), pp. 316, 319 with
further references.
Oberhammer (2003), p. 1155; Haas (2012), p. 319, 325.
Kahlert (forthcoming), 6D.II.
Ritz (2007), p. 95 (on Swiss law); Haas (2012), p. 320.
Oberhammer (2003), pp. 1144 et seq.; Lachmann (2008), para. 148; Haas (2012), pp. 319 et seq.
Geiben (2001), p. 39; Oberhammer (2003), p. 1144; Leisinger (2012), pp. 106 et seq.
Prtting (2001), p. 635; Geiben (2001), pp. 38, 47 et seq.; Oberhammer (2003), pp. 1157 et seq.; Lionnet
(2005), p. 458; Kreindler/Schfer/Wolff (2006), para. 299; Lachmann (2008), para. 147; Musielak-Voit
(2013), 1029 para. 27; Haas (2012), pp. 318 et seq.; Kahlert (forthcoming), 6D.
Glossner/Bredow/Bhler (1990), para. 286; Raeschke-Kessler/Berger (1999), para. 688; Knoblach (2003),
p.119; Schtze (2007), para. 210; Holder (2009), p. 135; Leisinger (2012), pp. 146 et seq.
Geiben (2001), pp. 33 et seq.; Prtting (2001), p. 634.
Cf. Oberhammer (2003), p. 1145.
Haas (2012), pp. 320 et seq.; in detail on different types of confidentiality clauses Kahlert (forthcoming)
6D.III. 1.; restrictive Leisinger (2012), p.158, according to whom information such as the existence of
an arbitration cannot be covered by a main contracts confidentiality clause.
Kahlert (forthcoming) 6D. IV. 3.
972
when exploring whether the arbitration agreement can be interpreted in a way that would
give rise to confidentiality obligations.85 Third, independent of whether there is an express
confidentiality clause, there might be an implied duty of confidentiality under the main
contract (in particular, a collateral duty under 241 (2) BGB), which extends also to information obtained in arbitral proceedings conducted in connection with this contract.86
26 To the extent that there is no confidentiality clause in (or implied duty under) the main
contract wide enough to also encompass information gained through arbitration, one must
interpret the arbitration agreement. In particular, one should explore the reasons behind the
parties choice in favour of arbitration (to the extent these motivations were known to the
respective other party or would have been apparent to any reasonable person in the position of that other party).87 If it is clear that the parties in question chose arbitration with the
common goal of maintaining confidentiality to the highest degree possible, and to subordinate in principle any interests in disclosure, this would be a strong indication for the
tacit agreement on a broad confidentiality obligation, even if there is no express provision
in the arbitration agreement. Moreover, as already mentioned, a confidentiality clause (or
lack thereof) in the main contract can also provide helpful information to be used in this
interpretation process.
27 Hence, whether or not the parties are obliged to maintain confidentiality with respect to the
arbitration is absent any express stipulation quite simply a question of the interpretation
of the parties agreements.88 Not surprisingly, as is always the case with contract interpretation, the outcome largely depends on the circumstances of the specific case and it is thus
impossible to give a definite answer in the abstract.89 However, some points can be made: the
(good faith) interests of the parties can be very different from case to case and are moreover
often conflictive between the parties to a given dispute.90 Therefore, no general assumption
is justified that parties to arbitration normally are interested in having broad confidentiality
obligations in place (on top of the privacy of the proceedings).91 Also, one cannot say that
confidentiality obligations for parties in arbitration are so common that parties who have not
expressly waived such obligations must be assumed to have accepted them.92 Hence, there
would have to be specific indications that both parties indeed sought to introduce a general
obligation of confidentiality on the occasion of the arbitration agreement. In the absence
of such indications, one cannot assume that a broad confidentiality obligation exists. As
mentioned already, this does not necessarily mean that there is no confidentiality obligation,
which could in particular derive from general statutory provisions or the main contract.
85
86
87
88
89
90
91
92
Cf. Oberhammer (2003), p. 1156 (rightly pointing out that the doctrine of separability does not prevent
from taking into account the main contract when interpreting the arbitration agreement); Holder (2009),
pp. 25 et seq.
Kahlert (forthcoming) 6D. III. 2.
This restriction is due to the German law principle according to which a partys inner will is irrelevant
for the interpretation (cf. 116 S. 1 BGB) if neither the concrete counterpart knew of that will nor a
reasonable person in the situation of the counterpart would have realized that such will existed.
Oberhammer (2003), p. 1154.
Geiben (2001), pp. 41 et seq.; Kahlert (forthcoming) 6D.IV. 2.; cf. also Oberhammer (2003), p.1158.
Kahlert (forthcoming) 6D.IV. 4.;cf. also Geiben (2001), pp. 47 et seq.; infra, Wilske, Ad hoc Arbitration
in Germany, para. 30; different view Leisinger (2012), pp. 156 et seq.
Kahlert (forthcoming) 6D.IV. 2.
973
Also, the duty of parties to arbitration not to obstruct the proceedings93 cannot serve as a 28
basis for broad confidentiality obligations under the arbitration agreement. Disclosing
information from arbitral proceedings may not be in the interest of the other party and
may significantly lower the chances of an amicable solution of the dispute, but the arbitral
proceedings as such are not obstructed.94
However, depending on the circumstances of the specific case, including the sensitivity of 29
the information in question and the legitimacy of the other partys interest in disclosure,
confidentiality obligations may derive from the arbitration agreement as a general duty of
care between parties to a contract ( 241 (2) BGB).95 This duty requires that no party may
cause harm to the other unless this is justified by overriding own interests.96 These cases will
often be those where an obligation of confidentiality already follows from the main contract
and/or the law of torts (see above para. 6).97
Lastly, according to the prevailing opinion under German law, confidentiality obligations 30
cannot be imposed on the parties by the arbitral tribunal as part of its discretion under 1042
(4) ZPO.98 However, the parties may agree to grant such power to the arbitral tribunal.99 This
can be effected by way of an individual agreement or by making reference to institutional
rules that contain such a provision.100 However, a confidentiality obligation derived from such
order by the arbitral tribunal would be confined to the duration of the arbitral proceedings.101
C.
Other Persons
As in most other jurisdictions, it is a general principle of German law that agreements at the 31
expense of third parties are invalid, i.e. parties to a contract cannot force any legal obligations
upon non-contracting parties. Therefore, even if a main contract, an arbitration agreement
and/or an arbitrators agreement provides for confidentiality obligations, third parties such
as counsel, (expert) witnesses, translators, minute-keepers, assistants to the arbitral tribunal,
etc. are not bound by such obligations.102 An agreement between the parties according to
which third parties are obliged to maintain confidentiality would be invalid.103
93
94
95
96
97
98
99
100
101
102
103
See Stein/Jonas-Schlosser (2002), 1029 para. 30; Lachmann (2008), para.459.

Oberhammer (2003), p. 1156; Holder (2009), p. 29; Haas (2012), p. 319; contra Geiben (2001), pp. 46 et
seq.; Leisinger (2012), p. 150.
With very different views on the scope thereof Holder (2009), pp. 32 et seq. and p. 135; Haas (2012), p.
319; Leisinger (2012), pp. 142 et seq.; Kahlert (forthcoming) 6D.IV. 4.
See in general on confidentiality obligations deriving from this duty of care Holder (2009), pp. 30 et seq.;
Kahlert (forthcoming), 2F.I. with further references.
Kahlert (forthcoming) 6D.IV. 4. e). In general on the relationship between 241 (2) BGB and 823
BGB BeckOKBGB-Sutschet (24th edn 2012), 241 para. 92.
Oberhammer (2003), p. 1163; Lachmann (2008), para. 151; Haas (2012), p. 321; Leisinger (2012), p.
164; contra Prtting (2001), pp. 635 et seq., according to whom the tribunal can make confidentiality
orders in narrow circumstances, in particular in cases where ordinary courts could exclude the public (see
on this below VI.).
Lachmann (2008), para. 151; Haas (2012), pp. 321 et seq.; arguably also Oberhammer (2003), p. 1163.
However, for Article 22 (3) of the ICC Rules 2012 as the most important example of such provision, it is
controversial whether it encompasses also ordering parties maintain confidentiality, see Haas (2012), p.
Holder (2009), p. 130; Haas (2012), pp. 322 with further references.
See Lionnet (2005), p. 457; Lachmann (2008), para. 146.
Prtting (2001), p. 636.
974
32 Unless there are specific statutory obligations of confidentiality for the person in question104
or if he/she is already obliged to maintain confidentiality due to another agreement with
one of the parties, e.g. an employment agreement,105 such obligations can only derive from
the contract that (expert) witnesses, assistants, etc., enter into with the parties or the arbitrators.106 In general, while the contract concluded with an expert witnesses often implies that
the expert is obliged to maintain confidentiality, witnesses of fact usually are not subject to a
similar duty (unless they are employees of one of the parties).107
33 Arbitrators should therefore discuss with the parties whether they wish to oblige such third
parties to maintain confidentiality. If this is the case, arbitrators should try to enter into a
confidentiality agreement with such third parties on behalf of the parties to the dispute.
However, while this will not be a problem for translators, minute-keepers and assistants to
the arbitral tribunal, all of whom normally have no personal interest in disclosing facts from
the arbitration and who are usually eager to obtain the assignment, witnesses can be a different story.108 If a witness refuses to sign such a confidentiality agreement, the tribunal certainly
cannot unilaterally impose confidentiality obligations,109 even more so as the witness is free
not to appear before the tribunal at all.
IV. Breaches of Confidentiality

34 To the extent that confidentiality obligations exist, a party could theoretically obtain an injunction if there is reason to believe that the other party (or an arbitrator) is about to disclose
protected information to third parties. However, the more practical scenario is that a party
becomes aware that the other party (or an arbitrator) has already breached the confidentiality obligation. This leads to the question of which legal remedies are available for violations
of confidentiality obligations (see below A.) and who an arbitral tribunal or the ordinary
courts is competent to decide on such remedies (see below B.).
A.
Legal Remedies
35 First of all, breaches of confidentiality obligations give rise to damage claims, either pursuant to 280 (1) BGB110 or according to 823 (1)111 or (2)112 BGB. However, the practical
hurdles for succeeding with such claims are relatively high because it is difficult to prove the
causal nexus between the breach of confidentiality and the damage. An equally difficult issue
is the quantification of that damage.113
104
105
106
107
108
109
110
111
112
113
For example, attorneys admitted to the German bar are subject to an obligation of confidentiality according to 43a Abs. 2 BRAO and 2 BORA. However, this obligation exists only vis--vis the client,
meaning that a party to arbitration is in a position to lifts its counsels confidentiality obligation. Another
example is confidentiality obligations of publicly appointed and sworn experts, as mentioned by Prtting
(2001), p. 636.
Lachmann (2008), para. 146; Leisinger (2012), p. 92.
Geiben (2001), p. 56; Leisinger (2012), p. 92.
Cf. Prtting (2001), p. 636; Lionnet (2005), p. 457; Khn/Gantenberg (2005), p.472.
Lionnet (2005), p. 457.
Lachmann (2008), para. 146; Leisinger (2012), p. 92 with further references.
With respect to confidentiality obligations derived from contractual obligations.
Regarding confidentiality obligations derived from this provision in the first place.
Pertaining to confidentiality obligations derived from general statutory provisions such as 17 UWG
(which protects business secrets in the context of unfair competition).
Brown (2001), p. 1016; Oberhammer (2003), p. 1160; Leisinger (2012), pp. 91, 283.
975
In view of these difficulties, remedies of a procedural nature would arguably sometimes 36

be more effective, if not in terms of compensation then at least in terms of deterring those
involved in the arbitration from (further) breaches.
One possible procedural remedy would be to regard a breach of confidentiality of one party 37
as a ground for termination of the arbitration agreement by the other party.114 However, an
arbitration agreement can be terminated with just cause only if there has been a severe breach
that makes it simply unacceptable for the terminating party to be bound by the arbitration
agreement any longer.115 A breach of confidentiality normally does not meet this test, not
least because the party invoking the breach would be worse off with the alternative of ordinary court proceedings which are in principle116 public.117
Another possible procedural remedy could be that information disclosed in breach of confi- 38
dentiality obligations cannot be used in other court or arbitration proceedings.118 The prevailing opinion under German law would allow the parties to conclude a procedural agreement
to that effect.119 However, in the absence of very clear indications that this is indeed what the
parties wanted, one should not overstretch their intentions and assume that such procedural
agreement was implied120 even more so since it is in most cases already difficult to derive
an implied substantive agreement on confidentiality from the parties intentions. In any event,
such a procedural agreement would only prevent the other party from using the information
gained through arbitration in other legal proceedings, not from otherwise disclosing the
information to third parties.
With respect to breaches of confidentiality by an arbitrator, it is controversial whether this 39
constitutes sufficient ground for challenging this arbitrator.121 While disclosure of information that is detrimental to just one party might be an indication of a lack of impartiality, this
does not appear to be true in all cases. The allegation of impartiality is even more doubtful in
cases where the information disclosed (such as the existence of the dispute) has the potential
to be detrimental to both parties.122
B.
Jurisdiction
Remedies for breaches of confidentiality obligations deriving from general statutory pro- 40
visions (such as 17 UWG) usually fall under the jurisdiction of the ordinary courts.123
Although the wording of most arbitration agreements is rather broad (all disputes arising
out of or in connection with the contract), this is usually interpreted to cover only those
114
115
116
117
118
119
120
121
122
123
This position was taken by the Court of First Instance in the Bulbank case, see Stockholm Tingsrtt
10.09.1998, Stockholm Arbitration Report 2000, p. 137 (pp. 139 et seq.).
Schwab/Walter (2005), Chap. 8 para. 11; similarly Oberhammer (2003), 1160.
See on exceptions below VI.
See (albeit in connection with mediation) Wagner, NJW 2001, 1398 (1399 et seq.); Hofmann, SchiedsVZ
2011, 148 et seq.; cf. also Oberhammer (2003), p. 1161.
See, ex multis, BGH 10.10.1989, NJW 1990, 441 (443); Wagner, NJW 2001, 1398 (1399); Hofmann,
SchiedsVZ 2011, 148 (149 et seq.), all with further references.
Kahlert (forthcoming) 7 B. VII.
Negated in principle by OLG Frankfurt, 26.06.2008, 26 SchH 2/08, para. 28 (juris); Kahlert (forthcoming), 7 B. IV; different view Lachmann (2008), para. 4306.
Kahlert (forthcoming), 7 B. IV.
Haas (2012), p. 326.
976
statutory claims concurring with contractual claims.124 Hence, unless the same claim can also
be based on a violation of contractual confidentiality obligation, it would be for ordinary
courts and not for an arbitral tribunal to decide upon such claim.125
41 With respect to confidentiality obligations that derive from the arbitration agreement as a
collateral duty ( 241 (2) BGB), it must be noted that for other collateral duties of parties
to arbitration such as the duty to cooperate in the proceedings by nominating an arbitrator
and paying the advance on costs the prevailing opinion is that legal remedies fall under the
jurisdiction of the ordinary courts.126 However, the rationale is different for these cases. Quite
obviously, it would not make sense for an arbitral tribunal to decide on a partys failure to
nominate an arbitrator in that scenario, there is no arbitral tribunal that could render such
decision. Likewise, it would not be sensible for an arbitral tribunal to judge its own case with
respect to payment of the advance on costs, or have another arbitral tribunal decide (which
would require another advance on costs not likely to be paid by the defaulting party). In contrast, with respect to breaches of confidentiality obligations by a party, there is no reason per
se why this could not be adjudicated upon by an arbitral tribunal. Therefore, if the concrete
arbitration agreement allows for this interpretation, legal remedies for breaches of confidentiality obligations deriving from the arbitration agreement can fall under the jurisdiction of
an arbitral tribunal.127
42 Regarding (explicit or tacit) confidentiality agreements of the parties, one must again
interpret the arbitration agreement to determine whether legal remedies for breaches of
confidentiality are covered. If the confidentiality agreement is entered into in the context of
the main agreement or the arbitration agreement, there can normally be no doubt that an
arbitral tribunal has jurisdiction (as long as the wording of the arbitration agreement is broad
enough, as is usually the case).128 The same will often be true even when the confidentiality
agreement is concluded only during arbitral proceedings (e.g. in the Terms of Reference), i.e.
subsequent to the main contract and the arbitration agreement. This is because arbitration
agreements can in principle cover subsequent contracts, even if these do not expressly make
reference to the arbitration agreement.129 Although an exception is made when the subsequent contract has to be regarded as a completely new contractual relationship,130 this is not
very likely to be the case for a confidentiality agreement entered into in the context of arbitral
proceedings.131 However, a problem arises when it is disputed whether the arbitral tribunal
has jurisdiction over the main contract. In this case, one can hardly assume that the party
contesting the arbitral tribunals jurisdiction over the main contract intends to have remedies
regarding the confidentiality clause adjudicated upon by that tribunal.132
124
125
126
127
128
129
130
131
132
See BGH 24.11.1964, NJW 1965, 300; Zller-Geimer (2014), 1029 para. 80; MnchKommZPO-Mnch
(2013), 1029 para. 72 with further references.
Haas (2012), p. 326.
See BGH 07.03.1985, NJW 1985, 1903 (1904); OLG Oldenburg 31.03.1971, NJW 1971, 1461 (1462).
Haas (2012), p. 326. On Swiss law also Ritz (2007), pp. 110 et seq.
Oberhammer (2003), p. 1160; Haas (2012), p. 328. On Swiss law also Ritz (2007), pp. 110 et seq.
Cf. MnchKomm-Mnch (2013), 1029 para. 112; Musielak-Voit (2013), 1029 para. 23.
OLG Karlsruhe 14.09.2007, SchiedsVZ 2008, 47 (48).
Haas (2012), p. 328.
Haas (2012), pp. 328 et seq.
V.
977
Conflict of Laws
In cases with international connecting factors, the question arises as to what extent the above- 43
described German law principles with respect to privacy and confidentiality are applicable.
The following demonstrates how this question should be answered when German law is the
lex arbitri (see below A.), the law applicable to the arbitration agreement (see below B.) or
the lex causae (see below C.).133 These three scenarios can of course and often will be
combined.
A.
German Law as lex arbitri
German law is the lex arbitri, i.e. the law applicable to the arbitral procedure, if there is a 44
valid134 agreement of the parties to that effect or if the seat of the arbitration is in Germany
(1025 (1) ZPO). The lex arbitri also governs agreements on the arbitral procedure.135
As mentioned above, the German law on arbitration ( 1025 et seq. ZPO) does not provide 45
for privacy of arbitration or confidentiality obligations of the persons involved, but at the
same time does not exclude either of them, leaving it to the parties to make that decision.
Therefore, if the lex arbitri is German law, this means that privacy and/or confidentiality
obligations can exist, but they must be derived from other sources of law, in particular agreements of the parties. It also means that the arbitrator cannot impose confidentiality obligations on the parties by virtue of the lex arbitri, given that such powers cannot be derived from
1042 (4) ZPO.
As demonstrated above, under German law privacy is viewed as an agreement of the parties 46
on the arbitral procedure,136 meaning it is an issue of the lex arbitri. Hence, if the lex arbitri is
German law, arbitration is private unless otherwise agreed upon by the parties.
Furthermore, the secrecy of the arbitral tribunals deliberations is, according to the more con- 47
vincing approach, also regarded as an agreement of the parties on the arbitral procedure.137 It
is thus likewise a matter of the lex arbitri.138 Therefore, German law being the lex arbitri means
that absent any agreement of the parties to the contrary, the deliberations of the arbitral tribunal are secret.
B.
German Law Applicable to the Arbitration Agreement
German law is applicable to the arbitration agreement if so chosen by the parties or, absent 48
any (explicit or tacit) choice of law, if German law is the lex arbitri.139 The issues covered
133
134
135
136
137
138
139
For those confidentiality obligations not deriving from party autonomy, but from general statutory provisions (law of torts, criminal law, law against unfair competition, data protection law etc.), the specific
conflict of law rules applicable to these provisions will determine whether German law can be applied.
German law does not stand in the way of parties wishing to apply 1025 et seq. ZPO to their foreign
arbitration. Rather, it is for the law of the seat to decide whether this is possible, supra Wagner, 1025 para.
Spohnheimer (2010), p. 96.
Supra, para. 4.
Supra, para. 15. The result does not change if one follows the arguably prevailing view that 43 DRiG
per analogiam is the legal basis of the secrecy of deliberations: it would still be an issue of the lex arbitri,
Kahlert(forthcoming), 7 D.I.
Kahlert(forthcoming), 7 D.I.
Cf. 1059 (2) no 1 (a); see MnchKommZPO-Mnch (2013), 1029 para. 31.
978
by the law applicable to the arbitration agreement are the conclusion, substantive validity,
interpretation, legal effects and termination of the arbitration agreement.140
49 The question now is to what extent obligations of confidentiality under German law (as discussed in part III. above) fall under these issues covered by the law applicable to the arbitration agreement. The answer is not simple, because such obligations can derive from different
sources of law that need to be assessed separately regarding the applicable law.141
1.
Arbitrators
50 The arbitrators general duty of confidentiality arises from the arbitrators agreement.142 It is
therefore not an issue covered by the law applicable to the arbitration agreement. Rather, the
crucial question is whether the arbitrators agreement is governed by German law. If it is, the
arbitrator will be obliged to maintain confidentiality (unless otherwise agreed upon) to the
extent described above.143
2.
Parties
51 It has been demonstrated that confidentiality obligations of the parties can derive from
stand-alone confidentiality agreements, from the main contract or the arbitration agreement.
In both of the latter cases, these obligations can derive either from explicit or tacit confidentiality clauses or as collateral duties under 241 (2) BGB.144
52 With respect to confidentiality obligations deriving as collateral duties from the arbitration
agreement, these must be qualified as (substantive145) legal effects of the arbitration agreement. Therefore, whether or not they exist is a question of the law applicable to the arbitration agreement.146 Accordingly, if German law is applicable to the arbitration agreement,
confidentiality obligations might exist under 241 (2) BGB.
53 On its face, the law applicable to the arbitration agreement could also cover the question
of whether confidentiality obligations derive from an (explicit or tacit) confidentiality
agreement entered into by the parties in the context of the arbitration agreement,147 be it as
part of the arbitration agreement or as a stand-alone agreement. However, an agreement on
confidentiality is not a necessary component of the arbitration agreement,148 so there is no
compelling need to subject both to the same law.149 Furthermore, confidentiality obligations
are often closely connected to the interests pursued by the parties under the main contract.150
This close connection would be ignored if the question as to whether a confidentiality agreement exists were qualified as an issue of the law applicable to the arbitration agreement.151
Hence, whether or not confidentiality obligations of the parties can be derived from an
140
141
142
143
144
145
146
147
148
149
150
151

Haas (2012), 323.
Supra, para. 10.
Supra, paras 11 et seq.
Supra, para. 25.
Oberhammer (2003), p. 1156; Ritz (2007), p. 106 (on Swiss law); Haas (2012), p. 321, 324.
Poudret/Besson (2007), para. 369; Born (2009), Vol. II., p. 2272; Haas (2012), p. 324.
This view is taken by Born (2009), Vol. II, p. 2272; Leisinger (2012), p. 165.
Oberhammer (2003), p. 1155; Haas (2012), p. 319, 325.
Ritz (2007), 107 (on Swiss law); Haas (2012), p. 325.
Ritz (2007), p. 114 (on Swiss law); Haas (2012), p. 325.
Oberhammer (2003), p. 1156; Haas (2012), p. 325.
979
(explicit or tacit) agreement of the parties should be regarded as an issue of the lex causae
rather than of the law applicable to the arbitration agreement, even if such confidentiality
agreement is entered into in the context of the arbitration agreement.152
C.
German Law as lex causae
The law applicable to the main contract (lex causae) is German law if so chosen by the par- 54
ties or, absent any explicit or tacit choice of law, if the contract has its closest connection to
Germany ( 1051 (1) and (2) ZPO).
If the lex causae is German law, the above-described principles153 apply with respect to the 55
interpretation as to whether the parties have (validly) agreed to confidentiality obligations.
This is independent of whether such agreement would formally be (part of) a stand-alone
confidentiality agreement, a confidentiality clause in main contract or arbitration agreement,
or whether it is a tacit agreement in the context of any of the aforementioned.154
VI. Court Proceedings Related to Arbitration

It is argued by some that there are no broad confidentiality obligations on the parties be- 56
cause such confidentiality would in any event be undermined as soon as ordinary courts
become involved with respect to the arbitral procedure (e.g. in annulment or recognition
proceedings).155 Apart from the fact that a lack of confidentiality in accompanying ordinary
court proceedings does not necessarily mean that the same must be true for the underlying
arbitration, it will be demonstrated that there are indeed mechanisms available for safeguarding at least highly sensitive information in ordinary court proceedings.
As a starting point, it must be noted that even if a party is bound by confidentiality obliga- 57
tions, initiating proceedings before ordinary courts is not a violation of these obligations
unless the party seeking assistance from the courts is not pursuing any legitimate interests.156
Therefore, a party interested in maintaining confidentiality generally cannot prevent court
proceedings from being initiated.
However, as already mentioned above, one cannot say that there are no mechanisms to pro- 58
tect sensitive information before ordinary courts. First of all, before German courts, there is
no general right of access to the court file for third parties. Unless the parties to the dispute
have agreed otherwise, only such persons who have a legal interest and can furnish prima
facie evidence to this effect may be granted access to the file ( 299 (2) ZPO). This legal interest requirement is quite strict, meaning that the applicants rights must potentially be affected
(directly or indirectly) by the contents of the file; mere commercial interest will not suffice.157
Furthermore, the court has discretion as to whether or not an application for access to the
files shall be granted, and it will take into account the parties interests in confidentiality (if
any) when exercising this discretion.158
152
153
154
155
156
157
158
Haas (2012), p. 325; Musielak-Voit (2013), 1029 para. 27; arguably also Oberhammer (2003), p. 1156.
The same view is taken under Swiss law by Ritz (2007), pp. 113 et seq.
Supra, paras 24-27.
Haas (2012), p. 325; arguably also Oberhammer (2003), p. 1156; also supra, para. 53
See, e.g., Prtting (2001), p. 635.
See Khn/Gantenberg (2005), p. 464; Haas (2012), 329 with further references.
MnchKommZPO-Prtting (2013), 299 para. 21 with further references.
BGH 18.02.1998, ZIP 1998, 961 (962); Musielak-Huber (2013), 299 para. 5 with further references.
980
59 If an oral hearing takes place,159 there is no specific provision allowing the court to exclude
the public based on the privacy or (to the extent applicable) confidentiality of the underlying
arbitration.160 However, on the basis of general provisions ( 171b, 172 Nr. 2, 3 GVG), the
public may be excluded if either important business secrets or sensitive personal information
are likely to be disclosed during that hearing, unless there is an overriding public interest for
these issues to be dealt with publicly. Whether a business secret is important is a determination made not from the subjective view of the person affected, but rather from an objective
perspective.161 However, the standard applied in this respect is not too strict.162 Nonetheless,
not all information covered by broadly phrased confidentiality agreements between undertakings will qualify as an important business secret.163
60 The court generally has discretion as to whether or not it should make an order to exclude the
public. It is obliged to make such order only if sensitive personal information is concerned
and if the person affected makes a request to exclude the public (and if there is no overriding
public interest militating for a public hearing).164 The hearing on whether the public is to be
excluded will itself be held privately if one of the parties makes an application to that effect or,
absent such application, if the court deems it appropriate ( 174 (1) GVG).
61 Moreover, if the public is excluded under the provisions mentioned above, the court may
oblige all persons present at the hearing to maintain confidentiality regarding all facts that
have come to their knowledge either through the hearing or through documents in the file.
The court has discretion whether or not to make such an order.165 Whenever this order is
made, a violation of the confidentiality obligation has harsh consequences: it is a criminal
offence under 353d no.2 StGB.
159
160
161
162
163
164
165
Such a hearing is required (only) if there is a request to annul the arbitral award or if, in recognition proceedings, it is possible that grounds for annulment exist, see 1063 (1) and (2) ZPO read in conjunction
with 128 (4) ZPO.
In contrast to Austrian law, 616 (2) of the Austrian Code of Civil Procedure; see thereon Haas (2012),
p.330 with further references.
MnchKommZPO-Zimmermann (2013), 172 GVG para. 6.
Zller-Lckemann (2012), 172 GVG para. 6.
Haas (2012), p. 330.
171b (2) GVG.
MnchKommZPO-Zimmermann (2013), 174 GVG para. 14.
Insolvency and Arbitration Effects of Party Insolvency on

Arbitral Proceedings in Germany
Stefan Krll
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Schiedsverfahren, ZIP 2010, 2478; Markert, Arbitrating in the Financial Crisis: Insolvency and
Public Policy Versus Arbitration and Party Autonomy Which law governs?, 2 Contemp. Asia
Arb. J. 217 (2009); Prtting, Schiedsklauseln in der Insolvenz, FS-Grg, 2010, 371; Ristelhuber,
Der Schiedsspruch im Insolvenzverfahren, ZInsO 2004, 427; Schmidt, Insolvenzordnung, 18th ed.,
2013; Uhlenbruck, Insolvenzordnung, 13th ed., 2010; G. Wagner, Insolvenz und Schiedsverfahren,
KTS 2010, 39; Ph. Wagner, Abstimmungsfragen zwischen Internationalem Insolvenzrecht und
Internationaler Schiedsgerichtsbarkeit, 2008; Ph. Wagner, When International Insolvency Law
Meets International Arbitration, Dispute Resolution International Vol. 3, No. 1, March 2009, 56;
Ph. Wagner, Die insolvente Partei im Schiedsverfahren eine Herausforderung fr alle Beteiligten,
GWR 2010, 129.
I.
II.
Para.
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Basic Principles of German Insolvency
Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
A. German Insolvency Proceedings. . . . . . 4
1. Legal Nature and Objectives. . . . . . . 4
2. Management of the Insolvency
Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. Enforcement of Claims by
Insolvency Creditors . . . . . . . . . . . . . 10
4. Effects on Pending Proceedings. . . 11
B. Foreign Insolvency Proceedings . . . . . 14
Para.
1. EC Regulation No. 1346/2000
on Insolvency Proceedings . . . . . . . 16
2. Insolvency Proceedings Outside
the European Union . . . . . . . . . . . . . 20
III. Subjective Arbitrability of the
Insolvent Party . . . . . . . . . . . . . . . . . . . . . . . . . 23
IV. Objective Arbitrability of the Various
Disputes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
A. Categories of Possible Disputes . . . . . . 25
B. Arbitrability of Disputes with
Insolvent Parties . . . . . . . . . . . . . . . . . . . . 31
982
Para.
1. Objective Arbitrability Pursuant
to German Arbitration Law. . . . . . . 31
2. Insolvency Related Disputes
(Insolvenzbezogene Einzelverfahren). . . . . . . . . . . . . . . . . . . . . . . . . . 33
3. Disputes Concerning the
Administration of Insolvency
Proceedings (Insolvenzverfahren) . . . . . . . . . . . . . . . . . . . . . .38
C. Legal Consequences . . . . . . . . . . . . . . . . 40
V. Arbitration Agreements Concluded
After the Insolvency of a Party . . . . . . . . . . . 41
VI. Arbitration Agreements Concluded by
the Insolvent Party before the Opening
of Insolvency Proceedings. . . . . . . . . . . . . . . 46
B. Relevance of the Impecuniosity of
the Insolvent Party? . . . . . . . . . . . . . . . . . 52
C. The Reach of the Arbitration
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 56
1. Claims of the Insolvent Party . . . . . 57
2. Rights of Separation and to
Separate Satisfaction . . . . . . . . . . . . . 59
3. Feststellungsstreitigkeiten 174
et seq. . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4. Right to Contest Detrimental
Transactions 129 et seq.
(Insolvenzanfechtung). . . . . . . . . . . . . 64
5. Right to Decide on the Fulfilment of Executory Contracts
Pursuant to 103 InsO . . . . . . . . . . . 70
6. Right to Enforce Claims
Assignend as Security 166 (2)
InsO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
D. Foreign Insolvency Proceedings . . . . . 74
VII. Effects of the Insolvency on Pending
Arbitration Proceedings. . . . . . . . . . . . . . . . . 76
A. Overview on the Consequences . . . . . 76
I.
Para.
1. The Insolvency Administrator
as a Party to Arbitral Proceedings . 78
2. Registration of Claim with the
Insolvency Administrator
Amendment of Relief . . . . . . . . . . . . 80
3. Interruption of Arbitral
Proceedings by Insolvency
Proceedings?. . . . . . . . . . . . . . . . . . . . . 84
4. Composition of the Tribunal . . . . . 89
5. Effects of the Insolvency on
Arbitrators Contract (Schiedsrichtervertrag) . . . . . . . . . . . . . . . . . . . . 91
6. Foreign Insolvency Proceedings . . 97
VIII. Effects of the Insolvency at the
Post-award Stage. . . . . . . . . . . . . . . . . . . . . . .100
A. Awards in Favor of the Insolvent
Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101
1. Party to Post-award Proceedings .102
2. Content of Awards and Corrections Allowed in Exequatur
Proceedings. . . . . . . . . . . . . . . . . . . . .105
B. Insolvency of the Award Creditor . . .108
1. Party to Post Award Proceedings.108
2. Operative Part . . . . . . . . . . . . . . . . . .110
3. Pending Proceedings . . . . . . . . . . . .111
4. Other Procedural Questions. . . . .113
C. Post-award Proceedings Concerning Awards Rendered in Favor of
the Insolvency Creditor General
Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . .114
D. Awards against the Insolvent Party . .117
1. Content of the Award
Interpretation and Corrections
at the Post Award Stage. . . . . . . . . .118
2. Need for a Declaration of
Enforceability? . . . . . . . . . . . . . . . . . .121
3. Defences against Enforcement /
Grounds for Setting Aside . . . . . . .124
4. Insolvency of the Award Debtor .132
Introduction1 2
1 The insolvency of a party generally has considerable consequences for its legal relationships
with other parties. The applicable insolvency law normally modifies such relationships in
various ways and imposes limits on party autonomy. In Germany, like in many other jurisdictions, neither the insolvency law nor the arbitration law3 explicitly addresses whether and
to what extent these changes and limitations affect the arbitration agreement, the arbitral
1
2
3
The author wants to thank Dmitry Marenkov for his valuable help in the preparation of this contribution.
Book 10 of the German Code of Civil Procedure (sections 1025-1066), see detailed commentary in Part
II of this book.
Insolvency and Arbitration Krll
983
proceedings or the enforcement of awards. Consequently, answers to these questions have to

be developed by the courts and the legal literature on the basis of the underlying principles
and objectives of both areas of law. Notwithstanding all differences in detail, the statement
of the American Court of Appeal for the 2nd Circuit concerning the relationship between
insolvency law and arbitration also holds true for German law:
[They] present a conflict of near polar extremes: bankruptcy policy exerts an inexorable pull towards centralization while arbitration policy advocates a decentralized
approach towards dispute resolution4
This chapter before setting out in greater detail how the conflict is solved in Germany (III 2
VI) will first provide a short overview of the legal consequences of the filing for insolvency
under German law and the general effects of a filing in another country (II). It will then address the subjective and objective arbitrability of disputes with the insolvent party (III- IV),
whether and how an insolvent party may enter into arbitration agreements (V) and the effect
of the insolvency on existing arbitration agreements (VI). It follows an overview on how the
insolvency affects ongoing arbitral proceedings (VII) and the effects on post-award proceedings (VIII). In addressing the various topics, a distinction will be made between insolvency
proceedings in Germany and foreign insolvency proceedings.
II.
Basic Principles of German Insolvency Law
German insolvency law is codified in the Insolvency Statute (Insolvenzordnung InsO) of 3

5October 1994, which entered into force on 1 January 1999.5 Its substantive provisions apply to proceedings initiated by parties in Germany.6 In principle, foreign insolvency proceedings are governed pursuant to the relevant conflict of laws rules of the German international
insolvency law by the law of the country where the proceedings have been initiated, with a
number of relevant exceptions.
A.
German Insolvency Proceedings
1.
Legal Nature and Objectives
In Germany, insolvency proceedings are considered to constitute a special type of execution 4

proceedings for the collective satisfaction of all creditors of a given debtor.7 That follows from
1 InsO, which describes the objective of insolvency proceedings and provides that they
shall serve the purpose of collective satisfaction of the debtors creditors. After the complete
overhaul of the German insolvency law in 1999,8 the overriding objective may be pursued
by two different means. Which one is selected depends primarily on the debtor involved.
Companies which are in principle economically viable should be allowed to restructure
4
5
7
8
In re United States Lines Inc. 197 F.3d 631, 640 (2nd Cir. 1999), cert. denied, 120 S- Ct. 1532 (2000)
Insolvency Statute of 5 October 1994 (BGBl. 1994 I p. 2866), as last amended by Article 19 of the Act of
20 December 2011 (BGBl. 2011 I p. 2854). Unofficial English Translation at: http://www.gesetze-iminternet.de/englisch_inso/englisch_inso.html#p0366.
Pursuant to section 335 InsO the insolvency proceedings and their effects, unless otherwise provided,
shall be subject to the law of the state in which the proceedings have been opened.
G. Wagner, KTS 2010, 39.
Prior to the entry into force of InsO on 1 January 1999 the German insolvency law consisted of the
Bankruptcy Act (Konkursordnung) of 1877 and the Rules of Conciliation (Vergleichsordnung) of 1935.
984
under supervision of the law. Other companies, by contrast, should be wound up in a process
ensuring an equal treatment of all creditors belonging to the same class.9
5 To pursue these two objectives, the German insolvency law, like that of many other countries,
imposes a number of restrictions on party autonomy or modifies existing legal relationships
between the debtor and its creditors. Those mandatory restrictions and modification are
directly associated with the opening10 of insolvency proceedings and can be found primarily
in 80 et seq., 87 et seq., 103 et seq., 129 et seq., 174 et seq. InsO and 240 Code of Civil
Procedure (Zivilprozessordnung ZPO).
2.
Management of the Insolvency Estate
6 The first set of modification concerns the management of the estate. According to 80
InsO, the debtor loses the right to manage the insolvency estate, which is then vested in the
insolvency administrator. In principle, the insolvency administrator has the same rights and
obligations as the debtor possessed at the time of the opening of the insolvency proceedings.
In this regard, the status of the insolvency administrator is legally comparable to that of a
universal successor (Gesamtrechtsnachfolger).11
7 In managing the insolvency estate12 the insolvency administrator is, however, endowed with
a number of special powers. Those are granted in order to prevent the impairment of the
estate and to ensure the satisfaction of certain well-founded claims held by the personal
creditors against the debtor.
8 In particular, the administrator is entitled pursuant to 103 InsO to decide whether or not
to perform executory mutual contracts, i.e. contracts which were not or not yet completely
performed by the debtor and the counter-party at the date when the insolvency proceedings
were commenced. He may either pursuant to 103 (1) InsO perform such a contract
replacing the debtor and claim the other partys consideration or pursuant to 103 (2)
InsO refuse performance. 13 In the latter case, the other party may bring a claim for nonperformance only as an insolvency creditor, while in the former case the claim is a claim
against the estate (Masseschuld).
9 Furthermore, the insolvency administrator is entitled pursuant to 129 et seq. InsO to
contest certain disadvantageous transactions of the debtor that negatively affected the value
9
10
11
12
13
1 InsO (Objectives of the insolvency proceedings) reads as follows: The insolvency proceedings shall
serve the purpose of collective satisfaction of the debtors creditors by liquidation of the debtors assets
and by distribution of the proceeds, or by reaching an arrangement in an insolvency plan, particularly in
order to maintain the enterprise. Honest debtors shall be given the opportunity to achieve discharge of
residual debt.
The opening of the proceedings has to be distinguished from the filing for insolvency. It requires an evaluation by the relevant authorities that the remaining insolvency estate is sufficient to cover the costs of the
insolvency proceedings. Some of the effects are already associated with the filing in particular if a so called
starker Insolvenzverwalter is appointed.
G. Wagner, KTS 2010, 39 (42) compared it to a heir; for a detailed discussion of the legal status of the
insolvency administrator see Aufdermauer (2011), pp. 79 et seq.
The insolvency estate (Insolvenzmasse) pursuant to the definition in 35 (1) InsO comprises all of
the assets owned by the debtor on the date when the proceedings were opened and those acquired by
him during the proceedings. Pursuant to 36 InsO objects not subject to execution are not part of the
insolvency estate.
For the underlying rationale in balancing the economic interest of the counter-party and the insolvency
estate see Braun-Kroth (2012), 103, para. 2.
985
of the insolvency estate. In case of a successful contestation, any assets transferred under the
contested transaction must be restituted to the insolvency estate pursuant to 143 InsO.
3.
Enforcement of Claims by Insolvency Creditors
Another major consequence resulting from the opening of insolvency proceedings is that 10
pursuant to 87 InsO insolvency creditors in the sense of 38 InsO14 are only permitted to
enforce their claims under the provisions governing the insolvency proceedings. To ensure an
equal treatment of all creditors, claims have to be filed in writing with the insolvency administrator ( 174 InsO). The latter then enters every registered claim into a schedule (Tabelle).
Upon verification of the claims, the insolvency administrator may either accept or contest
the claims. In case the insolvency administrator or any other creditor contests the claim pursuant to 179 InsO, the creditor may initiate proceedings to determine the existence of such
claim pursuant to 180 InsO. Decisions with final and binding effect determining a claim or
sustaining an objection shall be effective with respect to the insolvency administrator and all
insolvency creditors (183 InsO). Subsequently, the remaining estate is distributed equally
between those creditors whose claims have been accepted in an orderly procedure ( 187
et seq. InsO). By contrast, prohibited is individual execution by insolvency creditors into the
insolvency estate or into the debtors other property ( 89 InsO).
4.
Effects on Pending Proceedings
Already pending state court proceedings concerning the insolvency estate are automati- 11
cally interrupted upon the opening of insolvency proceedings pursuant to 240 ZPO. The
purpose of this provision is twofold. First, it should prevent the debtor from continuing the
proceedings in breach of the insolvency administrators right to manage the estate. Second, it
should enable the insolvency administrator to decide on the further conduct of the proceedings. He may either accept the claim, empower the debtor to continue the proceedings or
resume the proceedings.15 The latter normally requires a service of written pleadings by the
insolvency administrator.16
Additionally, as far as the proceedings concern claims by insolvency creditors in the sense of 12
38 InsO, the relief sought will regularly have to be amended due to the prohibition to pursue such claims outside the insolvency proceedings. Consequently, requests for payments of
contested claims must be amended towards the entry into the schedule ( 180 (2) and 175
InsO).17
No comparable express rules exist for arbitration proceedings.
B.
13
Foreign Insolvency Proceedings
The rules regulating the effects of foreign insolvency proceedings on legal relationships in 14
Germany depend on where outside Germany those proceedings have been initiated. In case
14
15
16
17
Pursuant to definition in 38 InsO insolvency creditors are personal creditors who hold well-founded
claims against the debtor on the date when the insolvency proceedings were opened.
MnchKommZPO-Gehrlein (2013), 240, para. 1; Zller-Greger (2014), 240, para. 1; Flther (2001), p.
6.
250 ZPO Form of resuming proceedings and notification
Any proceedings interrupted or suspended shall be resumed, and any notifications mentioned under
this Title shall be made by serving a written pleading to be submitted to the court.
BGH, 29.06.1994 (VIII ZR 28/94), ZIP 1994, 1193; Zller-Greger(2014), 240, paras 1 and 14.
986
of proceedings initiated in a Member State of the European Union (with the exception of
Denmark), questions as to the applicable law and the law governing the consequences of a
filing are determined pursuant to EC Regulation No. 1346/2000 of 29 May 2000 on insolvency proceedings.18 In all other cases, German international insolvency law ( 335 et seq.
InsO) determines which law is applicable and governs the effects of foreign filings on legal
relationships in Germany.
15 Neither the German arbitration law nor the German insolvency law contain an explicit or
even detailed provision on how such foreign insolvency proceedings would affect arbitration
proceedings proper or arbitration related court proceedings. The rules have to be deduced
again from the general principles of both areas of law in Germany. Consequently the difficult conflict of laws questions, which played a role in the well-known Viventi-Elektrim19 case,
including the core problem of qualification, also arise under German law.
1.
EC Regulation No. 1346/2000 on Insolvency Proceedings
16 EC Regulation No. 1346/2000 of 29 May 2000 (Reg. 1346/2000) was enacted with the aim
of improving the efficiency and effectiveness of insolvency proceedings having cross-border
effects within the EU internal market and to avoid incentives for forum shopping, i.e. transferring assets or judicial proceedings from one EU member state to another, seeking to obtain a
more favorable legal position (see Preamble). There is no question that its rules are binding
for German courts in all arbitration related court proceedings, including enforcement proceedings. According to the prevailing view, arbitral tribunals in proceedings which have their
place of arbitration in Germany should also determine the effects of insolvency proceedings
initiated in another member state on the basis of EC Regulation No. 1346/2000.20
17 Pursuant to Article 16 Reg. 1346/2000, any opening of insolvency proceedings by a competent court in the sense of Article 3, i.e. the courts of the Member State within the territory
of which the centre of a debtors main interests is situated, shall be recognised in all Member
States. In this regard, Article 17 Reg. 1346/2000 provides that a judgment opening the
proceedings referred to in Article 3 (1) shall, with no further formalities, produce the same
effects in any other Member State as under this law of the State of the opening of proceedings, unless this Regulation provides otherwise and as long as no proceedings referred to in
Article 3 (2) are opened in that other Member State
18
19
20
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2000:160:0001:0018:en:PDF. Denmark as the only EU member state does not participate in this EC Regulation and therefore is neither
bound by it nor subject to its application (see No. 33 of the Preamble).
See the conflicting decisions by the English Court of Appeal, Syska et al. v. Vivendi Universal SA et al.,
[2009] EWCA Civ. 677, Yearbook XXXIV (2009), 293; High Court, 2.10.2008 [2008] EWHC 2155 =
SchiedsVZ 2008, 316, 319 and the Swiss Supreme Court, Bundesgericht, 31.3.2009 (No. 4A_428/2008),
Yearbook XXXIV (2009), 286 with case note by Aebi/Frey, ASA Bulletin 2010, 113; from the abundant
literature on the case see Robertson, Cross-Border Insolvency and International Commercial Arbitration:
Characterisation and Choice of law Issues in Light of Elektrim S.A. v. Vivendi S.A. and Analysis of the
European Insolvency Regulation, [2009] Int. A.L.R. 125; Mankowski, EuInsVO und Schiedsverfahren,
ZIP 2010, 2478; Kasolowsky/Steup, Insolvenz in internationalen Schiedsverfahren lex arbitri oder lex
fori concursus, IPRax 2010, 180; cf. Flecke-Gianmarco/Keller, NZI 2012, 529; Naegeli, The Award and the
Courts Bankruptcy and Arbitration What Should Prevail? The Impact of Bankruptcy on Pending
Arbitral Proceedings in Austrian Yearbook on International Arbitration 2010, 193; see also the adjustment of the Swiss position Bundesgericht 16.10.2012 (4A_50/2012) ASA Bull. 2/2013, 354.
Ph. Wagner (2008), p. 113 et seq.
987
Pursuant to the general principle in Article 4 Reg. 1346/2000, the law applicable to insol- 18
vency proceedings and their effects shall be that of the Member State within the territory
of which such proceedings are opened. The law of the State of the opening of proceedings
shall determine the conditions for the opening of those proceedings, their conduct and their
closure.
One important exception of the general relevance of the law of the opening state can be found 19
in Article 15 Reg. 1346/2000. It provides that the effects of a pending lawsuit concerning an
asset or a right of which the debtor has been divested shall be governed solely by the law
of the Member State in which that lawsuit is pending. In the absence of a definition of the
term lawsuit in the Regulation, it is a matter of the applicable procedural law to determine
whether arbitral proceedings shall be qualified to constitute a lawsuit.21 The prevailing
view in German arbitration law is that Regulation No. 1346/2000 also applies to arbitral
proceedings.22 Consequently, German arbitration law will determine which effects the initiation of insolvency proceedings in another EU Member State have on already pending arbitral
proceedings in Germany. All other effects are determined by the law of Member State where
the proceedings were opened.
2.
Insolvency Proceedings outside the European Union
Insolvency proceedings initiated outside the European Union or in Denmark are pursu- 20
ant to 343 InsO automatically recognized in Germany. The only exceptions are where
the foreign authorities lack jurisdiction pursuant to the German understanding or where
recognition would be against public policy.23 335 InsO provides that the effects of such
proceedings on legal relationships in Germany are in principle governed by the law of the
state in which the proceedings have been opened (lex fori concursus). However, 336 et seq.
InsO contain certain exceptions, restrictions and clarifications of this general rule either in
form of special conflict of laws provisions or substantive provisions regulating directly the
effect of the foreign insolvency proceedings.
In this regard, 352 (1) InsO states that with the opening of insolvency proceedings abroad, 21
court proceedings concerning the insolvency estate and pending at that point in time in
Germany are stayed. Such stay shall continue until the action is joindered by a person who
in accordance with the law of the state of the opening of proceedings is entitled to continue
the action (i.e. insolvency administrator), or until the insolvency proceedings have been
terminated.
The prevailing view is that these rules are not only relevant for courts in arbitration related 22
proceedings, but also for arbitral tribunals.24
21
22
23
24
Paulus, Europische Insolvenzverordnung, 3rd ed, 2010, Art. 15 para. 3

MnchKommInsO-Reinhart (2008), Art. 15 EuInsVO, para. 4; G. Wagner, KTS 2010, 39 (59); Mankowski,
ZIP 2010, 2478 (2479 et seq.).
For a more comprehensive overview on the relevant requirements Ph. Wagner (2008) p. 48 et seq.
Trunk (1998), p. 126 et seq.; for a detailed discussion Ph. Wagner (2008) p. 86 et seq., 124; see for an
application of this rule under the old insolvency law OLG Hamm 2.11.1983, KTS 1985, 375.
988
III. Subjective Arbitrability of the Insolvent Party

23 According to German insolvency law, the opening of insolvency proceedings does not affect the subjective arbitrability of the debtor. Unlike in other jurisdictions,25 the German
insolvency law does not contain a provision according to which the debtor loses its ability
to be party to arbitration proceedings with the filing or opening of insolvency proceedings.
To the contrary, the only provision of the insolvency law which addresses arbitration at least
indirectly is clearly based on the assumption that the debtor retains its subjective arbitrability.
Pursuant to 160 (2) no. 3 InsO, the insolvency administrator may require the consent of
the creditors committee if he or she wants to enter into an arbitration agreement involving a
dispute of considerable importance to the estate. Such a provision implies that the insolvent
debtor in principle has subjective arbitrability.
IV. Objective Arbitrability of the Various Disputes

24 More complex is the legal situation concerning the objective arbitrability of the various
disputes that may arise with the insolvent party or the insolvency administrator. As such, it is
necessary to distinguish between different categories of disputes.
A.
Categories of Possible Disputes
25 The disputes which may arise in the context of insolvency proceedings can be of a completely
diverse nature involving a changing variety of public and private interests. Irrespective of
all differences in detail, these disputes fall into three broad categories characterized by the
nature of the disputes covered and the timing of facts giving rise to a claim.
26 The first category comprises disputes which relate to the insolvency proceedings as such, as
a procedure for the collective satisfaction of all creditors of a given debtor under the supervision of the insolvency court (Insolvenzverfahren).26 Covered are, inter alia, disputes as to
whether insolvency proceedings should be opened, the appointment and supervision of the
insolvency administrator or the procedure concerning the final distribution of the estate.
27 The second and third category concern specific disputes arising in connection with the
insolvency proceedings (Insolvenzbezogene Einzelverfahren). They lack largely the specific
execution element but have as their purpose primarily the determination of the existence of
claims.
28 The second category is composed of disputes that originate from facts or rights and obligations pre-dating the opening of the insolvency proceedings. For example, they include
disputes regarding the existence of claims against the debtor at the time of opening the
insolvency proceedings that have been filed with the insolvency administrator but have been
contested ( 179 et seq. InsO Feststellungsstreitigkeiten). Another prominent group of
these disputes are those about whether certain property is part of the estate ( 47, 48 InsO
Aussonderung) or whether an existing security right of a given creditor requires a special
treatment of certain assets ( 49 et seq. InsO Absonderung).
25
26
See for example Art. 142 Polish Insolvency Law as interpreted in the Vivendi/Elektrim decision by the
Swiss Supreme Court, Bundesgericht, 31.3.2009 (No. 4A_428/2008), Yearbook XXXIV (2009), 286; see
also Art. 87 Portuguese Insolvency Law.
For the classification and terminology see Aufdermauer (2011), p. 19.
989
The last category is composed of those claims which have their origin in facts or legal actions 29
taken by the debtor where authorized or the insolvency administrator after the insolvency proceedings have been initiated. These so called Masseschulden (debts of the estate)
are given a preferential treatment under German insolvency law. They are not covered by the
prohibition of separate enforcement in 87 et seq. InsO.
In the absence of any express regulation of the arbitrability of disputes falling in each category, 30
their arbitrability has to be determined on the basis of the general rules.
B.
Arbitrability of Disputes with Insolvent Parties
1.
Objective Arbitrability Pursuant to German Arbitration Law
In principle, German arbitration law contains a very broad concept of arbitrability. Pursu- 31
ant to 1030 (1) ZPO, any claim involving an economic interest (vermgensrechtlicher
Anspruch) can be submitted to arbitration. According to the intent of the legislator, the
term economic interest shall be interpreted broadly.27 It comprises any claim concerning
the payment of money or any subject-matter of monetary value and claims based on a legal
relationship aimed at a realization of money.28 Claims involving no economic interest may be
the subject of an arbitration agreement if the parties are entitled to conclude a settlement on
the issue in dispute. The German Arbitration Law expressly provides in 1030 (3) ZPO that
this general concept of arbitrability does not affect any restrictions or limitation contained in
special statutes.
The German Insolvency Statute does not contain an explicit restriction of the arbitrability of 32
any type of disputes. Consequently, any limitation would have to result from salient features
of insolvency law that obviously conflict with the admission of arbitration proceedings. In
principle, the particular features which have led in other jurisdictions to limitations of the
arbitrability of disputes with insolvent parties also exist in German insolvency law. The proceedings in part involve the exercise of sovereign power, there is at least a limited conferral of
exclusive jurisdiction on a particular court and a number of the disputes affect third parties
such as other creditors. In German law, however, the latter two features do not prevent the
arbitrability of disputes with insolvent parties. By contrast, the first feature is relevant for disputes relating to the insolvency proceedings proper (Insolvenzverfahren) within the meaning
of 11 et seq. InsO.
2.
Insolvency Related Disputes (Insolvenzbezogene Einzelverfahren)
Insolvency-related disputes falling into the second and third category of cases are generally 33
considered to be arbitrable in Germany.29 They concern claims involving an economic interest which are arbitrable pursuant to 1030 (1) 1. Alt. ZPO. At least for the disputes of the
third category, the so-called Masseforderungen that is implicitly recognized in 160 (2) No.
3 InsO, already mentioned above. The consent requirement imposed there presupposes that
the covered disputes can in principle be submitted to arbitration, i.e. are objectively arbitrable.
27
28
29

See commentary of 1030 ZPO by Trittmann/Hanefeld in Part II of this book.
Zller-Geimer (2014), 1030, para. 11; MnchKomm-ZPO-Mnch (2013), 1029, para. 81; Musielak/
Voit, (2013), 1030, para. 2; for the situation in other European Countries see Krll, in: Mistelis/Lew,
Pervasive Problems in International Arbitration, 2006, p. 357 (367).
990
34 Unlike the insolvency law of other countries, German insolvency law does not follow the rule
of an absolute vis attractiva concursus.30 The insolvency court31 has no all-embracing exclusive
jurisdiction over any insolvency or insolvency-related disputes. There are a number of insolvency-related disputes that are referred to the ordinary courts. These comprise, inter alia,
disputes concerning the right to separation (Aussonderung, 47 InsO), separate satisfaction
(Absonderung, 49 et seq. InsO), debts incumbent on the insolvency estate (Masseverbindlichkeiten, 53 et seq. InsO), the contest of debtors transactions in insolvency proceedings
(Insolvenzanfechtung, 129 et seq. InsO) and the determination of claims (Feststellung der
Forderungen, 174 et seq. InsO) just to mention the most important ones.
35 The mere fact that for the last mentioned type of disputes, the Feststellungsstreitigkeiten,
180 (1) InsO32 provides for the exclusive jurisdiction of the ordinary courts at the place
where the proceedings have been opened does not affect their objective arbitrability.33
Under German law, this type of conferral of exclusive jurisdiction upon a particular court
is regularly considered to have a limited scope, as has been clearly stated in the Bill to the
German Arbitration Act.34 Provisions on exclusive competence merely serve the purpose to
define the jurisdiction of various state courts and to establish a border between the respective
competences of such courts. They do not, however, draw a line between the competence of
state courts on the one hand and arbitration on the other hand.35
36 The same applies for the reference to the ordinary courts. It is not intended to exclude
arbitration but should merely make clear that such disputes do not fall under the jurisdiction
of the insolvency court.36
37 Equally, no obstacle for the objective arbitrability of these Feststellungsstreitigkeiten in Germany37 is the fact that a decision rendered in such proceedings have a binding effect also on all
other insolvency creditors pursuant to 183 (1) InsO.38 That the extension of res judicata effect to other parties not directly participating in the proceedings does not necessarily exclude
their arbitrability has been extensively discussed in the company law context.39 There, 248
(1) of the German Stock Corporation Act (Aktiengesetz AktG) provides that a decision
in actions for annulment of a resolution of the shareholders meetings binds all shareholder
and not only those which were parties to the proceedings. The fact that the Supreme Court
submitted its ruling to numerous caveats is not relevant. These restrictions ensure the right
30
31
32
33
34
35
36
37
38
39
See MnchKommInsO-Ganter (2013), 2, para. 7; Flther, DZWiR 2001, 89 (93); Ph. Wagner, GWR
2010, 129 (130).
In accordance with 2 (1) InsO the local court [Amtsgericht] in whose district a regional court [Landgericht] is located shall have exclusive jurisdiction for insolvency proceedings as the insolvency court for the
district of such regional court.
180 (1) InsO reads as follows: An action for the determination of a claim shall be brought under the
provisions governing ordinary civil proceedings. The local court where the insolvency proceedings are or
were pending shall have exclusive jurisdiction for such action. If the subject-matter of the action does not
fall under the jurisdiction of the local courts, the regional court in whose district the insolvency court is
located shall have exclusive jurisdiction.
See Flther, DZWiR 2001, 89 (93); Ph. Wagner, GWR 2010, 129 (130).
BT-Drucks. 13/5274, p. 34.
G. Wagner, KTS 2010, 39 (46); Heidbrink/von der Groeben, ZIP 2006, 265 (268); Ehricke,ZIP 2006, 1847
(1851).
For a different legal situation in Austria see references by G. Wagner, KTS 2010, 39 (45 Fn 28).
G. Wagner, KTS 2010, 39 (45 seq.).
BGH 06.04.2009, SchiedsVZ 2009, 233 (234 seq.).
991
of all shareholders and are due to the notification requirements in 246 AktG. There is no
equivalent to this provision in insolvency law.40
3.
Disputes Concerning the Administration of Insolvency Proceedings (Insolvenzverfahren)
Disputes of the first category, i.e. those concerning the insolvency proceedings as such and 38
their administration, are not arbitrable. 41 According to the German understanding the
conferral of exclusive jurisdiction upon a particular court does in principle not affect the
arbitrability of a dispute. 2,3 InsO, however, which submit such disputes to the exclusive
jurisdiction of the insolvency court, are in this particular context a strong indication that
such disputes are excluded from the realm of arbitration. The non-arbitrability of insolvency proceedings proper follows from their peculiar legal nature. They involve a number
of potentially separable decisions, some of which already produce effects which can hardly
be justified by party autonomy. 42 In their totality, these decisions making up the insolvency
proceedings are intended to provide for a distribution of the remaining assets of the insolvent
party between all its creditors according to certain principles. Insofar, the execution character
of the proceedings prevails. It is a characteristic feature of insolvency proceedings that they
determine the relevant issue with effects for all creditors of the debtor, i.e. have erga omnes
effect. Such an effect is contrary to the private nature of arbitration. It requires normally a
submission of the parties to arbitration and the award has in the absence of an agreement
to the contrary direct effects only on the parties of the arbitration.43 Irrespective of the fact
that the German legislator explicitly characterizes arbitration as a suitable true alternative to
court proceedings, it had primarily adjudication proceedings in mind rather than execution
proceedings which involve to a much greater extend the use of sovereign power. Insofar,
insolvency proceedings are not arbitrable.
Beyond these legal reasons, organizational considerations also make the use of arbitration for 39
insolvency proceedings not a viable alternative in practice. The need to conclude an arbitration agreement with any potential creditor to exclude that creditor from initiating insolvency
proceedings in the state court, would be a major obstacle. Insofar, the author is not aware
of any decision which even had to address the issue because a party tried to initiate such
proceedings with an arbitral tribunal.
C.
Legal Consequences
In light of the arbitrability of insolvency related disputes, whether such a dispute may be 40
submitted to arbitration depends primarily on the existence and validity of an arbitration
agreement and its scope ratione materiae and ratione personae in the particular case. As a consequence, the answers to these questions are in the end determined by the precise wording
of the arbitration clauses. Irrespective of that, there are well accepted answers to the typical
insolvency related question as to who may conclude an agreement and which disputes may
be covered. In this respect, one must distinguish between arbitration agreements concluded
40
41
42
43
G. Wagner, KTS 2010, 39 (46 seq.)

Aufdermauer (2011), pp. 19 et seq; MnchKommZPO-Mnch (2013), 1029, para. 81; Chr. Berger, ZInsO
2009, 1033 (1034).
See the comprehensive discussion by Aufdermauer (2011), p. 24 et seq.
See, Lehmann, Die Schiedsfhigkeit wirtschaftsrechtlicher Streitigkeiten als transnationales Rechtsprinzip, 2002, p. 129 who considers that to be an international principle.
992
after the initiation of the insolvency proceedings and those concluded by the debtor before
the initiation of such proceedings.
V.
Arbitration Agreements Concluded after the Insolvency of a Party
41 Pursuant to German law, the insolvency administrator may enter into arbitration agreements on behalf of the debtor. As set out above, the insolvency of a party does not affect
the debtors general ability to become a party to an arbitration agreement in the sense of a
general lack of subjective arbitrability. Instead, 80 InsO merely vests the power to conclude
such agreements in the insolvency administrator.44 Arbitration agreements entered into by
other persons (e.g. management of the company or its counsel) will not be binding for the
insolvency estate.
42 Pursuant to 160 (1) InsO, the insolvency administrator is required to obtain the consent
of the creditors committee (Glubigerausschuss, 67 InsO) if he intends to enter into transactions that are of particular importance to the insolvency estate. In the absence of a statutory
definition of a transaction of particular importance, the fulfillment of this criterion depends
on the circumstances of the particular case.45 160 (2) No. 3 InsO clarifies that the said consent is particularly essential in regard to bringing or joinder of lawsuits with a considerable
amount in dispute or refraining from bringing such lawsuits, as well as the conclusion of a
settlement or an arbitration agreement concerning such lawsuits with a considerable amount
in dispute. Whether the amount in dispute is considerable shall be determined on the basis
of the scope of the insolvency proceedings, the insolvency estate and the risks involved.46
43 It follows from the limited consent requirement in 160 InsO that in all cases which do
not qualify for particular importance, no authorization is necessary. Moreover, 164 InsO
states that even when consent is necessary, the lack of consent does not render arbitration
agreements invalid.
44 At the same time, there are generally no legal restrictions as to the conclusion of arbitration
agreements vis--vis insolvent counter-parties (i.e. their insolvency administrators).
45 The transferal of powers in 80 InsO concerns also the arbitrators contract. Only the insolvency administrator is entitled to conclude an arbitrators contract (Schiedsrichtervertrag)
after the opening of the insolvency proceedings.47 There is, however, no requirement of approval by the creditors committee.
VI. Arbitration Agreements Concluded by the Insolvent Party before the Opening
of Insolvency Proceedings
A.
General Principles
46 In Germany, arbitration agreements concluded by the debtor before the opening of insolvency proceedings are binding for the insolvency administrator.48 The view that such an
44
45
46
47
48
G. Wagner, KTS 2010, 39 (40).

Braun-Dithmar (2012), 160, para. 9.
Braun-Dithmar (2012), 160, para. 14; Uhlenbruck/Uhlenbruck (2010), 160, para. 42.
See below V.3.
BGH 28.2.1957, BGHZ 24, 15 (18); BGH 20.11.2003, NJW 2004, 2898 (2899); BGH 25.04.2013 (IX
ZR 49/12), DZWIR 2013, 483 para. 8; Dahl/Thomas, NZI 2012, 534; Heidbrink/von der Groeben, ZIP
2006, 265 (265 seq.); Ehricke,ZIP 2006, 1847; Kck, ZInsO 2006, 11 (12); G.Wagner, KTS 2010, 39 (42).
993
extension of the binding effects of an arbitration agreement runs counter the objective of the
insolvency proceedings by restricting the insolvency administrator in its pursuit of claims
has remained singular.49 It is one of the fundamental principles underlying Germany insolvency law that for the administration of the insolvency estate, the insolvency administrator is
bound by the legal relationships existing for the debtor unless such relationships are modified
for insolvency reasons. The legal position can be compared to that of a universal successor,
which means that in relation to the estate the insolvency administrator steps into the shoes of
the debtor.50 That also applies in particular for procedural relationships, as evidenced by the
provisions on pending proceedings, such as 85 InsO.
Consequently, the insolvency administrator is, in principle, also bound by arbitration agree- 47
ments concluded by the debtor. None of the modification of the legal relationship between
the debtor and its creditors provided for in the insolvency law affects the arbitration agreement.51 The underlying rationale of the various insolvency specific modifications of legal
relationships with the debtor is to protect the insolvency estate. However, the arbitration
agreement as such does not impose any additional substantive burden on the estate but
merely regulates how rights and obligations of the estate are to be enforced.52
The arbitration agreement is not considered to be a mandate (Auftrag) in the sense of 115 48
InsO53 or a management contract (Geschftsbesorgungsvertrag) in the sense of 116 InsO
which would expire automatically.
At the same time, the insolvency administrator has no right to terminate arbitration agree- 49
ments pursuant to 103 InsO.54 The arbitration agreement is not considered to be an executory contract in the sense of 103 InsO.55 Some authors justify this conclusion by referring
to auxiliary character of the arbitration agreement, which merely regulates the mode of
49
50
51
52
53
54
55
Hsemeyer (2007), para. 13.28; critical also Schulte-Frohlinde/Wilts, ZInsO 2006,196 (199); see also
Prtting, FS-Grg (2010), p. 371 (373 seq) who is of the view that in light of 103 InsO, the insolvency
administrator is only bound as claimant but not as respondent.
See G. Wagner, KTS 2010, 39 (42); BGH 28.5.1979, III ZR 18/77, NJW 1979, 2567; for a criticism of
this comparison with, however no effect on the final result see Ehricke, ZIP 2006, 1847 (1849); Flther,
DZWIR 2004, 162 (163)
For a detailed discussion of the underlying rationale Aufdermauer (2011), pp. 51 et seq; see also discussion of the justification of the successor analogy in light of the various theories concerning the legal
status of the insolvency administrator at pp. 79 et seq.
Aufdermauer (2011), p. 75.
BGH 20.11.2003, NJW 2004, 2898 (2899); id. 25.04.2013 (IX ZR 49/12), DZWIR 2013, 483 para. 8
103 InsO provides:
Option to be Exercised by the Insolvency Administrator
(1) If a mutual contract was not or not completely performed by the debtor and its other party at the
date when the insolvency proceedings were opened, the insolvency administrator may perform
such contract replacing the debtor and claim the other partys consideration.
(2) If the administrator refuses to perform such contract, the other party shall be entitled to its claims
for non-performance only as an insolvency creditor. If the other party requires the administrator
to opt for performance or non-performance, the administrator shall state his intention to claim
performance without negligent delay. If the administrator does not give his statement, he may no
longer insist on performance.
BGH 25.04.2013 (IX ZR 49/12), DZWIR 2013, 483 para. 8; G. Wagner, KTS 2010, 39 (42); Aufdermauer (2011), pp. 67 et seq Flther (2001), 71 et seq.; for the KonkursO Jestaedt (1985), 66; in favour of an
applicability of 103 Jaeger/Windel (2007), 80 Rn 249.
994
enforcing rights.56 Others rely more generally on the arbitration agreements character as a
procedural contract.57 A third group justifies it with the lack of reciprocity of the obligations
arising from the arbitration agreement.58
50 It is equally uncontested that the termination of the main contract on the basis of 103 InsO
has no effect on the arbitration agreement. Pursuant to the principle of separability ( 1040
Abs. 1 ZPO), the legal fate of an arbitration clause does not depend on the main contract in
which it is included.
51 In general, the insolvency administrator is also not entitled to contest the conclusion of an
arbitration agreement under 129 et seq. InsO.59 The German legislator considered arbitration to constitute a true alternative to state courts for the adjudication of claims of equal legal
value.60 Thus, in the absence of particular circumstances, the conclusion of an arbitration
agreement cannot be considered to be a transaction disadvantaging the insolvency creditors in the sense of 129 (1) InsO. That could only be different if the parties had drafted the
arbitration agreement purposefully in a way that it rendered the pursuit of claims financially
or factually more difficult. An example would be selecting a place of arbitration in a distant
country without any reasonable justification and requiring hearings to be held there. Even in
these circumstances, a contest pursuant to 129 et seq. InsO would additionally require the
debtors illiquidity on the date of the transaction and the awareness of the other party thereof.
B.
Relevance of the Impecuniosity of the Insolvent Party?
52 The insolvency administrator, as well as any other party involved in the proceedings, may
however rely on all non-insolvency specific grounds to terminate the arbitration agreement
or to avoid its effects.61 Notwithstanding the fact that the insolvency of a party as such does
not affect the validity of the arbitration agreement, the impecuniosity of the debtor often
underlying the filing for insolvency may do so. Pursuant to the German Supreme Court, the
lack of sufficient funds to conduct arbitral proceedings renders an arbitration agreement void
or inoperable.62 The underlying rationale of the decision is that it would result in a denial
of justice to insist on arbitration and enforce the arbitration agreement if a party which is
not able to pay the advance on costs or otherwise lacks fund to present its case in arbitral
proceedings. Unlike in proceedings before state courts, there is no legal aid available in arbitration proceedings which could remedy such a lack of fund.
53 Notwithstanding any criticism as to the reasoning of the decision,63 its result, i.e. the nonenforceability of the arbitration agreement in such cases, is widely accepted. According to
German case law, the insolvent party only needs to furnish prima facie evidence that it does
56
57
58
59
60
61
62
63
See G. Wagner, KTS 2010, 39 (42); Aufdermauer (2011), pp. 67 seq;

Haas, ZZP 2013, 116 (117)
Flther (2001), 72 seq.; Kck, ZinsO 2006, 11 (12). for the KonkursO Jestaedt (1985), 66 seq.; for a different justification in the context of Art. 4 (2) lit. e Reg. 1346/2000, see Schmidt/Brinkmann (2013),
Art. 4 para. 17 according to whom the arbitration agreement has served its purpose and has been fully
performed once arbitration proceedings have been initiated.
Flther (2001), 73 et seq., id. DZWIR 2004, 162 (163); Kck, ZinsO 2006, 11 (14).
BT-Drucks. 13/5274, p. 34.
See Lachmann (2008), para. 620 who mentions continuous obstruction of the proceedings as a ground
which could exist for example in the refusal to pay an advance of cost by either party.
BGH 14.9.2000 (III ZR 33/00), BGHZ 145, 117, 119 = NJW 2000, 3720, Heidbrink/von der Groeben,
ZIP 2006, 265 (266).
See Risse, RPS 2/2001, BB 2001, Beilage 6 zu Heft 31, p. 11.
995
not possess sufficient funds to initiate and conduct arbitral proceedings. If the other party
is then not willing to pay the complete advance on cost and enable the insolvent party to
meaningfully participate in the arbitration, the arbitration agreement would be considered
to be void. As a consequence, the debtor could start court proceedings against its creditors
who are excluded from relying on the arbitration agreement to challenge the courts jurisdiction. Equally, the debtor could successfully challenge the jurisdiction of an arbitral tribunal if
arbitral proceedings were initiated by the creditors.
In the authors view, the impecuniosity of a party does not render the arbitration agreement 54
void or inoperable but merely temporarily incapable of being performed.64 For that, the party
should not only be required to furnish prima facie evidence about the lack of funds but also
that it would be entitled to legal aid in state court proceedings.65 To deprive the counterparty
of its contractual right to go to arbitration is only justified if the impecunious partys right to
present its case is in the particular case better protected in state court proceedings.
In proving the lack of sufficient funding, it must be kept in mind that the mere fact that a party 55
is insolvent does not automatically excludes it from having sufficient funds to participate in
arbitral proceedings.66
C.
The Reach of the Arbitration Agreement
If the enforceability of the arbitration agreement is not affected by the impecuniosity of the 56
debtor, the only question which has to be answered in a given case is whether the particular
dispute with the insolvency administrator (or other creditors) is covered by the arbitration
agreement. That applies irrespective of whether the insolvency administrator acts as claimant, pursuing claims of the insolvency estate, or as respondent, defending the estate against
claims of creditors. As a general rule, it can be said that all disputes not relating to special powers of the insolvency administrator are covered by the arbitration agreement. By contrast,
those disputes which concern such special powers modifying the pre-insolvency substantive
relationship between the debtor and its creditors are outside the jurisdiction of the arbitral
tribunal.67 The underlying rationale is that the debtor could not transfer jurisdiction over disputes concerning powers it did not have. In practice, it may be difficult to distinguish clearly
between the various disputes.
1.
Claims of the Insolvent Party
Disputes concerning claims belonging to the insolvency estate and which are not based 57
on special powers of the insolvency administrator are in general covered by the arbitration
agreement.68 Thus, the insolvency administrator has to pursue all claims in arbitration unless
he can rely on the impecuniosity defense or the other party agrees to a termination of the
arbitration agreement to allow the administrator to pursue his claims in the state court.
64
65
66
67
68
See also KG Berlin 13.08.2001, SchiedsVZ 2003, 239.

For a different view see KG Berlin 13.08.2001, SchiedsVZ 2003, 239; for a critical analysis of the problem
of impecuniosity and the development of rules how to best balance the conflicting principles of access to
justice and pacta sunt servanda see G. Wagner, SchiedsVZ 2003, 206 (210 et seq.).
See G. Wagner, SchiedsVZ 2003, 206 (207) who emphasizes the importance of this distinction, id. KTS
2010, 39 (42 seq Risse RPS 2/2001, BB 2001, Beilage 6 zu Heft 31, p. 11.
Heydn,SchiedsVZ 2010, 182 (187).
G. Wagner, KTS 2010, 39 (43).
996
58 In the authors view, that applies also to claims for the performance under executory contracts
where the administrator has decided to fulfil the contract. 69 Irrespective of the fact that such
a claim presupposes that the insolvency administrator has exercised his right under 103 (1)
InsO to ask for performance, the claim is de facto identical to the claim which could have been
raised by the insolvent party before the opening of insolvency proceedings and would then
have been covered by the arbitration agreement.
2.
Right of Separation and to Separate Satisfaction
59 Creditors that want to invoke a right of separation (Aussonderungsrecht)70 and rights of

separate satisfaction for security rights (Absonderungsrechte)71 can and must generally do
so in front of an arbitral tribunal. The insolvency administrator is, to this extent, bound by
arbitration agreement concluded by the debtor.
60 According to the German Supreme Court, that does not apply in cases where the alleged
right of separation is based on a right to use under a licensing agreement and the claims raised
either concern directly, or at least as a preliminary question, the insolvency administrators
right under 103 (2) InsO to refuse performance the licensing agreement.72 In its Quimonda
decision, the Court decided that the insolvency administrators right under 103 InsO is not
covered by the arbitration agreement and consequently arbitration is also not possible where
it is raised as a defense against a claim otherwise covered by an arbitration agreement.
3.
Feststellungsstreitigkeiten 174 et seq. InsO
61 Disputes concerning the existence of claims which have been registered with the insolvency
administrator but have been contested by the latter are generally considered to fall within the
scope of an arbitration agreement.73 Such claims are in general based on preexisting contracts
between the insolvent party and the claimant and were intended to be covered by the arbitration clause at the time of contract conclusion. The opposite view, which wants to exclude
such claims from the scope of arbitration agreement due to the nature of the underlying
dispute,74 has found little support.
62 Equally not convincing is the view that wants to limit the reach of the arbitration agreement
to disputes concerning the existence of such claims but considers disputes as to their ranking
not to be covered.75
69
70
71
72
73
74
75
That may be controversial in light of the jurisprudence of the German Supreme Court concerning the opposite case (refusal to perform under 103 (2) InsO) reported below; in favor Prtting, FS-Grg (2010),
p. 371 (373 et seq) who wants to exclude claims against the insolvency administrator from the scope of
arbitration agreements.
See KG Berlin 23.4.2012, SchiedsVZ 2012, 218 (220).
BGH 20.11.2003, NJW 2004, 2898 (2899); RGZ 137, 109 (11); for a different view Uhlenbruck, InsO,
86 para. 10; LG Kleve MDR 2001, 291.
BGH 30.6.2011, SchiedsVZ 2011, 281 = ZZP 2013, 111 (with note Haas at 115); see for details infra at
para. 70.
BGH 20.11.2003, NJW 2004, 2898 (2899); id. 25.04.2013 (IX ZR 49/12), DZWIR 2013, 483 para. 8;
Ehricke, ZIP 2006, 1847 (1849).
HamKommInsO-Herchen (2012), 180 para. 12, 179 Rn. 17, according to whom the dispute in case of
179 Ins0 is not about the existence of the claim, which would be covered by the arbitration agreement,
but about the creditors right to participate in the distribution of the estate.
Aufdermauer (2011), p. 194 et seq.; fot the opposite view see Ehricke, ZIP 2006, 1847 (1850).
997
Highly controversial is the legal situation if the proceedings had to be initiated because 63
another creditor contested the existence of a claim. One could doubt whether also such a
creditor is bound by the arbitration agreement since he never concluded an agreement with
the insolvency creditor.76 At a closer look, his right to object, which is at the heart of such
an action, is an action which originated in the original debtor and is merely enforced by the
creditor. Like the insolvency administrator, he is therefore bound by the legal relationships
entered into by the insolvent party.77
4.
Right to Contest Detrimental Transactions 129 et seq. InsO (Insolvenzanfechtung)
The arbitration agreement does not cover disputes with the insolvency administrator arising 64
from an exercise of the right to contest disadvantageous transactions of the debtor pursuant
to 129 et seq. InsO.78 The dispute is not considered to arise out of the underlying contract
between the creditor and the buyer. Instead, it concerns a statutory right granted to the insolvency administrator which is not at the disposal of the debtor.
This last aspect is not given sufficient weight by those authors which advocate an inclusion of 65
the contestation-disputes into the scope of the arbitration agreement. They stress the arbitrability of such contests and imply that the will of the parties at the time of the conclusion of the
arbitration agreement comprised any possible contests.79 Even if such an intention existed,
the debtor would have no power to bind the insolvency administrator in relation to powers
which originate in the person of the insolvency administrator.
Conceptually, it would be possible to interpret the arbitration agreement, in so far as it con- 66
cerns claims connecting with the right to contestation, as a contract concluded by an agent
without authority which the insolvency administrator could confirm subsequently pursuant
to 177 Civil Code (BGB). However, in the absence of clear indications to the contrary,
it cannot be assumed that the creditor was willing to enter into such a unilaterally binding
arbitration agreement. 80
As a consequence, a creditor may not rely on the arbitration clause to challenge the juris- 67
diction of the state courts in an action initiated by the insolvency administrator in the state
courts.81
More controversial is the treatment of the opposite situation where the creditor has started 68
arbitration proceedings and the insolvency administrator could raise the right to challenge
the underlying transaction as a defense to the claim. The German Supreme Court has dealt
76
77
78
79
80
81
Against a binding force see Aufdermauer (2011), p. 243 et seq.; Uhlenbruck/Sinz (2010), 180 para. 16;
Longre/Gantenbrink, SchiedsVZ 2014, 21 (23).
Chr. Berger, ZInsO 2009, 1033 (1038); Flther (2001), p. 84 seq.; MnchKommInsO-Schumacher (2013),
180 paras 11, 31; G. Wagner, KTS 2010, 39 (45).
BGH 17.10.1956, NJW 1956, 1920 (1921); id. 20.11.2003, NJW 2004, 2898 (2899); id. 17.1.2008
SchiedsVZ 2008, 148 para. 17MnchKommmInsO-Kirchhof (2008), 146, Rn 37; G.Wagner, KTS 2010,
39 (42); Kck, ZinsO 2006, 11 (14); Heidbrink/von der Groeben, ZIP 2006, 265 (266 seq.).
Uhlenbruck-Hirte (2010), 143 para. 66; Paulus, ZInsO 1999, 242 (244 et seq.); Adolphsen in Bork,
Handbuch des Insolvenzanfechtungsrechts (2006), Chapter 19, para. 40.
Heidbrink/von der Groeben, ZIP 2006, 265 (267 seq.).
BGH 17.10.1956, NJW 1956, 1920 (1921); id. 20.11.2003; DZWIR 2004, 161 (162); id. 17.01.2008,
SchiedsVZ 2008, 148 (150); Uhlenbruck, InsO, 80, Rn 115; HamKoInsO-Marotzke, 103, para. 31;
MnchKomInsO-Kirchhof (2013), 146, para. 37; G. Wagner, KTS 2010, 39 (42); Kck, ZinsO 2006, 11
(14).
998
with the situation in the context of proceedings to have an award declared enforceable which
determined that the creditor had a right to separate satisfaction based on an assignment of
assets. The court allowed the insolvency administrator to raise the right to contest the assignment, arguing that the insolvency administrator could not have raised that defence in the
arbitration proceedings.82 In its reasoning, the court justified the finding that the insolvency
administrator could not have raised the defence in the arbitration proceedings by referring to
the legal situation for set-off.
69 As pointed out correctly by Wagner, the comparison with the set-off is misplaced.83 While a
set-off concerns a completely different claim, the right to contest the underlying transaction
concerns the same right which is already subject to the arbitration. Consequently, the insolvency administrator should be entitled to raise that defense already in the arbitration. In general, the arbitral tribunal is entitled to deal with all defences raised against a claim, irrespective
of whether it would have jurisdiction over the defence if it had been raised as a separate claim.
5.
Right to Decide on the Fulfilment of Executory Contracts Pursuant to 103 InsO
70 In the already mentioned Quimonda decision, the German Supreme Court determined that
the insolvency administrators right pursuant to 103 InsO to decide upon the fulfilment of
executory contracts also belongs to those rights which fall outside the scope of the arbitration agreement. 84 In line with the generally prevailing view, the court emphasized that such
a right is not based on the parties contract but has its origin in insolvency law. It is not a preexisting right of the debtor which the latter could submit to arbitration. Instead, it constitutes
a particular power originating in the person of the insolvency administrator. It is underlined
by the provision of 119 InsO, which declares invalid any agreements excluding or limiting
the application of 103 et seq. InsO in advance. The Court concluded that since the rights
pursuant to 103 et seq. InsO could not be deviated from by means of party autonomy,
it could not be a part of any contractual provisions and, thus, outside of the scope of the
71 The court explicitly stated that its findings cover not only cases where the main claim is based
on 103 InsO, but also those cases where the right is a preliminary question for the main
claim or raised as a defense. The case decided concerned an action for the separation of assets, but the same reasoning would apply in cases for determining the existence of a contested
claim pursuant to 180 InsO if the insolvency administrator raises 103 InsO as a defense.
72 In the authors view, the decision does not properly take into account the nature of the insolvency administrators rights under 103 InsO. Unlike in the case of contestation under
129 et seq. InsO, whenever the insolvency administrator makes use of his rights under
103 InsO, the resulting claims are in the end still based on the contract between the parties.
To this extent, the legal situation is closer to that under 166 (2) InsO which the insolvency
senate of the Supreme Court considered to fall within the scope of the arbitration agreement
than to that of 129 InsO where the resulting claim is based on 143 InsO.
82
83
84
85
BGH 17.01.08 III ZB 11/07 SchiedsVZ 2008, 148 para. 15 et seq.; see the comments by Heiliger, IBR
2008, 479; Wagner/Braem, KTS 2009, 242.
G. Wagner, KTS 2010, 39 (49 seq.).
BGH 30.6.2011 (III ZB 59/10), SchiedsVZ 2011, 281 with supporting comments by Haas, ZZP 2013,
115; Heim, GRUR 2012, 97; Wilske, LMK 2011, 322673; Dahl/Thomas, GWR 2011, 368; Prtting,
EWiR 2011, 545.
Heydn, SchiedsVZ 2010, 182.
6.
999
Right to Enforce Claims Assigned as Security 166 (2) InsO
The insolvency administrator is entitled pursuant to 166 (2) InsO to collect claims which 73
the debtor had previously assigned as security to a third party. The German Supreme Court
held that while this right exists only for the insolvency administrator and the debtor would
not have been entitled to collect such claims, they are covered by the arbitration agreement.86
Unlike in the excluded cases of contestation of transactions pursuant to 129 et seq. InsO
where the resulting claims would be based on a statutory right of the insolvency administrator, the claim collected under 166 (2) InsO is the one arising under the underlying contract.
87
Like an assignee, the insolvency administrator must accept the rights in their present status
as created by the debtor.
D.
The author is not aware of any case law in Germany concerning the jurisdiction of an arbitral 74
tribunal where foreign insolvency proceedings have been initiated before the commencement of arbitral proceedings. On the basis of a literal application of the EU-Insolvency
Regulation or 335 et seq. InsO, the effects of insolvency proceedings in such cases are
governed by the foreign lex loci concursus. Unlike for the situation where arbitral proceedings
are already pending, there is no special conflict of laws rule which declares a different law
to be applicable. Consequently, if this foreign lex loci concursus declares that the insolvency
renders the arbitration agreement void, that the insolvency administrator is not bound by
it or that he has the right to avoid the arbitration agreement, arbitration in Germany will be
prevented.88 Equally, awards rendered in arbitral proceedings initiated against the objection
of the insolvency administrator can be set aside or their enforcement could be refused for a
lack of jurisdiction of the arbitral tribunal.
Such a literal interpretation may conflict, however, with basic principles of the German legal 75
order. The principle pacta sunt servanda is part of German public policy and applies also to
arbitration agreements. Deviations from that principle are limited to cases where they are
required by more important interests. At least according to the German understanding, such
interests do not require that the insolvency administrator is generally released from arbitration agreements concluded by the debtor. Consequently, it cannot be excluded that courts
may consider the application of such foreign provisions prohibiting arbitration in those cases
to be contrary to German public policy. In other countries which in principle follow the lex
fori concursus approach, certain limitations of the applicable insolvency law that go beyond
those in that particular country have been excluded by ordre public or comparable considerations.89 Also in Germany, the general view that excessive provisions of foreign insolvency
law could be excluded by an application of the ordre public defense has found some support.90
Whether restrictions on the arbitrability of such disputes or limitations leading to comparable results would be considered to be covered by that exceptions remains to be seen.
86
87
88
89
90
BGH 25.04.2013 IX ZR 49/12, ZIP 2013, 1539.

Heydn, SchiedsVZ 2010, 182.
For such a view see Schmidt/Brinkmann (2013), Art. 4 para. 16; Mankowski, ZIP 2010, 2478 (2484); Ph.
Wagner (2008), p. 147.
See Swiss Supreme Court 16 October 2012 4A_50/2012, ASA Bull. 2/2013, 354; United States Bankruptcy Court Virginia, 28.11.2011- Case No. 09-14766-SMM in re Quimonda AG IILR 2012, 322;
Trunk, p. 291.
1000
VII. Effects of the Insolvency on Pending Arbitration Proceedings

A.
Overview on the Consequences
76 It follows from the above that the opening of the insolvency proceedings in Germany does
not affect the jurisdiction of the arbitral tribunal. The arbitration agreement remains valid
for the disputes covered and cannot be avoided by the insolvency administrator pursuant to
103, 129 et seq. InsO. The commencement of insolvency proceedings does not lead to the
termination of the pending arbitral proceedings.91
77 The opening of insolvency proceedings has, however, a number of procedural effects. In most
cases, it leads to a change of the parties of the arbitration, requires usually a temporary stay
of the arbitral proceedings to allow the insolvency administrator to take the necessary decisions, requires the parties to file their claims with the insolvency administrator and may also
affect the composition of the tribunal.
1.
The Insolvency Administrator as a Party to the Arbitral Proceedings
78 From the time of the opening of the insolvency proceedings, the insolvency administrator takes over the debtors right to manage the insolvency estate ( 80 InsO). Hence, the
insolvency administrator replaces the debtor and becomes party in any ongoing or future
proceedings.92 The insolvency administrator, therefore, not only takes over the right to take
legal action and conduct legal proceedings (Prozessfhrungsbefugnis) on behalf of the debtor.
Instead, he entirely replaces the debtor as party to the dispute. Thus, the insolvent company
may no longer participate in the arbitration either as claimant or as respondent and assert
claims or raise defences. All its rights are transferred to the insolvency administrator.93
79 In case the debtor is the claimant in the proceedings, the insolvency administrator may decide
not to join the proceedings pursuant to 85 (2) InsO. In such cases, the claim is excluded
from the insolvency estate and the arbitral proceedings may be continued with the debtor.94
2.
Registration of Claim with the Insolvency Administrator Amendment of Relief
80 It is one of the central features of German insolvency law set out in 87 InsO that with
the opening of insolvency proceedings, insolvency creditors in the sense of 38 InsO can
pursue their claims only in accordance with the rules of the insolvency law. The prohibition
to pursue claims by any other means protects the principle of equal treatment of all creditors,
which is part of the German public policy. 95
81 Consequently, any insolvency creditor of an insolvent party is obliged to file its claims in
writing with the insolvency administrator ( 87, 174 InsO). The insolvency administrator
91
92
93
94
95
Zller-Geimer (2014), 1042, para. 48; Ph. Wagner, GWR 2010, 129 (130).
Uhlenbruck/Uhlenbruck (2010), 80, para. 115.
BGH 20.11.2003 (III ZB 24/03), DZWIR 2004, 161 (162); id. 29.01.2009 III ZB 88/07, SchiedsVZ
2009, 176 para. 14, which makes clear that as long as substantially only the insolvency administrator has
been treated as a party, an incorrect description of the parties is irrelevant.
For such a case see OLG Dresden 27.01.0511 SchH 02/04, SchiedsVZ 2005, 159.
BGH 29.01.2009 III ZB 88/07, SchiedsVZ 2009, 176 paras 21 et seq.; MnchKommInsO-Schumacher
(2013), Vor 8587 para. 53; Ehricke, ZIP 2006, 1847 (1852); Heidbrink/von der Groeben, ZIP 2006,
265 (268).
1001
then enters every registered claim into a schedule (Tabelle). Any failure to do so may render
the award non-enforceable and justifies its set aside.96
In case neither the insolvency administrator nor any other creditor contests the claim, its ex- 82
istence is deemed to be determined. Pursuant to 178 (3) InsO, the entry into the schedule
of a determined claim has the legal effect of a final judgment with respect to the insolvency
administrator and all insolvency creditors. As a consequence, the arbitral proceedings can,
in general, be terminated.97
In case the insolvency administrator contests the claim pursuant to 179 InsO the creditor 83
must continue the proceedings, taking into account the new legal situation by adjusting its
prayers for relief. Instead of demanding performance (e.g. payment), the prayer for relief shall
be changed towards a declaratory relief. The German arbitration law in 1046(2) ZPO expressly allows either party to amend or supplement its claim or defence during the course of
the arbitral proceedings. If the creditor fails to amend its prayers for relief, the arbitral tribunal
should remind it to do so. In principle, it could render a declaratory award even without an
express amendment of the claim. Such a declaration that a claim exists constitutes a minus
to the requested order for payment of the claim. The latter always includes an implicit declaration that the claim exists. Until recently, the failure to amend the prayer for relief and an
award ordering payment could lead to the setting aside or non-enforceability of the award
for a violation of public policy pursuant to 1059 (2) No. 2 (b) ZPO.98 In a decision of 2009
dealing with the enforcement of a foreign award, the German Supreme Court has, however,
held that as long as the party filed the claim with the insolvency administrator and it was clear
that it wanted to pursue the claims only within the framework of the insolvency procedure,
the mere fact that the operative part of the award did not properly reflect that would not
render it contrary to public policy. Instead, the operative part could be amended accordingly
in the exequatur proceedings.
3.
Interruption of Arbitral Proceedings by Insolvency Proceedings?
Pursuant to 240 ZPO, state court proceedings are interrupted (Unterbrechung) upon the 84
initiation of insolvency proceedings against a party in Germany.99 The main rationale behind
the concept of 240 ZPO is that the insolvency proceedings shall not be disturbed by pending lawsuits. The interruption shall contribute to the protection of creditors rights and ensure
their collective satisfaction in the sense of 1 InsO. All parties receive time to consider and
adjust to the new legal and economic situation. The counter-party will regularly be interested
to see whether the insolvency administrator accepts or rejects its claim.100 240 ZPO is, inter
96
97
98
99
100
BGH 29.01.2009 III ZB 88/07, SchiedsVZ 2009, 176 paras 21 et seq. in so far confirming the lower
instance OLG Kln 13.11.2007, SchiedsVZ 2008, 152; the set aside is limited, however, to that parts of
the claims which have not been filed.
Flecke-Gianmarco/Keller, NZI 2012, 529 (532).
See Ehricke, ZIP 2006, 1847 (1850) arguing that a payment claims would entail the risk that the resulting
decision may subsequently be enforced individually despite the prohibition to do so.
240 ZPO (Interruption due to insolvency proceedings) reads as follows: In the event of insolvency
proceedings being instituted against a party, the proceedings shall be interrupted to the extent they
concern the insolvent estate until they can be resumed in accordance with the rules applying to the
insolvency proceedings, or until the insolvency proceedings are terminated. The same shall apply if the
authority to manage the debtors assets and the power to dispose over them devolves upon a preliminary
insolvency administrator.
MnchKomZPO-Gehrlein (2013), 240, para. 1.
1002
alia, intended to give the insolvency administrator the opportunity to make a decision as
to the joinder of the pending actions as plaintiff or defendant in accordance with 85, 86
InsO.101 The interruption may last until the proceedings can be resumed in accordance with
the rules applying to the insolvency proceedings, or until the insolvency proceedings are
terminated. Thus, 240 ZPO grants the insolvency administrator the adequate opportunity
to make a decision as to whether to join the proceedings.
85 240 ZPO applies directly to arbitration related court proceedings, whether they concern
the composition of the tribunal (e.g. 1035, 1037 ZPO) or the granting of interim relief
(1033 ZPO). 102
86 However, pursuant to the prevailing view in German jurisprudence and literature, 240
ZPO neither directly nor by means of analogy applies to arbitrations, unless the parties agree
accordingly.103 Arbitral proceedings are therefore not interrupted by statutory law and there
is no formal decision as to the continuation of proceedings necessary.104
87 Irrespective of that, an orderly procedure in the sense of 1042 ZPO requires that the insolvency administrator shall be entitled to familiarize himself with the arbitral proceedings.
He, too, has a right to be heard105 and, in order to comply with this right, any set deadlines in
the arbitration shall be reasonably extended.106 The insolvency administrator shall be given
sufficient time to study all the relevant materials and to decide whether the proceedings shall
be resumed. This adjournment ensures an equality of arms (Waffengleichheit) between the
parties.107
88 Therefore, the general discretion of the arbitral tribunal as to the conduct of the arbitral
proceedings pursuant to 1042 (4) ZPO is limited in that respect. Otherwise, there is a risk
that the award may be set-aside on the grounds of violation of the right to be heard pursuant
to 1059 (2) No. 2 (b) ZPO. Hence, while no automatic interruption within the meaning of
240 ZPO takes place requiring subsequently a formal decision to take up the proceedings
the arbitration tribunal normally has to react to the insolvency proceedings by ordering
a stay or prolonging deadlines. Where the arbitration proceedings concern an insolvency
claim in the sense of 38 InsO, the proceedings may only be continued after the verification
meeting took place.108
4.
Composition of the Tribunal
89 The general principle that the insolvency administrator enters into the legal relationship of the
debtor as they stand also extends to procedural relationships. Consequently, the insolvency
101
102
103
104
105
106
107
108
MnchKomZPO-Gehrlein (2013), 240, para. 1; Zller-Greger (2014), 240, para. 1.

Uhlenbruck/Pape (2010), 4, para. 44; Uhlenbruck/Uhlenbruck (2010), 85, para. 40; Ph. Wagner, GWR
2010, 129 (130).
OLG Dresden, 27.1.2005 11 SchH 2/04, SchiedsVZ 2005, 159; OLG Kln, SchiedsVZ 2008, 153
[confirmed by BGH, 29.1.2009 III ZB 88/07]; Zller/Geimer (2014), 240, 1042 para. 48; Kbler/
Prtting/Lke, InsO, 85, para. 33; MnchKomInsO-Schumacher (2013), vor 85-87, para. 53; Flther
(2001), pp. 12 et seq.; Musielak/Stadler (2013) 240, para. 6; Ehricke, ZIP 2006, 1847, 1850; Uhlenbruck/Pape (2010), 4, para. 44; G. Wagner, KTS 2010, 39 (56).
Uhlenbruck/Uhlenbruck (2010), 80, para. 115.
BGH 29.01.2009 III ZB 88/07, SchiedsVZ 2009, 176 para. 28; Flther, DZWIR 2001, 89 (92).
Flther, DZWIR 2001, 89, 90.
Flecke-Gianmarco/Keller, NZI 2012, 529 (531); Uhlenbruck/Sinz (2010), 180, para. 37.
1003
administrator usually cannot change the composition of the arbitral tribunal. Despite the
importance of the right to select ones own arbitrator, the insolvency administrator is bound
by the debtors nomination of the party-appointed arbitrator.109 The insolvency administrator is not entitled to request a different composition of the tribunal merely because he would
have appointed a different arbitrator.
However, in exceptional cases, German courts have accepted requests for a subsequent 90
change in the composition of the arbitral tribunal. The Higher Regional Court in Berlin (KG
Berlin) allowed an application pursuant to 1034 (2) ZPO for the substitute-appointment
of the chairman and the arbitrator appointed by the debtor in a case where all arbitrators
originally appointed had a very close connection to the original parties including the debtor.
110
As no such connection existed with the insolvency administrator, the court held that the
parties had an unequal influence on the composition of the tribunal.
5.
Effects of the Insolvency on Arbitrators Contract (Schiedsrichtervertrag)
It follows from the above that the insolvency administrator is in principle also bound by the 91
arbitrators contract111 concluded by the debtor with the members of the tribunal before the
commencement of the insolvency proceedings. The arbitrators contract regulates the legal
relationship between the parties and the arbitrator(s), especially in ad hoc arbitration. While
in institutional arbitration most aspects of the relationship between the parties and the arbitrators are dealt with in the applicable arbitration rules (e.g. the remuneration and liability of
the arbitrators), it is common practice in ad hoc arbitration to conclude a written arbitrators
contract. While there is no case law yet, the prevailing view in the literature indicates that the
insolvency administrator is bound by previously concluded arbitrators contract and may not
terminate the arbitrators contract pursuant to 103 et seq. InsO.112
In cases where the debtor is the claimant, the option of 103 InsO is subordinated to the 92
right of the insolvency administrator pursuant to 85 InsO. The latter provision entitles
the insolvency administrator to either join the proceedings and become the party of the
pending proceedings or refrain from doing so. If the insolvency administrator decides to join
the proceedings, the arbitrators remuneration claim resulting from the arbitrators contract
forms a part of debts incumbent on the estate (Masseverbindlichkeiten) within the meaning
of 55 (2) InsO. If the administrator does not join the arbitral proceedings, the arbitrators
contract and the remuneration claim thereunder is not transferred to the insolvency estate
and remains binding between the debtor and the arbitrator. In such a case, the arbitrator has
a remuneration claim against the debtor but not the insolvency estate. Thus, 103 InsO is
not applicable to arbitrators contracts.
Neither does the arbitrators contract expire in accordance with 115, 116 InsO. The 93
purpose of these provisions is to preserve the insolvency estate and avoid that management
obligations under existing contracts interfere with the exclusive power of the insolvency
administrator to manage the insolvency estate pursuant to 80 InsO.113 However, there is no
109
110
111
112
113
Ph. Wagner, GWR 2010, 129 (130).

KG Berlin, 11.08.2004 (23 Sch 11/03), SchiedsVZ 2005, 100 (case note by Lachmann).
For a more detailed discussion of the arbitrators contract and its controversial legal nature see Part II,
Nacimiento/Abt/Stein, Introduction to 1034-1039, paras 23-28, and Part IV Wilske, Ad hoc Arbitration
in Germany, para. 44.
Chr. Berger, FS-von Hoffmann (2011), 903 (909 seq.); G. Wagner, KTS 2010, 39 (64).
Braun-Kroth (2012), 116, para. 1.
1004
overlap between the arbitrators task (i.e. to decide a dispute) and the administrators task to
manage the estate. Therefore, 116 InsO is not applicable to arbitrators contracts.
94 Finally, the power to terminate a contract of service (Dienstvertrag) in accordance with 113
InsO shall also not apply to the arbitrators contract. Even if one qualifies the arbitrators
contract as a service contract within the meaning of German law,114 it is a duty of the arbitrator who is bound by the arbitration agreement to facilitate the arbitral proceedings. A
possibility to terminate the arbitrators contract unilaterally would contradict such duty.115
95 The arbitrators contract could, however, be contested by the insolvency administrator pursuant to 129 et seq. InsO if it constitutes a disadvantageous transaction in the sense of these
provisions. While an arbitration agreement does not per se bring disadvantages to the debtor
and the insolvency estate (see above), the situation may be different with the arbitrators
contract and the remuneration comprised. Whether there is a direct disadvantage within
the meaning of this provision depends on the amount of remuneration. Where the agreed
remuneration of the arbitrator(s) is unreasonably high, 129 InsO provides a ground for
contesting such a contract. The schedule of fees of the existing arbitration institutions can
provide guidance as to the acceptable level of remuneration. Once the fee is considerably
higher, the arbitrators contract shall be contestable. However, it is only the remuneration
claim exceeding the usual level which amounts to a direct disadvantage to the insolvency
creditors and is therefore contestable. By contrast, the arbitrators contract and the adequate
part of the remuneration claim remain valid and cannot be contested pursuant to these
provisions.116
96 Contesting the completed payment of the advance/deposits on the tribunals costs117 will
regularly not be possible due to the restriction of so-called cash transaction pursuant to 142
InsO.118
6.
97 The effects of the opening of insolvency proceedings in another country on arbitration

proceedings in Germany are determined by German law according to the relevant conflict
of laws rules.
98 In case the insolvency proceedings have been opened in an EU Member State, Art. 15 Reg.
1346/2000 explicitly provides that effects on pending proceedings are governed by the
law of the country where the proceedings are pending. While the Regulation is primarily
addressed to state courts, its provisions are also considered to be binding for arbitrators.119
The concept of proceedings in the sense of Art. 15 Reg. 1346/2000 also covers arbitration proceedings.120 According to the prevailing view, Art. 15 covers not only questions of
114
115
116
117
118
119
120
The dogmatic qualification of arbitrators contract to a certain category/sort of contract is controversial in

German doctrine/literature.
Chr. Berger, FS-von Hoffmann (2011), 903 (909 seq.).
Chr. Berger, FS- von Hoffmann (2011), 903(911).
E.g. Section 25 DIS Arbitration Rules, Article 36 ICC Rules of Arbitration, Article 24 LCIA Arbitration
Rules; Article 41 Swiss Rules of International Arbitration.
142 (Cash Transactions): Payments on the part of the debtor in return for which his property benefited directly from an equitable consideration may only be contested under the conditions of section 133
subsection (1).
Ph. Wagner, GWR 2010, 129 (130).
Schmidt/Brinkmann (2013), Art. 15 EuInsVO para. 3; Mankowski, ZIP 2010, 2478 (2480 seq).
1005
interruption and the like but also the tribunals jurisdiction insofar as the latter is based on an
In all other cases, 352 InsO provides that foreign insolvency proceedings lead to an in- 99
terruption of German proceedings. While it is controversial whether 352 InsO applies
directly to arbitration proceedings or not,122 it is generally accepted that the arbitral tribunal
must take into account the new situation in exercising its discretion in structuring the arbitral
proceedings. While 352 InsO directly only addresses the question of interruption of proceedings, it must be extended to the question of whether the arbitration proceedings can be
conducted at all, in particular whether the arbitration agreement remains valid. Otherwise,
the principle underlying the provision, i.e. that German law determines whether and to what
extend proceedings are interrupted, could be rendered ineffective via the backdoor.
VIII. Effects of Insolvency at the Post-award Stage

The insolvency of a party to arbitral proceedings also influences the proceedings at the post- 100
award stage in a number of ways. The amendment necessary in comparison to the ordinary
post-award stage depends on two factors: first, whether the award has been rendered in favor
of the debtor or against it, and second, whether the insolvency occurred already before the
award was rendered (awards in favor / against the insolvent party) or thereafter (insolvency
of the award debtor / creditor). This later distinction is relevant, as in cases where the insolvency already occurred before the rendering of the award, the parties and the arbitral tribunal
should have taken care of the changes required by the insolvency proceedings already during
the arbitral proceedings and in the award. As a consequence the award should in principle
have been rendered for or against the correct parties and should reflect eventual changes
necessary to the request for relief or the operative part of the award. Where this is not the
case, the question arises whether such defects may be remedied at the post-award stage or
result in the setting aside of the award or defences as to its enforcement.
A.
Awards in Favor of the Insolvent Party
In case the award has been rendered in favor of the insolvent party, the effects on post-award 101
proceedings are limited. They must only reflect eventual changes in the right to administer
the estate required by 80 InsO or a comparable provisions of the applicable foreign insolvency law. By contrast, the restrictions on enforcement and execution of claims against the
insolvent party, found in German insolvency law in 85 et seq. InsO, are not relevant.
1.
Party to Post-award Proceedings
The correct party to proceedings to recognize or set aside an award in favor of the insolvent 102
party is determined by the applicable insolvency law. In case of pre-award insolvencies, the
award should in principle already mention the correct parties under the applicable insolvency law or reflect the changes required. Thus, it is normally the person or entity mentioned
in the award as the party which may apply for the recognition and enforcement of the award
or becomes the defendant in setting aside proceedings.
121
122
Flecke-Gianmarco/Keller,NZI 2012, 529 (533); Ph. Wagner, GWR 2010, 129 (131); for a different view
Mankowski, ZIP 2010, 2478 (2481).
In favour Schmidt/Brinkmann (2013), 352 InsO para. 5; G. Wagner, KTS 2010, 39 (62).
1006
103 In case of German insolvency proceedings, awards rendered in favor of the insolvent party
should have been rendered in favor of the insolvency administrator. Unless the latter has
decided not to join the arbitral proceedings, he should have become party to the arbitration
proceedings and thus party to the award. Consequently, the insolvency administrator should
in principle be party to all types of post award proceedings.123 These are covered by his general right to manage the insolvency estate pursuant to 80 InsO. Only where the insolvency
administrator has decided not to join the arbitration proceedings, such that the award has
been rendered in favor of the insolvent party, or where he has empowered the insolvent party
to enforce the award, the latter will become party to the post award proceedings.
104 In case of foreign insolvency proceedings, the foreign lex fori concursus determines who
should have been a party to the arbitral proceedings and who becomes creditor of the
award. It is normally that person or entity which also becomes party to all type of post award
proceedings.
2.
Content of Awards and Corrections Allowed in Exequatur Proceedings
105 In general, the exequatur judge may not modify the award or its operative part.124 His only
options are to either declare the award enforceable (completely or in part) or reject its enforcement, which, in case of a German award, leads to its setting aside.
106 Should the award not reflect the changes required by the applicable insolvency law as to the
parties or their representation and the orders to be made, the exequatur court is faced with
the question of whether that can or even must be remedied. It is submitted that necessary
changes can be made where it is clear from the reasoning that the correct party participated
and the wrong nomination is merely due to a lack of knowledge of the arbitrator.
107 Amendments of the relief ordered are usually restricted to reflecting that change of the party,
i.e. ordering the counterparty not to pay the insolvent party but the insolvency administrator.
By contrast, the prohibitions in 87, 89 InsO only apply in case of enforcing rights against
the insolvent party. In the authors view, at least in the above described circumstances, the
required corrections can be made by the exequatur judge.
B.
Insolvency of the Award Creditor
1.
Party to Post-award Proceedings
108 Should the award creditor become insolvent after the award has been rendered, the applicable insolvency law determines the correct party to all types of post-award proceedings from
that time onwards. These types of proceedings are part of managing of the estate in the sense
of 80 et seq. InsO or comparable foreign provisions.
109 In case of German insolvency proceedings, the insolvency administrator becomes party to
these proceedings unless he decides not to join. For foreign insolvency proceedings, the correct party is determined by the lex loci concursus.125
123
124
125

For details see Part II, Krll 1061 para. 167 seq.
For details see supra at VII 1 a).
2.
1007
Operative Part
If the insolvency administrator decides to joinder the proceedings for a declaration of en- 110
forceability, the operative part of the award may be changed in a way that the declaration
of enforceability is rendered in favor of the insolvency administrator. Though the exequatur
proceedings are not considered to form part of the execution proceedings yet, the principle
underlying 727 ZPO126 is considered to be applicable.
3.
Pending Proceedings
According to the prevailing view in German insolvency proceedings, all types of post-award 111
proceedings pending in the state courts at the time of insolvency are interrupted according
to 240 ZPO in order to allow the insolvency administrator to make the necessary decisions. 127 Some authors want to limit the interruption in case of enforcement proceedings to
such cases where the court has ordered an oral hearing. 128 In light of the numerous decisions
which have to be made by the insolvency administrator, irrespective of whether defences are
raised, it seems justified to apply 240 ZPO despite the special nature of the proceedings for
a declaration of enforceability.
The same also applies in case of foreign insolvency proceedings either pursuant to 15 Reg. 112
1346/2000 or 352 InsO.
4.
Other Procedural Questions
Apart from the above changes, the insolvency of the award creditor does not affect post- 113
award proceedings in any way. Since the issue is not enforcement against the debtor but in its
favor, the restrictions in 85 et seq. InsO are of no relevance.
C.
Post-award Proceedings Concerning Awards Rendered in Favor of the Insolvency

Creditor General Remarks
The above described principles concerning a possible change of party and the interruption 114
of proceedings also apply where post-award proceedings are initiated for awards rendered in
favor of the insolvency creditor. In German insolvency proceedings, the administrator then
becomes a party to the proceedings, replacing the original debtor if he wants to take up the
proceedings. In case of foreign insolvency proceedings, the lex fori concursus determines how
the insolvency affects the status of the debtor in such proceedings
126
127
128
Section 727
Enforceable execution copies for and against successors in title
(1) An enforceable execution copy may be issued to the successor in title of the creditor designated in the
judgment as well as against that successor in title of the debtor designated in the judgment, and against
that possessor of the object that is the subject matter of the legal dispute, against whom the judgment has
taken effect pursuant to section 325, provided that the legal succession or the circumstances of possession
are known to the court or are proven by public records or documents, or records or documents that have
been publicly certified.
(2) If the legal succession or the circumstances of possession are known to the court, this is to be mentioned in the court certificate of enforceability.
Ristelhuber, ZInsO 2004, 427 (431); Uhlenbruck/Pape (2010), 4 para. 44; see also G. Wagner, KTS
2010, 39 (62) addressing, however, only the opposite case directly.
Schwab/Walter (2005), Chap 16. para. 49; Eberl, InVo 2002, 293 (394).
1008
115 Additionally, enforcement proceedings against the insolvent party require compliance with
the prohibitions in 87, 89 InsO or comparable provisions of the foreign insolvency law.
These may lead to considerable modification in comparison to ordinary enforcement
proceedings. Irrespective of when the award has been rendered at least in case of German
insolvency proceedings a singular execution of awards is prohibited.129 Consequently, any
award against the insolvent party can only be executed within the context of the insolvency
proceedings. Equally, at least in case of insolvency claims, the declaration of enforceability
has to comply with the requirements of 87 InsO, i.e. merely containing a declaration that
the claims exists.
116 That is different if the award concerns debts incurred by the insolvency estate in the sense of
55 InsO. Pursuant to 53 InsO, they are given a preferential treatment.
D.
Awards against the Insolvent Party
117 Awards rendered against the insolvent party, i.e. where insolvency proceedings pre-date the
award, should in principle already reflect the modifications to the arbitration proceedings
which were necessary due to the insolvency of the original debtor. In particular, they should
be rendered against the correct party and their operative part should be limited to insolvency
compatible determinations. Particularly in international cases involving either insolvency
proceedings in a third country, awards rendered in a different jurisdiction or by foreign arbitrators, this is not always the case.
1.
Content of the Award Interpretation and Corrections at the Post-award Stage
118 In determining whether an award complies with the exigencies of the applicable insolvency
law and whether corrections are necessary and possible, a German court will first have to
interpret the award.
119 Concerning the parties involved, as long as the right party has participated de facto in the
proceedings, i.e. in case of German insolvency proceedings the insolvency administrator, a
legally incorrect nomination of the party can be remedied in the exequatur proceedings.130
120 The same applies with regard to the operative part. The mere fact that an award orders the
insolvent party or the insolvency administrator to make payments does not necessarily exclude it from being declared enforceable, even in case of German insolvency proceedings. In
principle, such an order would violate 87 InsO according to which enforcement of claims is
only possible within the framework of the insolvency proceedings, which in turn only allows
a determination of the existence of a claim. Where it is clear from the reasoning of an award
that a party has filed its claims with the insolvency administrator and thus seeks enforcement within the framework of insolvency proceedings, the arbitral award may be interpreted
accordingly. Thus, the payment order may be turned in the exequatur proceedings into a
declaration that the given claim exists.131
129
130
131
Ristelhuber, ZInsO 2004, 427 (428).

BGH 29.01.2009 III ZB 88/07, SchiedsVZ 2009, 176 para. 14 where the original debtor represented by
the insolvency administrator was mentioned as a party in the award and not the insolvency administrator
who had, however, conducted the proceedings.
BGH 29.01.2009 III ZB 88/07, SchiedsVZ 2009, 176 paras 9 et seq.
2.
1009
Need for a Declaration of Enforceability?
Pursuant to 1055 ZPO, an award rendered in German arbitration proceedings has the same 121
effect between the parties as an enforceable judgment. Consequently, an award determining
the existence of a claim which has been challenged after its filing with the insolvency administrator does not in principle require a special declaration of enforceability. It constitutes
an enforceable title in the sense of 183 (1) InsO,132 entitling the creditor to request a
correction of the insolvency schedule.133 At the same time, the resulting registration of the
claim constitutes an enforceable title pursuant to 178 (3) ZPO, such that no further title
is required to participate in the distribution of the remaining assets of the insolvency estate.
Irrespective of that, the German courts consider applications to have German awards de- 122
clared enforceable to be admissible. The mere fact that the award may not have an enforceable content i.e. merely determining the existence of a contested claim does not exclude
the legal interest of a party in having the award declared enforceable. As in all other cases, the
existence of an enforceable content of the award is not a requirement for a legal interest.134
Equally, the de lege existing absence of any need for a declaration of enforceability is not considered to exclude a legitimate interest in such a declaration. In particular, where the award
does not comply in all respects with the exigencies of insolvency law or leaves doubts as to
its compliance, the creditor has an interest in having that doubts removed by a declaration of
enforceability.
This applies a fortiori in case of foreign awards. Unlike German awards, foreign awards are not 123
automatically recognized until they have been set aside. Instead their recognition depends
on the absence of any grounds to resist enforcement.135 A declaration of enforceability may
consequently clarify the situation and exclude allegation that the award is not recognizeable.
3.
Defences against Enforcement / Grounds for Setting Aside
The failure by the arbitral tribunal or the counterparty to properly react to the insolvency of 124
a party may fulfill several of the grounds for setting aside or defences against enforcement.
Depending on the type of defect, they include the lack of a valid arbitration agreement, a
violation of the right to be heard and an infringement of public policy.
a) Lack of jurisdiction
In case of German insolvency proceedings, the general rule that the insolvency administrator 125
is bound by pre-insolvency arbitration agreements of the debtor limits the practical relevance
of the lack of jurisdiction defense against the award. It may become relevant in those cases
where the award concerns one of the above described exceptions, affecting the original rights
of the insolvency administrator.136 By contrast, where the award is based on a post-insolvency
132
133
134
135
136
183 Effects of the decision

(1) A decision with final and binding effect determining a claim or sustaining an objection shall be
effective with respect to the insolvency administrator and all insolvency creditors.
(2) The prevailing party shall request amendment of the schedule with the insolvency court.
(3) If only individual creditors have pursued the action but not the insolvency administrator, these
creditors may claim reimbursement of their costs from the insolvency estate to the extent to which
such assets have benefited from the judicial decision.
Ehricke,ZIP 2006, 1847 (1852), with references also to the opposite view.
BGH 29.01.2009 III ZB 88/07, SchiedsVZ 2009, 176 para. 18.
For details see supra Part II, Krll, Introduction to 1060, 1061 para. 14.
See supra V 3.
1010
arbitration agreement concluded by the insolvency administrator, the mere absence of a

required approval by the creditors committee does not affect the jurisdiction of the tribunal.
164 InsO explicitly provides that the administrators failure to get the necessary approval
does not affect the validity of the contract.
126 In case of foreign insolvency proceedings, the situation may be different. Should the applicable insolvency law render the arbitration agreements invalid or otherwise exclude the
jurisdiction of an arbitral tribunal, awards rendered may be susceptible to the lack of jurisdiction defense. Should the arbitration proceedings have been pending at the time of the
insolvency, special rules preserving the jurisdiction of the tribunal may apply. The effects of
insolvency proceedings on pending arbitration proceedings are according to the German
understanding governed by the law of the place where the arbitration proceedings take
place. Consequently, provisions of foreign insolvency proceedings affecting the jurisdiction
of the arbitral tribunal would not justify the defense of a lack of jurisdictions against awards
rendered in arbitration proceedings in Germany, provided they were initiated before the
foreign insolvency.137
b) Right to be heard
127 Should the tribunal not have given the insolvency administrator sufficient time to familiarize
himself with the case and to make the necessary decisions, the award may be open to attack
for a violation of the right to be heard pursuant to 1059 (2) no. 1 (b) ZPO Art. V (1) (b)
NYC. That applies irrespectively of whether the place of arbitration is in Germany or in a
different country and whether it concerns German or foreign insolvency proceedings.
c) Public policy
128 Numerous of the restrictions on party autonomy contained in the applicable insolvency law
are part of public policy. That applies in particular to all those rules guaranteeing an equal
treatment of the various creditors. Consequently, their violation by the arbitral tribunal may
render the award or its enforcement contrary to public policy. However, it has to be determined for each case where the award appears to be in conflict with one of these rules whether
there is really a true conflict and whether it already amounts to a violation of public policy.
129 The award may be contrary to public policy where the arbitral proceedings were conducted
with the wrong party, i.e. the original debtor instead of the insolvency administrator. The latters right to manage the estate is part of public policy since it serves to protect the creditors
and to guarantee their equal treatment. It is, however, submitted that as long as the relevant
decision were de facto taken by the insolvency administrator, that right is sufficiently protected. Consequently, the mere fact that the parties to the proceedings were wrongly designated does not amount to a violation of public policy, though it seems to infringe the relevant
provisions of German insolvency law.
130 A violation of public policy normally exists where the creditor has not registered its claims
with the insolvency administrator.138 Such registration serves to ensure the equal treatment
of all creditors and to prevent that claims are raised outside the insolvency proceedings.
These are core features of insolvency law, the violation of which renders an award contrary to
public policy, at least where it concerns insolvency claims.
137
138
See supra VI 1.
BGH 29.01.2009 III ZB 88/07, SchiedsVZ 2009, 176 paras 21 et seq.; Flecke-Gianmarco/Keller, NZI
2012, 529 (533).
1011
By contrast, the mere fact that the award orders payment instead of solely determining the 131
existence of a claim does not in itself constitute a violation of public policy. As long as the reasons reveal that the parties have sought a determination of their right within the framework
of insolvency proceedings, the operative part of the award may be interpreted accordingly.139
4.
Insolvency of the Award Debtor
In case insolvency proceedings are opened against the award debtor after the award has been 132
rendered, setting aside proceedings or enforcement proceedings must take that into account.
a) Parties to the proceedings interruption
Proceedings must be initiated or continued with the correct party. In German insolvency 133
proceedings that is the insolvency administrator.140 Already pending post-award proceedings
are interrupted pursuant to 240 ZPO or 15 Reg. 1346/2000 or 352 InsO.141
b) Enforcement proceedings modifications required by 87 InsO
In most cases, awards rendered concern claims which classify as insolvency claims in the 134
sense of 37 InsO or comparable provisions in the applicable foreign insolvency law, the
enforcement of which is governed by the special provisions of insolvency law. In German
insolvency proceedings, the general prohibition in 87 InsO to pursue claims outside the
framework of the insolvency also applies for the award creditor. Consequently, the award
creditor has to file the claim embodied in the award with insolvency administrator pursuant to 173 et seq. InsO.142 If no objections are raised, the claims are deemed to have been
determined and the schedule has the effect of a final judgment.
If objections are raised, the existence of the award does not exclude a review of the underly- 135
ing claim but shifts the obligation to take actions to the party raising objections, whether it
is the insolvency administrator or another creditor. That applies even before the award has
been declared enforceable. The award constitutes a final decision in the sense of 179 (2)
InsO.143 1055 ZPO explicitly states that the award has between the parties the effect of a
final judgment. As a consequence, anyone contesting the underlying claim must do so via the
special opposition procedure foreseen in 179 InsO. For that effect, it is not necessary that
the award has been declared enforceable.
139
140
141
142
143
BGH 29.01.2009 III ZB 88/07, SchiedsVZ 2009, 176 paras 7 et seq.

G. Wagner, KTS 2010, 39 (62).
For details see supra at paras 100 et seq.
G. Wagner, KTS 2010, 39 (63).
Ristelhuber, ZInsO 2004, 427 (429 seq); Uhlenbruck/Uhlenbruck (2010), 80, para. 115; G. Wagner, KTS
2010, 39 (63); but see for the opposite view MnchKomInsO-Schumacher (2013), 179 para. 24; Uhlenbruck/Uhlenbruck (2010), 179 para. 14; Flecke-Gianmarco/Keller, NZI 2012, 529 (532) who require
that the award has been declared enforceable.
Investment Arbitration and the Participation of

State Parties in Germany*
Alfred Escher / Patricia Nacimiento / Christoph Weissenborn / Sven Lange
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Para.
Germany and Investment Arbitration. . . . . 1
A. Foreign Investment in the German
Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
B. German Investment Abroad . . . . . . . . . . 4
C. Germany as a Place for Investment
Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
D. From Diplomatic Protection to
Investment Arbitration . . . . . . . . . . . . . . . 7
E. Definitions of Foreign Investment,
Foreign Investor and State
Parties from a German Perspective . . . 9
1. Lack of a Statutory Definition,
Usefulness of a General
Concept, and Necessity of a
Case-by-Case Analysis . . . . . . . . . . . 10
2. Considerations as to the
Specific Criteria . . . . . . . . . . . . . . . . . . 11
II. Essentials of Investment Disputes
between Foreign Private Investors and
German Public Entities . . . . . . . . . . . . . . . . . 22
A. Explicit Arbitration Agreements
between Foreign Investors and
German Public Entities. . . . . . . . . . . . . . 22
B. Non-explicit Arbitration
Agreements between Foreign
Investors and the Federal Republic
of Germany . . . . . . . . . . . . . . . . . . . . . . . . . 24
C. Arbitrability of Disputes between
Foreign Private Investors and
German Public Entities (Objektive
Schiedsfhigkeit) . . . . . . . . . . . . . . . . . . . . . 25
III. Arbitration Clauses and Material
Rights of Investors in German BITs
and Article 26 ECT . . . . . . . . . . . . . . . . . . . . . 26
A. The German BIT Programme . . . . . . . 27
B. Material Rights of Investors in
German BITs and Arbitration
Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
1. Material Rights of Investors. . . . . . . 28
2. Enforcement of Rights through
Arbitration. . . . . . . . . . . . . . . . . . . . . . . 30
3. Further Practical Relevance of
German BITs . . . . . . . . . . . . . . . . . . . . 31
C. Arbitration Clauses and Material
Rights of Investors in
Article26 ECT. . . . . . . . . . . . . . . . . . . . . . 33
I.
Para.
IV. Institutions and Procedure for
Arbitrating International Investment
Disputes in Germany . . . . . . . . . . . . . . . . . . . 37
A. Arbitration under the ICSID
Rules: The Co-operation
Agreement between ICSID
and DIS of 16 December
2005 Regarding the Frankfurt
International Arbitration Centre . . . . . 38
B. Arbitration of International
Investment Disputes under the
Auspices of the DIS . . . . . . . . . . . . . . . . . 39
C. Further Institutional and
Procedural Options for
International Investment
Arbitration in Germany . . . . . . . . . . . . . 40
1. International Investment
Arbitration Pursuant to ICC,
SCC and PCA Rules . . . . . . . . . . . . . 40
2. Ad hoc Arbitration of International
Investment Disputes . . . . . . . . . . . . . 41
D. Implications of European Law
for Investment Arbitration
Proceedings in Germany . . . . . . . . . . . . 44
1. Lack of Jurisdiction Following
from the Application of Article
59 VCLT? . . . . . . . . . . . . . . . . . . . . . . . 49
2. Lack of Jurisdiction Following
from the Application of Article
30 (3) VCLT? . . . . . . . . . . . . . . . . . . . 52
3. Lack of Jurisdiction because of
EU Law Forming Part of the lex
loci arbitri? . . . . . . . . . . . . . . . . . . . . . . . 53
4. Application of EU Law on the
Merits . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
V. Enforcement of Investment Awards in
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
A. Enforcement of a German Investment
Award under 1060 ZPO . . . . . . . . . . . 56
B. Enforcement of a Foreign Investment
Award under 1061 ZPO . . . . . . . . . . . 57
1. Applicable Rules . . . . . . . . . . . . . . . . . 57
2. Practical Recommendation. . . . . . . 58
C. Enforcement of ICSID Awards in
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
1. Overview . . . . . . . . . . . . . . . . . . . . . . . . 61
2. Procedure and Practice . . . . . . . . . . . 63

Para.
3. No Special Relationship
Needed for Enforcing ICSID
Awards in Germany . . . . . . . . . . . . . . 67
VI. State Immunity in Germany . . . . . . . . . . . . . 68
A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . 68
B. The Notion of Limited Immunity . . . . 71
C. German Case Law and Practice of
State Immunity . . . . . . . . . . . . . . . . . . . . . 75
1. Immunity in Adjudication
Proceedings. . . . . . . . . . . . . . . . . . . . . . 75
2. Immunity from Execution . . . . . . . . 80
3. Immunity and Execution of
ICSID Awards . . . . . . . . . . . . . . . . . . . 90
4. Immunity in Proceedings
for the Declaration of
Enforceability of Awards . . . . . . . . . 91
D. German Law and Practice on
Waiver of Immunity . . . . . . . . . . . . . . . . . 98
E. German Law and Practice on Who
Can Claim Immunity . . . . . . . . . . . . . .104
I.
1017
Para.
VII. Investment Risk Insurance: the
Investment Guarantees of the Federal
Republic of Germany . . . . . . . . . . . . . . . . . .106
A. Basics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106
B. Risks Covered . . . . . . . . . . . . . . . . . . . . .108
C. Eligible Investments and
Requirements . . . . . . . . . . . . . . . . . . . . . .110
D. Loss Prevention and Event of Loss . .113
E. Miscellaneous. . . . . . . . . . . . . . . . . . . . . .118
VIII. The Practitioners View: Commercial
and/or Investment Arbitration A
Welcome but Difficult Choice for
Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .122
A. Introduction . . . . . . . . . . . . . . . . . . . . . . .122
B. Options . . . . . . . . . . . . . . . . . . . . . . . . . . .124
C. The Options with a Specific View
to the German Model BIT. . . . . . . . . .130
D. Considerations and Criteria for the
Decision of an Investor . . . . . . . . . . . . .133
Germany and Investment Arbitration1
On December 1, 2009 the Lisbon Treaty entered into force. This brought a fundamental 1
change in the landscape of the foreign direct investment legal regimes of Germany and all
other member states of the European Union. In the long-run, the traditional foreign (direct)
investment legal regimes of Germany and the other member states of the European Union
will most likely disappear and will be replaced with a new and presently emerging European
legal regime for foreign (direct) investment. One can estimate that this process can realistically take up to ten years or even longer. During this transitional period, one has to distinguish
between two legal regimes with regard to the topic of this chapter on investment arbitration
in Germany. On the one hand, there is the traditional German legal regime with German bilateral investment protection treaties with third counties (= non-EU member countries) and
with EU member countries, as well as the Energy Charter Treaty, which contain arbitration
provisions for the settlement of investor state disputes. On the other hand, there is the
new and emerging European legal regime for foreign (direct) investment with provisions in
the Lisbon Treaty, new EU regulations on the preliminary co-existence with the traditional
legal regime (which entered into force on January 9, 2013) and on financial liability of the
EU and member states in investment arbitration (a draft for such regulation already exists),
forthcoming investment chapters in future European Free Trade Agreements with third
countries (which are presently been negotiated), possible future extra EU BITs (which are
also presently under negotiation), and a planned European code for arbitrators in investment
arbitration. The Lisbon Treaty has shifted the (exclusive) competence for regulating foreign
(direct) investment, in particular for concluding bilateral investment protection and promotion treaties at least with third countries from the member states of the European Union to
the European Union itself and the European Commission. The policy idea behind this fundamental change is that in a globalised world with new leading economic world powers like
1
1018
China, Russia, India and Brazil challenging the old leading economic world powers like the
US and Japan, the European Union itself and no longer its member states should be a strong
actor in the field of regulating foreign (direct) investment and the settlement of investor
state disputes on the international and global level. This policy idea seems to be convincing,
however the precise implementation of the Lisbon Treaty in the field of investment law and
investment arbitration has proven to be a very long and difficult process with many practical
obstacles. This updated chapter on investment arbitration in Germany can only highlight
some of the developments on the European level and their implications on the future practice
for German investors abroad (within and outside the European Union) and foreign investors
(from other EU member states or from outside the EU) in the German economy with a
special focus on the future settlement of investor state disputes through arbitration. From
the viewpoint of a practitioner, the German and European legal regime for foreign (direct)
investment and investor state disputes is becoming even more complex than before. It is
an open question as to whether the emerging new European regime will bring for German
investors abroad and foreign investors into the German economy a substantial and effective
improvement in comparison to the situation before the entry into force of the Lisbon Treaty.
A.
Foreign Investment in the German Economy
2 Germany is host to a huge number of foreign investment from many countries in the world,
particularly from other countries of the European Union, Switzerland, Austria, the United
States of America, Japan and, increasingly, from India and China. In 2005, the number of
foreign investment in Germany amounted to EUR 26,264 million.2 Foreign investment
in Germany takes place in virtually all sectors of the German economy, ranging, e.g. from
automobiles, steel, energy, manufacturing to banking, insurance, financial services and increasingly in the area of infrastructure. It appears in many forms, covering, e.g. wholly foreignowned companies, portfolio investments in listed companies, private equity investments in
non-listed companies, sale and lease back transactions with local municipalities, so-called
public private partnerships, infrastructure investments with the participation of state-owned
enterprises and public institutions of the Federal Republic of Germany and/or one of its 16
federal states, the numerous local municipalities, or one of the public purpose entities owned
by such municipalities.
3 In many cases, foreign investment in Germany only involves private parties. However, even in
cases where the foreign investor only has contractual relations with private German companies, the foreign investor is obviously affected by various regulations of the Federal Republic
of Germany, one of its 16 federal states (Bundeslnder) or one of the local municipalities. In
other cases, for example in the infrastructure sector, the Federal Republic of Germany, one of
its 16 federal states, state enterprises or public purpose entities owned by local municipalities
are directly involved in investment contracts with foreign private investors. The huge stock of
foreign inbound investment in Germany raises specific questions as to how disputes between
the foreign investor on the one hand and one of the public entities at the federal, state or local
level on the other hand can be settled through investment arbitration. For the past, there is
no statistical information available as to how often such disputes have been settled through
arbitration. One reason may be a certain reluctance of German public entities to conclude
such arbitration agreements. Another reason may be the availability of a highly sophisticated
2
See Deutsche Bundesbank, Zahlungsbilanzstatistik Mai 2006, Statistisches Beiheft zum Monatsbericht 3,
Frankfurt am Main 2006, pp.39 et seq. and 49.
1019
and well-functioning system of administrative courts in Germany. A third reason for the
absence of statistical information on investment arbitration between foreign private and
German state parties (including in this sense, inter alia, state enterprises and public purpose
companies of local municipalities) may be the confidentiality of arbitral proceedings outside
the International Centre for the Settlement of Investment Disputes (ICSID) system. For
the future, one can expect an increase of such arbitral proceedings due to the huge stock of
foreign investment in Germany, the growing number of ICSID clauses in German bilateral
investment treaties, the ICSID clause in Article26 Energy Charter Treaty (ECT) and the
active role of the German state in the economy as entrepreneur, regulator and as organiser of
privatizations.
B.
German Investment Abroad
Germany is not only the biggest exporter of goods and services, but also one of the larg- 4
est exporters of long-term capital. The destinations of German investment abroad cover all
regions of the world, particularly in other countries of the European Union, countries of the
former Eastern Bloc, China, India, and last, but not least, the United States. Many of the 30
German Stock Market Index (Deutscher Aktien Index DAX) listed German stock corporations generate more than 50 per cent of their turnover outside Germany. Also, many other
large and Mittelstand companies from Germany are active foreign investors.
German investment abroad is protected and supported by the German bilateral investment 5
treaty (BIT) programme3 and investment guarantees4 by the German government. German companies are regular users of international commercial arbitration and, increasingly,
of investor-state arbitration under the auspices of ICSID5 and other institutions. In light of
growing regulatory and other pressures on German investors abroad, one may forecast a
further increase in investor-state arbitration as an ultima ratio of conflict resolution.
C.
Germany as a Place for Investment Arbitration
There are several reasons why foreign private and state parties may take recourse to Germany 6
as a neutral place for arbitrating their investment disputes. Many countries in the world, particularly those with a civil law tradition, have been influenced by the German codifications of
civil law, commercial law and civil procedure.6 The German legal practice has been open to
the influence of common law thinking. German case law and the German law on arbitration
of 1998 may be cited as examples in this regard.7 The geographic location of Germany in
the heart of the EU and in the middle between American or Asian investments on the one
hand and European or Asian destinations on the other hand may be an argument for having
Germany as a place for arbitrating international investment disputes. Germany is actively
involved in legal aid programmes, e.g. in Eastern Europe and Asia. These programmes aim
3
4
5
6
See infra, para. 27.

The German Civil Code of 1900 and the Swiss Civil Code of 1907/1911 have influenced equivalent civil
law codifications, e.g. in Japan (1898), Brazil (1916), Siam (1925), Turkey (1927), Poland (1927), China
(1929), Peru (1936) and Greece (1940/1946), see Wieacker Privatrechtsgeschichte der Neuzeit, 2nd
edn, Gttingen 1967, pp.346 (484, 485, 495, 503 et seq.).
For a deeper discussion of the 1998 arbitration law reform in Germany, see Berger, in: Berger (ed.)
(1998), p.1.
1020
at creating or improving a modern legal regime that is suitable for a market economy in
transition countries.8 Countries that are regular users of German legal aid programmes may
also be interested in having Germany as a neutral place for settling their international investment disputes. Germany is a prominent player in the process of European integration and
has the unique experience of the German unification with its former socialist part. It is in
comparison to many other countries in the world an open place for foreign investments
and offers a highly developed judicial and arbitral system. Germany offers several options, in
particular the Frankfurt International Arbitration Center (FIAC) and the German Institution of Arbitration (Deutsche Institution fr Schiedsgerichtsbarkeit DIS), for a neutral forum
for the settlement of international disputes.
D.
From Diplomatic Protection to Investment Arbitration
7 Prior to the proliferation of investment treaties, the investors options were rather limited
when an investment went wrong.9 In the absence of an arbitration clause in the contract
entered into between the investor and the host state, the investor might have attempted to
initiate legal proceedings in the state courts of the host state. Another and probably more
promising option was the recourse to diplomatic protection of the investor by his home
state.10 Such diplomatic protection was based on public international law as applicable between the host state and the investors home state. Since such rules of public international
law for the protection of private parties were applicable only vis--vis the home state of the
investor, the latter was deemed to be violated in his rights. As a consequence, the investors
home state espoused the investors rights and asserted them by way of diplomatic means
against the host state. Whether diplomatic protection was granted, though, lay within the
discretion of the home state. In addition, diplomatic intervention was prone to cause political tensions.11 All in all, the investors possibilities for the protection of his investments were
rather limited. The difficulties in achieving adequate protection were considered an obstacle
to private investment and thus to economic development.12
8 Investment arbitration brought a dramatic break with such tradition by granting the investors
directly the rights deriving from a treaty of public international law. As a consequence, the investor is vested with the direct right to bring a claim against the host state in an international
arbitration. Investment arbitration has now become the preferred method of dispute resolution in disputes between an investor and the host state of his investment. The shortcomings
of diplomatic protection were one reason why Germany pursued the conclusion of BITs
with arbitration clauses. By doing so, the efficiency of conflict resolution was intended to
be enhanced and the risks of political tensions mitigated. However, diplomatic protection
8
10
11
12
The German Foundation for International Legal Cooperation (IRZ; <www.irz.de>) focuses primarily
on legal aid programmes in countries of the former socialist Eastern Bloc whereas the Gesellschaft fr
Technische Zusammenarbeit (GtZ; <www.gtz.de>) and the Kreditanstalt fr Wiederaufbau (Kf W; <www.
kfw.de>) also provide legal aid programmes all over the world.
For a short overview of the history of investment arbitration, see Bishop/Crawford/Reisman (2005), pp.1
et seq.; Schreuer, in: Hofmann/Tams (eds) (2007), pp.1 et seq.; Shihata, (1986) 1 ICSID Review 1 et seq.;
Theodorou (2001), pp.1 et seq.
On diplomatic protection see judgment of the International Court of Justice (ICJ) in the case concerning
the Barcelona Traction, Light and Power Company Ltd (Belgium v Spain), ICJ Reports 1970, 3 et seq.;
Bippus (1989), pp.1 et seq., 94 et seq.; Happ (2000), pp.70 et seq.
Schreuer, in: Hofmann/Tams (eds) (2007), p.1 (2).
Schreuer, in: Hofmann/Tams (eds) (2007), p.1.
1021
of foreign investments has not fully disappeared. If German investors face serious conflicts
with the host state, they may also ask the German government for informal support and communication with the host state in order to find a conflict resolution without taking recourse
to investment arbitration and/or without using the investment guarantees of the German
government. The following describes the basis as well as material and procedural issues of
investment arbitration related to Germany.
E.
Definitions of Foreign Investment, Foreign Investor and State Parties from a German
Perspective
The arbitration clause contained in investment treaties extends only to the investor as con- 9
templated under the relevant investment treaty and is limited to the foreign investment as
protected by the relevant investment treaty. The jurisdiction of an arbitral tribunal based on
an investment treaty thus depends on the existence of an investor and foreign investment
in the sense of the applicable treaty. In the case of a dispute, it is therefore necessary to first
review whether the investor and his foreign investment fall within the ambit of protection of
the applicable investment treaty.
1.
Lack of a Statutory Definition, Usefulness of a General Concept, and Necessity of a Case-byCase Analysis
Neither the Federal Republic of Germany nor its 16 federal states have enacted statutes 10
which define the terms foreign investment, foreign investor and state party. These terms
constitute the key elements of an international investment dispute between foreign private
and state parties. Germany has concluded numerous international investment treaties and
instruments. The underlying policy considerations of these treaties and instruments are
relevant for elaborating a concept of arbitral international investment dispute from the viewpoint of German law. Since international and national investment law is highly fragmented
and based on various sources with different legal character, such a concept seems to be useful
both for academic and practical purposes. It should highlight the features and underlying
policy considerations of its subject and its various actors. For example, international organisations like the World Bank or the Organisation for Economic Cooperation and Development (OECD) follow certain developmental and economic interests in formulating their
soft law instruments on foreign investment. Capital-importing and developing countries
tend to use their foreign investment law as an instrument to achieve their development
goals. Capital exporting countries like the United States want to extend the scope of their
BITs to the pre-investment phase.13 Other capital exporting countries like Germany follow
a more traditional approach in their BIT programme, which concentrates on the protection
of already existing foreign investments. From a practical point of view, a general concept of
an international investment dispute and its various underlying policy considerations should
provide guidance to entrepreneurs and their advisors in order to better evaluate the legal
risks and the investment climate of a host country. A general concept of key terms of international investment law and arbitration should also facilitate the formulation and application
of procedural and material rights and obligations of parties to a foreign investment under
the relevant investment instruments. Such a general concept must be distinguished from
the question of whether a specific dispute falls within the jurisdiction of an ICSID tribunal
13
For example, Art.3 (1) 2004 US Model BIT.
1022
pursuant to Article 25 ICSID Convention14 and the consent of the parties involved. The
jurisdiction of ICSID is primarily based on the consent of the eligible state and private parties provided that their investment dispute falls within the broad concept of an investment
dispute as envisioned in Article25(1) sentence 1 ICSID Convention.15
2.
Considerations as to the Specific Criteria
11 a. Foreign Investment: There is no single valid definition of foreign investment in the fields of
law and economics. The International Monetary Fund (IMF), central banks and economists
distinguish between foreign direct investment and portfolio investment. If a foreign investor
has 10% or more of the voting rights in an enterprise, such an investment is considered as a
foreign direct investment. Otherwise, a portfolio investment is concerned.16 Some national
investment laws and even some BITs focus on a narrow and enterprise-based definition of
foreign investment.17 Many international investment instruments apply a wide and assetbased definition.18 Such a broad definition of foreign investment is often followed by capital
exporting countries, whereas a narrow definition of foreign investment is typically applied by
a country with a rigid and restrictive policy on foreign investment.
12 Germany is a signatory to many international investment treaties and instruments. It signed
the first BIT worldwide in 195919 and has entered into more BITs than any other country in
the world. Germany has signed 139 BITs with other countries, of which 130 are in force.20
Germany is a Contracting State of the 1994 Energy Charter Treaty,21 the 1994 World Trade
Organisation Agreement including the General Agreement on Trade in Services (GATS)
and the Agreement on Trade Related Investment Measures (TRIM).22 The 1992 World Bank
Guidelines on the Treatment of Foreign Direct Investment23 and the OECD Declaration and
Decisions on International Investment and Multinational Enterprises,24 to name only two
examples of soft law international investment instruments, have also been supported by
Germany. In most of these instruments, Germany has consented to a wide and asset-based
definition of foreign investment. Such a wide definition is also used in the German Model
Treaty on the Reciprocal Encouragement and Protection of Foreign Investment of 2005
14
15
16
17
18
19
20
21
22
23
24
Art.25 (1) sentence1 ICSID Convention states that the jurisdiction of the ICSID shall extend to any
legal dispute arising directly out of an investment between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another
Contracting State, which the parties to the dispute consent in writing to submit to the Centre. See Escher,
RIW 2001, 20 et seq.
Schreuer (2001), Art.25 paras81 et seq. Therefore, the parties cannot submit a dispute on a pure sales or
other commercial contract to an ICSID tribunal.
Escher, in: Bradlow/Escher (eds) (1999), pp.3 (20 et seq.).
Parra, (1997) 12 ICSID Review 287 (294), footnote18 citing Art.1 of the BIT between Bulgaria and
Finland as an example.
Escher, in: Bradlow/Escher (eds) (1999), pp.3 (20 et seq.).
BIT between Germany and Pakistan of 25.11.1959, BGBl. 1961 II, 793.
German Federal Ministry for Economic Affairs and Energy.
BGBl. 1997 II, 5; (1995) 34 ILM 381 et seq. with introduction by Wlde.
BGBl. 1994 II, 1473 (1625, 1643); Wolf (2006), pp.15 et seq., 26 et seq.
Schlemmer-Schulte, in: Bradlow/Escher (eds) (1999), p.87.
OECD Declaration and Decisions on International Investment and Multinational Enterprises as of 2000
are available on the OECD website <www.oecd.org>.
1023
(German Model Treaty).25 According to Article1 (1) German Model BIT, an investment
encompasses every kind of asset, including but not limited to:
movable and immovable property as well as any other rights in rem such as mortgages, liens and pledges; shares of companies and other kinds of interest in companies; claims to money which has been used to create an economic value or claims to
any performance having an economic value; intellectual property rights, in particular
copyrights, patents, utility-model patents, registered designs, trade-marks, tradenames, trade and business secrets, technical processes, know-how, and good will;
business concessions under public law, including concessions to search for, extract
and exploit natural resources.
The policy reasons for such a concept of foreign investment are first, to provide as much 13
protection as possible for the investor acting in another country with a different legal culture,
and second, to support a level playing field for all kinds of export of capital.26 A foreign investor should have confidence that all his assets and aspects of his economic activity in another
country are protected under the rule of law. He should base his decision as to how his foreign
investment is structured and organised on economic considerations, not on concerns about
the legal protection of his undertakings.
b. Foreign Investors: The term foreign investor is not defined homogeneously in the numer- 14
ous international investment instruments.27 The 2005 German Model BIT partly defines the
terms nationals and companies. The term nationals in respect to the Federal Republic of
Germany means Germans within the meaning of the Constitution of the Federal Republic
of Germany. Pursuant to Article1 (4) German Model BIT, the term companies means:
any juridical person as well as any commercial or other company or association with
or without legal personality having its seat in the territory of the Federal Republic of
Germany, irrespective of whether or not its activities are directed at profit.
This means that companies which are located in a third country and controlled by German 15
nationals are not considered to be eligible investors under the German Model Treaty.28 Of
course, the German Model Treaty does not define the term investor of the other contracting
party. As a general principle, international law leaves the definition of its own nationals to the
decision of each state. As a result, the definition is to be made by the concrete contracting
party in each actual treaty. For example, the revised German-Chinese BIT of 1 December
2003 defines the term investor in respect of the Peoples Republic of China as:
natural persons who have nationality of the Peoples Republic of China in accordance
with its laws, economic entities, including companies, corporations, associations,
partnerships and other organisations, incorporated and constituted under the laws
and regulations of and with their seats in the Peoples Republic of China, irrespective
of whether or not for profit and whether their liabilities are limited or not.29
25
26
27
28
29
The 2009 German Model Treaty is of no practical relevance since the competence had already shifted to
the EU.
Escher, in: Bradlow/Escher (eds) (1999), p.3 (23).
Parra, (1997) 12 ICSID Review 287 (299, 324) regarding the question as to whether the nationality of a
legal entity could also be based on the control of that person.
Karl, (1996) 11 ICSID Review 1 (8).
The new German-Chinese BIT entered into force on 11.11.2005, reprinted in BGBl. 2005 II, 732.
1024
16 A similar approach is applied by many other contracting parties in their BITs with Germany
in regard to the definition of their protected investors in Germany.30 In some cases, an even
narrower definition is applied, particularly in older BITs. The German-Indonesian BIT of 8
November 1968 defines the term company with respect to the Republic of Indonesia as:
any company with limited liability, being registered in the territory of the Republic
of Indonesia, and any juridical person established in accordance with the law of the
Republic of Indonesia.31
17 Consequently, an Indonesian partnership with unlimited liability would not qualify as an
eligible corporate investor under the German-Indonesian BIT, provided that Indonesian law
does not consider a partnership as a juridical person. However, the Indonesian partners may
then qualify as Indonesian nationals covered by that BIT. In contrast, the ICSID Convention allows for a much broader definition of foreign investor.32 Against this background, one
can conclude that the German concept of foreign investor is traditional in the sense that the
place of foundation and/or administration in the country of the other contracting state is
primarily important for the qualification of an eligible protected investor.
18 c. State Parties: When considering the basic notions of investment arbitration, it is also necessary to examine whether and when a state exists, as well as the circumstances in which state
enterprises, state sub-entities, public institutions or even local municipalities are treated like
a state. This issue can only be decided on a case-by-case basis. However, such analysis may be
facilitated by the following guiding principles:
19 Article25German Constitution (Grundgesetz GG) states that the general rules of international law, i.e. custom and general principles in the sense of Article38 (1) of the International Court of Justice (ICJ) Statute, are integrated into German law and that these rules
overrule German statutes and directly generate rights and obligations in Germany. Since
Article25GG integrates general rules of public international law into German law, one can
expect that a German court would apply these doctrines in order to determine when and
how long a state exists, for example in the case of state separation, failed states or state succession.33 The example of Montenegro, which declared itself an independent state in 2006,
30
31
32
33
For example, Art. 1 No. 3 of the German-Czechoslovakian BIT of 02.10.1990, which entered into
force on 02.08.1992, reprinted in BGBl. 1992 II, 294; Art.1 (3)(b) of the German-Yugoslavian BIT of
10.07.1989, which entered into force on 25.10.1990, reprinted in BGBl. 1990 II, 350; Art.1 (1)(c) of
the BIT between Germany and the former Soviet Union of 13.06.1989, which entered into force on
05.08.1991, reprinted in BGBl. 1990 II, 342.
Art.1 (4)(b) of the German-Indonesian BIT which entered into force on 19.04.1971, reprinted in BGBl.
1970 II, 492.
Art.25 (2)(b) second alternative ICSID Convention states that National of another Contracting State
also means any juridical person which had the nationality of the Contracting State party to the dispute on
that date and which, because of foreign control, the parties have agreed should be treated as a national of
another Contracting State for purposes of this Convention. If such a foreign controlled company does not
qualify as a foreign investor under an applicable BIT, it is nevertheless possible and advisable to conclude
an agreement according to the before-mentioned provision in order to enable such company to be an
eligible investor under the ICSID Convention.
According to the German Constitutional Court (Bundesverfassungsgericht BVerfG), Art.25GG incorporates the customary public international law and the general legal principles within the meaning
of Art.38 (1)(b) and (c) ICJ Statute into German law; BVerfG 30.10.1962, BVerfGE 15, 25 (34); id.
30.04.1963, BVerfGE 16, 27 (33); id. 14.05.1968, BVerfGE 23, 288 (316 seq.); id. 10.06.1997, BVerfGE 96, 68 (87). If the parties to an international investment dispute have chosen German law as the
1025
may highlight the practical importance of this question. The mandatory three elements for
constituting a state under public international law are (1) the permanent and effective existence of state power (2) over state people (3) within a state territory. A fourth element as to
whether a sovereign power is capable of entering into relations with other states is historically
disputed and not commonly accepted.34 The German government has declared that it follows the traditional three elements doctrine.35
Since Germany is a Contracting State of the ICSID Convention, one may look at Article25 20
(1) sentence 1 ICSID Convention in order to determine whether a subdivision or agency of
a Contracting State is being able to act like a state party in an ICSID proceeding. According to
this provision, a Contracting State may designate to ICSID that any or certain of its constituent subdivisions or agencies are entitled to appear like a state party in an ICSID proceeding.
The consent by such a constituent subdivision or agency of a Contracting State to an ICSID
proceeding requires the approval of that state unless that state notifies ICSID that no such
approval is necessary.36
Against this background, it is apparent that the German concept of a state party refers both 21
to public international and domestic constitutional law. With regard to the often disputed
issue in international investment arbitration as to whether acts or omissions of state enterprises, public institutions or local municipalities can be attributed to a state, from a German
perspective one has to further examine the applicable administrative law.37 As a result, Germany follows a broad and investor-friendly concept of foreign investment and a traditional
concept of determining foreign investors and state parties. Such a general concept has to be
distinguished from a legal analysis in an individual investment dispute as to which rights an
eligible investor can claim from a state party under the investment contract and/or another
legal instrument which constitutes the consent to their investment arbitration.
II.
Essentials of Investment Disputes between Foreign Private Investors and

German Public Entities
A.
Explicit Arbitration Agreements between Foreign Investors and German Public Entities
The following distinguishes between explicit and non-explicit investment arbitration agree- 22
ments between foreign private investors and German public entities. A foreign investor and
the Federal Republic of Germany may conclude an investment agreement with an explicit
arbitration clause. This may be the case in the context of an infrastructure or privatization
project where the Federal Republic of Germany is directly involved as a stakeholder. A foreign investor may also include an explicit arbitration clause in contracts with one of the 16
federal states, the numerous state enterprises, local public purpose companies or one of the
many existing local municipalities.
Strictly speaking, only the Federal Republic of Germany and its 16 federal states are con- 23
sidered to be states in the sense of German constitutional law. These states are, in principle,
34
35
36
37
governing law of their dispute, an arbitral tribunal would have to take recourse to Art.25GG, otherwise
to the applicable BIT or directly to public international law according to Art.42 ICSID Convention.
Verdross/Simma (1984), pp.223230.
Declaration of the German government regarding the recognition of the Republic Guinea-Bissau, reprinted in ZaVR 1975, 777.
Art.25 (3) ICSID Convention.
Bckstiegel (1971), pp.371 et seq.
1026
able to conclude explicit arbitration agreements with foreign private parties through their
ministries. The public sector in Germany also comprises state enterprises, municipalities
and public purpose companies owned by such municipalities. These public entities are to be
distinguished from the state in the strict constitutional sense. A foreign investor has to check
in each individual case whether and to which extent the Federal Republic of Germany, one
of its 16 federal states and one of the aforementioned public entities are able to conclude
an arbitration agreement. As a rule of thumb, all these public entities are, in principle, able
to conclude an explicit investment arbitration clause with a foreign investor, provided that
nothing in the governing constitutional or administrative law or in the constituent charters
of these public entities prevents them from doing so. Explicit investment arbitration agreements between foreign investors and German public entities may most likely be governed
by the Code of Civil Procedure (Zivilprozessordnung ZPO) rules, the DIS Rules or other
rules as preferred by the German public entity.
B.
Non-explicit Arbitration Agreements between Foreign Investors and the Federal

Republic of Germany
24 In the absence of such an explicit arbitration agreement the foreign investor may rely on
arbitration clauses contained in an applicable BIT or in Article26 Energy Charter Treaty
which his home country has concluded with the Federal Republic of Germany. Typically,
only the Federal Republic of Germany can be a party to a non-explicit arbitration agreement
because only it may consent to investment arbitration in an applicable international treaty
which the eligible foreign investor may accept through filing an arbitration claim as provided
for in the applicable treaty. As a result, only the Federal Republic of Germany can be a party
of a non-explicit investment arbitration agreement with a foreign investor.38 Two investment
arbitration proceedings have been initiated against Germany.39
C.
Arbitrability of Disputes between Foreign Private Investors and German Public Entities
(Objektive Schiedsfhigkeit)
25 The arbitrability of a dispute is a particular issue of explicit investment arbitration agreements between German public entities and foreign investors. In the case of a non-explicit
arbitration agreement between the Federal Republic of Germany and a foreign investor, the
substantive rights in the applicable BIT or other legal instrument are per se arbitrable. As a
general rule, a German public institution may enter into an explicit arbitration agreement
having as its subject matter a potential dispute with a foreign investor, provided that it is able
and authorised under German administrative law to conclude an administrative contract
with a private person or entity. Pursuant to 54 German Code of Administrative Procedure
(Verwaltungsverfahrensgesetz VwVfG), a legal relationship in the field of public law can be
created, changed and rescinded by a so-called administrative contract as long as there are
no conflicting legal norms. In some areas, an administrative contract is not common at all
38
39
In our understanding, non-explicit means the same as arbitration without privity. See Paulsson, (1995)
2 ICSID Review, 232 (246 et seq.).
Vattenfall AB, Vattenfall Europe AG, Vattenfall Europe Generation AG v. Federal Republic of Germany
(ICSID Case No. ARB/09/6), on 17.04.2009 the acting Secretary-General registered a request for the
institution of arbitration proceedings, on 11.03.2011 the Tribunal rendered its award embodying the parties settlement agreement, pursuant to ICSID Arbitration Rule 43(2); Vattenfall AB and others v. Federal
Republic of Germany (ICSID Case No. ARB/12/12) was registered on 31.05.2012 (still pending);
1027
or is even legally not admissible, e.g. between a taxpayer and the German tax authorities.40 A
foreign investor cannot therefore expect that his tax dispute with the German tax authorities may be settled through explicit arbitration instead of taking recourse to the German tax
courts (Finanzgerichte). In practice, an explicit arbitration agreement between a foreign investor and a German public entity (in the broadest sense) may primarily occur in the context
of large infrastructure or privatization projects. In each case, one has to examine carefully
the applicable statutes and regulations as to whether the subject matter of the contract is
arbitrable or not. Given the presumption of 54 VwVfG, one can assume the arbitrability of
the subject-matter in an investment contract between a foreign investor and a German public
entity, provided that no legal norm or principle clearly states the contrary.
III. Arbitration Clauses and Material Rights of Investors in German BITs and
Article 26 ECT
Investment treaties aim at stimulating the flow of private capital and investment into con- 26
tracting states.41 They may be multilateral, such as North American Free Trade Agreement
(NAFTA), Central American Free Trade Agreement (CAFTA) or the Energy Charter
Treaty, or bilateral. In the case of an investment dispute, investment treaties allow the investor
to have disputes with the host state decided by a neutral arbitral tribunal. Nevertheless, the
investor can still take recourse to informal protection and mediation activities of the German
government in order to avoid an escalation into a formal investment arbitration. Given the
increase in German investments abroad and foreign investments in Germany (in particular
from outside the EU and the US), one can expect a growing practical importance of German
BITs.
A.
The German BIT Programme
The law on foreign investment and the practice of investment arbitration have experienced 27
a dynamic development in recent decades. Germany has significantly contributed to the
growing importance of foreign investment law, inter alia, through its successful programme
on bilateral investment treaties. Even today, no country in the world has concluded more
BITs than Germany. As of April 2014, Germany has signed 139 bilateral investment treaties
with other countries of which 130 are in force.42 In 1959 Germany concluded the first ever
BIT with Pakistan, which is still valid today.43 Historically, the German BIT programme was
motivated by the desire to support and protect German investments abroad, particularly
in developing countries.44 Given its wide acceptance and its precedent character for other
countries, the German BIT programme can be viewed as a success story. The German BITs
typically contain provisions on their scope that include definitions of key terms, substantive
rights of eligible investors for the investments covered, along with mechanisms for solving
disputes between the Contracting Parties on the one hand and between an investor from
one Contracting Party and the other Contracting Party on the other. Many German BITs
40
41
42
43
44
See 155 German Tax Code (Abgabenordnung AO); Kopp/Ramsauer, Verwaltungsverfahrensgesetz,

9th edn, Mnchen 2005, 54 para.5.
Happ (2000), pp.61 et seq.
German Federal Ministry for Economic Affairs and Energy. For a list of the German BITs see AnnexI to
this chapter.
The German-Pakistan BIT entered into force on 28.04.1962, reprinted in BGBl. 1961 II, 793.
Semler, SchiedsVZ 2003, 97; Schfer, BB 2004, 1069 (1070).
1028
are more or less similar to the 2005 German Model BIT which will be the focus of our later
analysis.45 With regard to individual investment cases, it is crucial for the actors and advisors involved to carefully analyze the applicable BIT, including protocols of the Contracting
Parties. In the present context of globalisation, it is important to note that foreign investors
in Germany can also invoke the material rights and dispute resolution clauses which are
contained in their home countries BITs with Germany.
B.
Material Rights of Investors in German BITs and Arbitration Clauses
1.
Material Rights of Investors
28 The 2005 German Model BIT begins with a preamble stating the objectives, e.g. the reciprocal protection and encouragement of foreign investments.46 After defining the terms
investment and investor, the German Model BIT contains the classical material rights of
investors: Article 2 (1) provides that each Contracting State shall in its territory promote,
as far as possible, investments by investors of the other Contracting State and admit such
investments in accordance with its legislation. This model provision does not intend to apply
the national treatment principle to the pre-establishment phase of an investment. However,
it requires the host state to exercise due process when deciding on the admission of an investment.47 An aggrieved investor might even invoke such a provision if his admission is refused
on grounds that are not provided for in the existing legislation of the host state. Article 2 (2)
demands that each Contracting State shall in its territory accord investments by investors of
the other Contracting State fair and equitable treatment as well as full protection under the
Treaty. Article 4 (1) further emphazises that investments by investors of either Contracting
State shall enjoy full protection and security in the territory of the other Contracting State.
Both standards are complementary to each other and require a fact-intensive analysis if invoked by an investor.48 A denial of justice and/or the destruction of facilities by government
forces typically constitute violations of the fair and equitable treatment and full protection
and security standards, respectively. However, violations of these standards are not limited
to these examples. The exact reach of these standards can only be developed by tribunals
on a fact-intensive case-by-case analysis. According to Article 2 (3), neither Contracting
State shall in any way impair by arbitrary or discriminatory measures the management,
maintenance, use, enjoyment or disposal of investments in its territory of investors of the
other Contracting State. Article3 (1) and (2) state that the investment and the investor shall
receive both national treatment and most-favoured-nation treatment (MFN). The national
treatment standard requires a Contracting State to accord investments in its territory that are
owned or controlled by investors of the other Contracting State treatment not less favourable
than it accords to investments of its own investors. Most of the German BITs concluded prior
to the mid-1970s contain a reciprocity clause according to which a Contracting State grants
national treatment only to the extent that the other Contracting Party provides national
45
46
47
48
Due to limitations of space, this chapter cannot analyze every German BIT and its special features in
comparison to the German Model BIT. With regard to the former Model BIT of 1991, see Karl, (1996)
11 ICSID Review 1 (6 et seq.), (9 et seq.), (11 et seq.), (14 et seq.), (23 et seq.) with further information on
deviations of German BITs from the Model BIT.
2005 German Model Treaty on the Encouragement and Reciprocal Protection of Investments. See also
Karl, (1996) 11 ICSID Review 1; Fracker, SchiedsVZ 2006, 236.
Fracker, SchiedsVZ 2006, 236 (241).
Fracker, SchiedsVZ 2006, 236 (242); Dolzer, (2005) 39 Intl Law. 87 et seq.; Reinisch, YILJ 2005,
1653etseq.
1029
treatment as well.49 The protocols of some German BITs contain specific deviations from the
national treatment standards which the other Contracting Parties have reserved for policy
reasons.50 According to the MFN clause, each state is obliged to grant the most favoured
treatment to the investments of investors from the other state as it does towards investments
from investors from third countries based on treaties, with the exception of customs unions
or free trade agreements, with that third country.51 The rights of the investor to freely transfer the profits of their investment and their compensation in the case of expropriation are
guaranteed pursuant to Article5. Contractual obligations of a state towards an investor are
considered as obligations under the umbrella clause of the BIT, Article8 (2).52 According
to Article4 (2), expropriation should only be admissible in a non-discriminatory way under
due process of law against timely payment of prompt, adequate and effective compensation
(so-called Hull formula).53
In summary, the German BITs provide to eligible German or foreign investors high and 29
valuable protection standards for their covered investments that are independent from and
complementary to any other applicable standards of the law of Germany or the host state, the
EU or international law.
2.
Enforcement of Rights through Arbitration
The substantive standards of German BITs can be enforced particularly through binding ar- 30
bitration against the foreign or the German state. The German Model BIT provides in Article
10 that disputes between the contracting states of a BIT can be submitted to international
arbitration. Disputes between an investor and a state shall be solved amicably, and, if this is
not successful, by submission to a court or arbitration, Article11. Most of the German BITs
contain a clause providing for ICSID arbitration. Such clauses are considered to be a binding,
irrevocable offer of the state to enter into an arbitration agreement. In most cases, such offer is
deemed to be accepted implicitly when the investor initiates arbitration.54
49
50
51
52
53
54
E.g. treaties with Morocco, Mauritius, Niger, Sierra Leone, Sudan, Tanzania, Thailand, Togo, Chad,
Turkey, Uganda, Central African Republic, Ecuador, Ivory Coast, Gabon, Greece, Haiti, Iran, Yemen and
Kenya.
Karl, (1996) 11 ICSID Review 1 (12) with a list of examples.
Karl, (1996) 11 ICSID Review 1 (11); Fracker, SchiedsVZ 2006, 236 (242). In Siemens v. Argentinia,
an ICSID tribunal has recently decided that the most-favoured-nation treatment clause in the GermanArgentine BIT applied both to matters of substantive and procedural law so that Siemens could take
advantage of the more favourable dispute resolution clauses contained in the BIT between Argentina and
Chile. Notwithstanding this decision, it is arguably an open question whether all MFN clauses in German
BITs not only embrace material, but also procedural rights, see Newmark/Poulton, Siemens -v- Argentina:
Most-favoured-nation clause (re)visited, SchiedsVZ 2005, 30; Happ, SchiedsVZ 2005, 21 (23 and 24).
This issue can be raised, for example, by investors from countries which have concluded an old-style BIT
with China. The new-style German-Chinese BIT allows ICSID arbitration not only for disputes about
the amount of compensation, but also for disputes on all treaty obligations.
See Schreuer, The Journal of World Investment & Trade 2004, 231; Schramke, SchiedsVZ 2006, 249;
Griebel, SchiedsVZ 2006, 306.
Art.4 (2) German Model BIT also states that an indirect or creeping expropriation occurs if the measures
are tantamount to a direct taking of foreign property by the state. See Dolzer, (2002) 11 N.Y.U. Envtl. L. J.
64.
Happ, SchiedsVZ 2005, 21; Schreuer (2001), Art. 25 paras 92-125.
1030
3.
Further Practical Relevance of German BITs
31 Apart from the points discussed above, German BITs are also of practical importance at the
planning and implementation stage of foreign investments. For example, the availability of
guarantees against non-commercial risks by the German government for German investments abroad is dependent on the existence of a German BIT with the host state.55 The
substantive rights and arbitration clauses under the applicable BIT should be considered at
the drafting stage of investment contracts. In principle, it is possible that an investor from a
third country that has no BIT with Germany channels its investment through a company established and having its corporate seat in a country that has concluded a BIT with Germany
in order to take advantage of that BIT. However, whether such treaty shopping meets all
requirements of the applicable BIT has to be checked carefully in each individual case.
32 In the case of an investment dispute, an investor can take recourse to informal protection
and mediation activities of the German government in order to avoid an escalation into a
formal investment arbitration. Given the increase of German investments abroad and foreign
investments in Germany (in particular from outside the EU and the US), one can expect a
growing practical importance of German BITs.
C.
Arbitration Clauses and Material Rights of Investors in Article26 ECT
33 The general acceptance of protection of investments through arbitration in BITs led to the
inclusion of comparable provisions into other treaties of multilateral economic cooperation
and free trade agreements.56 One of the most important treaties is the Energy Charter Treaty,
a further instrument of investment protection within the energy sector.57 It was entered into
by countries from Western, Central and Eastern Europe, Central Asia as well as by Japan
and Australia. The treaty, with currently 48 members (including the EU), was signed in
December 1994 and has been in force since April 1998.58 It aims to provide a multilateral
legal framework, covering all aspects of a continuing cross-border co-operation between the
contracting states in the energy sector. The ECT seeks to stimulate foreign direct investment
and trade due to its underlying key principles of openness of energy markets and nondiscrimination against investors in order to secure energy supply. The ECT is divided into
eight parts. PartI contains the preamble, definitions, as well as the objectives of the ECT.
PartII deals with the trade of energy products. In PartIII, the provisions for the promotion,
protection and treatment of investments in the energy sector which are applicable when disputes arise, are outlined.59 Part V further provides for the resolution of such disputes. PartIV
contains miscellaneous provisions, such as provisions regarding taxes. The remaining parts
concern the constitution of the Energy Charter Conference (Part VII) served by the Energy
Charter Secretariat in Brussels,60 as well as final provisions (PartVIII).
55
56
57
58
59
60
Information on investment guarantees of the Federal Republic of Germany can be found on the website
of the Foreign Trade and Investment Promotion Scheme (Auslandsgeschftsabsicherung der Bundesrepublik Deutschland AGA) <www.agaportal.de/en/dia/index.html>. See also Adam, in: Bradlow/Escher
(eds) (1999), p.583.
Redfern/Hunter (2004), para.11-04.
Detailed references in Wlde, Arb.Int. 1996, 429; Turner, (1998) Int.A.L.R. 166.
BGBl. 1997 II, 4
Wlde, Arb.Int. 1996, 429; Lew/Mistelis/Krll (2003), para.28-34.
Website of the Energy Charter Secretariat <www.encharter.org>.
1031
In PartV of the ECT, an international dispute settlement regime is laid down to guarantee 34
that a professional and trustworthy system can be invoked when needed. This is of particular relevance in the energy sector since energy disputes may often be complex, with
high amounts at stake, and a number of contracting parties do not yet have a sufficiently
developed domestic judicial system in place. The ECT includes effective dispute settlement
mechanisms for the different areas it covers and, as other investment treaties do, grants direct
rights to non-state parties.
In the field of investment disputes, Article 26 ECT provides for investor-state disputes 35
whereas Article27 ECT governs disputes between states. Pursuant to Article26 ECT, an
investor from a contracting state may only bring a claim against the host state for an alleged
breach of treaty obligations that is outlined in PartIII of the treaty.61 Only obligations under
PartIII of the ECT are justiciable, while the many other obligations provided for in other
parts of the ECT are not. The foreign investor has three options to bring the claim against the
state: either in the state courts or in line with a previously agreed dispute settlement procedure or in arbitral proceedings. A foreign investor opting to submit a dispute to international
arbitration has the choice between arbitration under the ICSID Rules, the ICSID Additional
Facility Rules, the Arbitration Institute of the Stockholm Chamber of Commerce (SCC)
Rules or ad hoc under UNCITRAL Rules.
Since the ECT does not contain a special enforcement regime, the enforcement is based on 36
the New York Convention 1958, unless the ICSID Convention applies. For this purpose,
Article 26 (5)(b) ECT declares that claims are considered to arise out of a commercial relationship and a party may request that the arbitration takes place in a state which is a party to
the New York Convention 1958. If a state refuses to enforce or comply with an award, this
would constitute a breach of the ECT, to which interstate arbitration based on Article27
would be applicable.62 However, choosing ICSID arbitration would abate this problem, since
the ICSID Convention requires its member states to recognize and enforce ICSID awards
regardless of the application of the New York Convention 1958. Numerous arbitral proceedings based on Article26 ECT have already taken place.63 In the light of the ever growing
sensitivity and importance of East-West energy disputes, one can expect an increase in such
arbitral proceedings in the future.
IV. Institutions and Procedure for Arbitrating International Investment Disputes

in Germany
For the resolution of a dispute between the investor and a state, most of the German BITs 37
provide for arbitration under the ICSID Rules. ICSID is, however, not the only option.
Investment arbitration can also be conducted under other institutional rules, such as those
of the German Institution of Arbitration (DIS), the Permanent Court of Arbitration (PCA),
the International Chamber of Commerce (ICC) or the Stockholm Chamber of Commerce
(SCC), as well as ad hoc based on UNCITRAL Arbitration Rules or the 10th Book of the
German ZPO.
61
62
63
Happ (2000), pp.115 et seq.

Lew/Mistelis/Krll (2003), para.28-37.
Happ (2000); Essig, SchiedsVZ 2006, 311 et seq.
1032
A.
Arbitration under the ICSID Rules: The Co-operation Agreement between ICSID and
DIS of 16 December 2005 Regarding the Frankfurt International Arbitration Centre
38 ICSID arbitration and conciliation proceedings are normally held at the seat of ICSID, located in Washington, D.C.64 However, parties to an ICSID proceeding may agree for geographical, political or other reasons to have Frankfurt am Main as the place of their proceeding.
Until 16 December 2005, this required the written consent of the tribunal or commission
after consultation with the Secretary General of ICSID.65 On 16December 2005, DIS and
ICSID concluded an arrangement according to Article63(a) ICSID Convention, pursuant
to which ICSID proceedings may be held, if the parties so agree, at the seat of the Frankfurt
International Arbitration Center (FIAC). FIAC is a joint institution of DIS and the Frankfurt
Chamber of Industry and Commerce (Industrie- und Handelskammer IHK Frankfurt am
Main) which provides the facilities for conducting such proceedings.66 If parties now agree to
have FIAC as the place for conducting the proceedings, the approval of the tribunal or commission after consultation with the Secretary-General of ICSID is no longer needed. There
are 12 other arbitration centres that have been granted this status as well.67 Notwithstanding
any arrangement according to Article63(a) ICSID Convention, a request by a party wishing
to institute an ICSID proceeding must be addressed in writing to the Secretary-General at
the seat of ICSID in Washington, D.C.68 In the following process of constituting the tribunal,
the parties may then agree on having FIAC as the place of their proceeding. This has occurred
in at least one ICSID case in recent years.69 If the parties have chosen FIAC as the place of
their ICSID proceeding, the normal procedural rules of ICSID70 and their amendments (as
effective from 10 April2006) apply.71 If the parties to an ICSID arbitral proceeding at the seat
of FIAC have agreed that a state court could be asked to order interim measures, the Higher
64
65
66
67
68
69
70
71
Article 62 ICSID Convention; Regulation26 (1) sentence1 alternative 1 of the ICSID Administrative
and Financial Regulations.
Article 63 (b) ICSID Convention.
Contact information: Frankfurt International Arbitration Center (FIAC), IHK Frankfurt am Main,
Brsenplatz4, 60313 Frankfurt am Main, Germany; phone +49-(0)69-2197-1314, fax +49-(0)69-21971487, <www.fiac-arbitration.de>. See also SchiedsVZ 2006, VII; News from ICSID, Vol.22, No.2 2005,
19; Reichert, SchiedsVZ 2007, 213.
Further co-operation partners of ICSID are the Permanent Court of Arbitration at The Hague, the
Regional Arbitration Centres of the Asian-African Legal Consultative Committee at Cairo, at Kuala
Lumpur and at Lagos, the Australian Commercial Disputes Centre at Sydney, the Australian Centre for
International Commercial Arbitration at Melbourne, the Singapore International Arbitration Centre,
the Gulf Cooperation Council Commercial Arbitration Centre at Bahrain, the Maxwell Chambers in
Singapore, the Hong Kong International Arbitration Centre, the Centre for Arbitration and Conciliation
at the Chamber of Commerce of Bogota and the China International Economic and Trade Arbitration
Commission.
Article 28 (1) and Article 36 (1) ICSID Convention; Rule1 of the ICSID Institution Rules.
Cf. Caratube International Oil Company LLP v. The Republic of Kazakhstan, ICSID Case No. ARB/08/12,
Award, 5June2012, para.14.
For an overview of ICSID arbitration, additional facility and conciliation proceedings see Lrcher,
SchiedsVZ 2005, 11; Schbener/Markert, ZVglRWiss 2006, 65; Escher, RIW 2001, 20.
Parra, SchiedsVZ 2006, 247; Escher, nderungen der ICSID Arbitration Rules, ICSID Additional Facility Rules und ICSID Administrative and Financial Regulations, FIAC website <www.fiac-arbitration.
de>. The amendments concern, for example, the obligation of the arbitrators to disclose issue conflicts,
the right of a tribunal or commission to accept third party briefs and allow third party access to oral hearings and the publication of awards.
1033
Regional Court (Oberlandesgericht OLG) of Frankfurt am Main would have jurisdiction

for such orders.72
B.
Arbitration of International Investment Disputes under the Auspices of the DIS
A foreign investor and a foreign state could agree to settle their investment dispute under the 39
auspices of the DIS.73 The DIS frequently administers arbitral proceedings of commercial
disputes both at a national and international level. The DIS may also administer the settlement of international investment disputes, since its arbitration rules are equally suitable
for commercial and investment disputes. This may be of particular interest for parties from
neighbouring countries of Germany. A private investor from France, the Benelux countries,
Switzerland or Austria on the one hand and state enterprises and/or state entities from
Central Europe, the Baltic states or south eastern European countries on the other hand may
agree for geographical, political, historical or other practical reasons to hold a DIS arbitral
proceeding in order to settle their investment dispute. The normal DIS Rules would apply
for such an investment arbitral proceeding, including the confidentiality requirement of Section43 of the 1998 DIS Arbitration Rules.
C.
Further Institutional and Procedural Options for International Investment Arbitration

in Germany
1.
International Investment Arbitration Pursuant to ICC, SCC and PCA Rules
International investment arbitration does not only take place under the auspices of the ICSID, 40
but also ad hoc and within other institutions like the International Chamber of Commerce,74
the Arbitration Institute of the Stockholm Chamber of Commerce,75 and the Permanent
Court of Arbitration.76 A private and a state party can also agree that their investment dispute
is settled under the ICC Arbitration Rules at a place in Germany so that the German lex
arbitri would apply.77 Parties could further consent that their investment dispute is governed
by the SCC or PCA Arbitration Rules and takes place in Germany.78 In all of these cases, the
confidentiality requirement would apply and third parties would not have access.79
2.
Ad hoc Arbitration of International Investment Disputes
a. 1025 et seq. ZPO: Parties to an international investment dispute can further agree on 41
an ad hoc proceeding in Germany which in the absence of any other explicit agreement
72
73
74
75
76
77
78
79
Article 47 ICSID Convention; ICSID Arbitration Rule 39; Article 2 (2) of the German federal statute
approving and implementing the ICSID Convention of 25.02.1969, reprinted in BGBl. 1969 II, 369
(German ICSID Approval Statute) in connection with 1062ZPO.
For further information on DIS and the 1998 DIS Rules see the DIS website <www.dis-arb.de>.
The ICC Rules of Arbitration (in force as from 01.01.2012) are available on the ICC website <www.
iccwbo.org>.
The Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (in force as
from 01.01.2010) are available on the SCC website <www.sccinstitute.com>.
The PCA Rules and Procedures are available on the PCA website <www.pca-cpa.org>.
For a discussion of the ICC Arbitration Rules with regard to a place of arbitration in Germany see supra,
Khner/Flecke-Giammarco, ICC Arbitration in Germany, paras 12 et seq.
See Article 20(2)SCC Arbitration Rules; Article 18(2) PCA Arbitration Rules2012.
Article 22 (3) ICC Arbitration Rules; Article 46 SCC Arbitration Rules; Article 25 (4) PCA Optional
Rules for Arbitrating Disputes between Two Parties of Which Only One Is a State.
1034
between the parties is governed by 1025 et seq. ZPO. In general, these provisions are
equally applicable to commercial and investment arbitral proceedings.80 However, special
issues such as arbitrability, enforcement of awards against state parties or state immunity
primarily arise in the context of investment arbitration. If foreign investors want to conclude
an arbitration agreement with a German public entity, they must be aware that the German
public entity may have a preference for a proceeding under the ZPO rules because of its
familiarity with these rules.
42 b. Ad hoc Arbitration of International Investment Disputes under UNCITRAL Arbitration Rules:
A further option of procedural rules provided in some BITs, in the Energy Charter Treaty
as well as in the NAFTA Treaty, are the UNCITRAL Arbitration Rules. These Rules were
adopted by UNCITRAL in 1976 and updated in 2010.81 They provide a comprehensive set
of procedural rules covering all aspects of arbitral proceedings without referring to a specific
body or institution of arbitration. As a consequence, there is no administration or supervision of arbitral proceedings conducted under the UNCITRAL Arbitration Rules.82 One of
the typical hurdles in ad hoc proceedings may be the nomination or removal of an arbitrator
if no institution intervenes. This problem is solved by the UNCITRAL Arbitration Rules,
which provides the Secretary General of the Permanent Court of Arbitration at The Hague
with the power to designate an appointing authority.83 The UNCITRAL Arbitration Rules
are widely used in investment arbitration and are deemed to be appropriate, well-tested rules
of procedure.
43 On 11July2013, the UNCITRAL Rules on Transparency in Treaty-based Investor-State
Arbitration were adopted. These rules provide for far-reaching transparency in investment
arbitration and are based on the understanding that confidentiality is not appropriate in the
case of investment arbitration that regularly deals with matters belonging to the sphere of
public interest.84 In general, the rules apply to an investment arbitration proceeding if the
proceeding is initiated pursuant to a BIT concluded on or after 1April2014 that provides
for the application of the UNCITRAL Arbitration Rules. Moreover, parties that are willing
to conduct their proceedings publicly are at all times free to agree on the applicability of the
UNCITRAL transparency rules.85
D.
Implications of European Law for Investment Arbitration Proceedings in Germany
44 The Lisbon Treaty was signed by the EU member states on 13 December 2007, and entered
into force on 1 December 2009. The Lisbon Treaty has expanded the exclusive competence
of the EU and the Commission in the field of the Common Commercial Policy by explicitly
including foreign direct investment.86 Since 1 December 2009, the EU and the Commission,
but no longer Germany and all other EU member states, have the competence to negotiate and conclude future bilateral investment protection and promotion treaties with third
80
81
82
83
84
85
86
For an analysis of 1025 et seq. ZPO see Part II, Wagner, 1025 et seq.
For the text of the 1976 and 2010 UNCITRAL arbitration rules see the UNCITRAL website at <http://
www.uncitral.org/uncitral/en/uncitral_texts/arbitration/2010Arbitration_rules.html>.
Bishop/Crawford/Reisman (2005), p.435.
Article6(2) of the 2010UNCITRAL Arbitration Rules.
Fernndez Masi, TDM 2 (2006).
Cf. Article 1 (1) and 1 (2) (a) of the UNCITRAL Rules on Transparency in Treaty-based InvestorState Arbitration, available at <http://www.uncitral.org/pdf/english/texts/arbitration/rules-ontransparency/pre-release-UNCITRAL-Rules-on-Transparency.pdf>.
Article 3, 207.
1035
countries unless otherwise authorised by the Commission on a case by case basis for third
countries with which the EU does not intend to conclude such provisions in the future. On
1 December 2009, all member states of the EU had concluded approximately 1,300 BITs
with third countries. The shift of competence from the EU member states to the EU and
the Commission has raised many issues; e.g. can investors still rely on the substantial rights
and disputes resolution clauses contained in the German extra EU and intra EU BITs? Is the
German government or the EU Commission competent to provide diplomatic protection
to German investors under the German BITs, being effective on 1 December 2009? How
will the shift of competence affect the future programme of investment guarantees provided
by the German government to German investors abroad? Will future EU BITs with third
countries or investment chapters in future EU free trade agreements with third countries
provide the same, higher or lower levels of substantive protection for German or foreign
investors under the traditional German BITs? What will be the future EU framework for
regulating investor state disputes? What role will ICSID play in future dispute resolution
provisions contained in future EU BITs or in future investment chapters in European free
trade agreements? Who will be the defendant in future investment arbitration and who has
to pay an award rendered in favour to a successful claimant, e.g. Germany and / or the EU?
What happens to intra EU BITs, in particular to the German BITs concluded with other EU
member states?
Specific problems arise if an investor from a member state of the European Union initiates 45
investment arbitration proceedings against another EU member state. This is because EU
law also provides for the protection of investors, but in a markedly different way than BITs.
In particular, EU law guarantees the freedom of establishment, the free movement of capital
as well as non-discrimination. On the other hand, EU law does not contain provisions guaranteeing fair and equitable treatment, full protection and security and, importantly, dispute
resolution by means of investor-state arbitration. It is for this reason that the availability of
BIT protection in the intra-EU context has become the subject of an extensive debate. In
particular, the EU commission has taken a very critical view of intra-EU BITs.87
In the years after the shift of competence, only some of these questions have more or less 46
been clarified. The emergence of the new EU regime for foreign investment treaties including
provisions on the resolution of investor state disputes and the gradual replacement of the
traditional regime is still an ongoing process. This chapter can only highlight some points
in this regard from a German perspective. In July 2010, the Commission published a draft
for a regulation dealing with the transition of bilateral investment treaties between member
states and third countries.88 The EU Parliament issued on 6 April 2011 a statement on the
future European foreign investment policy after the shift of competence from the member
states to the EU.89 On 8 June 2011, the European Parliament published a declaration on the
future trade relations between the EU and Canada.90 On 12 December 2012, the Commission enacted Regulation No. 1219/2012 establishing transitional arrangements for bilateral
investment treaties between member states and third countries, the so-called grandfathering
87
88
89
90
For a summary of the European Commissions reaction to the issue cf. Eastern Sugar B.V. (Netherlands) v.
The Czech Republic, SCC Case No. 088/2004, Partial Award, 27March2007, paras119 et seq.
Document KOM2010/344; this draft resulted in the regulation No. 1219/2012 of December 12, 2012
which entered into force on January 9, 2013.
Document 2010/2203(INI).
Document B7-0344/2011.
1036
or transitional regulation. On 21 June 2012, the Commission published a draft on the regulation of financial competences and liability of the EU and affected member states in investor
state disputes, the so-called liability regulation.91 Since the entry into force of the Lisbon
Treaty, the Commission has authorized the negotiations of investment chapters in future free
trade agreements between the EU and Canada, India, Singapore, Japan, Brazil, Morocco, Tunisia, Egypt, Jordan and the USA. Also, negotiations between the EU and China on a future
EU China BIT are under the way. This overview shows that the new EU regime for foreign
direct investment with third countries including provisions on investor state disputes is
still in the making. A German investor who considers to initiate an investment arbitration
against a third country (or against another EU member state) or a foreign investor (from a
third country or another EU member state) who wants to commence an investment arbitration against Germany must carefully analyse both the applicability of the traditional legal
regime and the applicability of the evolving EU legal regime on foreign direct investment.
At present, only the EU Regulation No. 1219/2012 establishing transitional arrangements
for bilateral investment treaties between member states and third countries provide some
legal clarity. In short, this Regulation stipulates with regard to Germany that the German
BITs signed before 1 December 2009 with third countries remain effective, provided that
Germany notifies the Commission of such BITs by 8 February 2013 and that they are not
replaced through future EU BITs or future EU investment chapters in free trade agreements.
The Commission is obliged to publish all notifications made by the member states under this
Regulation until 8 May 2013.
47 According to UNCTAD statistics (as of Croatias accession to the EU on 1 July 2013)
there are 198 intra-EU BITs in force.92 Mostly, these are BITs that were concluded prior to
1May2004 and typically, one state joined the EU prior to and one state joined on or after
1May2004.93 In addition, all member states of the EU are also contracting parties of the
ECT.94 In recent years, numerous arbitrations based on intra-EU BITs have been conducted.
While in some of these arbitrations states have tried to use the potential conflict with EU law
to defend themselves from claims (in particular by alleging a lack of jurisdiction)95 the matter
was not raised and hence not analysed by tribunals in other cases.96
48 A multitude of ways has been suggested in which EU law could play a role in investment
arbitration. The most important arguments will be presented in the following:
91
92
93
94
95
96
Document COM/2012/335.
For lists of signed and ratified treaties for individual states cf. http://unctad.org/en/Pages/DIAE/International%20Investment%20Agreements%20%28IIA%29/Country-specific-Lists-of-BITs.aspx
Wehland, SchiedsVZ2008, 222 (223).
The applicability of the ECT in an intra-EU dispute raises specific questions which go beyond those
that need to be considered with regard to intra-EU BITs. For a comprehensive analysis cf. Tietje, TDM 1
(2009). Cf. also Electrabel S.A. v. Republic of Hungary, ICSID Case No. ARB/07/19, Decision on Jurisdiction, Applicable Law and Liability, 30 November 2012, paras4.111et seq.
Eastern Sugar B.V. (Netherlands) v. The Czech Republic, SCC Case No. 088/2004, Partial Award,
27March2007; Jan Oostergetel and Theodora Laurentius v. Slovak Republic, UNCITRAL, Decision on
Jurisdiction, 30 April 2010; Achmea B.V. v. The Slovak Republic, UNCITRAL, PCA Case No. 2008-13
(formerly Eureko B.V. v. The Slovak Republic), Award on Jurisdiction, Arbitrability and Suspension,
26October2010.
Cf. e.g. ADC Affiliate Limited and ADC & ADMC Management Limited v. The Republic of Hungary, ICSID
Case No. ARB/03/16, Award of the Tribunal, 2October2006; EDF (Services) Limited v. Romania, ICSID
Case No. ARB/05/13, Award, 8October2009. For a list of Intra-EU investment arbitrations cf. Tietje
(2011), p.6, fn.8.
1.
1037
Lack of Jurisdiction Following from the Application of Article59VCLT?
Most prominently, states have argued that by concluding the accession treaty for entering 49
the EU, BITs that had been entered into prior to the accession treaty have been terminated
according to Article59 of the Vienna Convention on the Law of Treaties (VCLT). According to this provision, a treaty shall be considered as terminated if its parties conclude a later
treaty relating to the same subject matter and the parties intended the later treaty to replace
the former treaty, or if the provisions of the later treaty are so far incompatible with those
of the earlier one that the two treaties are not capable of being applied at the same time.
The consequence of the termination of a BIT under Article59VCLT would be that there is
no longer a valid offer to arbitrate stemming from that BIT and that a tribunal in a dispute
based on an intra-EU BIT would lack jurisdiction. This could also be raised during set aside
proceedings based on 1059 (2) No. 1 (a) ZPO. However, the prevailing (and preferable)
opinion among tribunals, as well as scholars, is to decline the application of Article59VCLT.
This view was also taken by the OLG Frankfurt in a recent decision.97
To begin, BITs and the EU treaties do not cover the same subject matter.98 While some 50
overlap exists,99 for example with regard to non-discrimination, transfer provisions in BITs
and the free movement of capital under Article 63 TFEU, BIT protection typically goes
beyond the protection afforded to individuals in the EUtreaties.100 In particular, guarantees
such as fair and equitable treatment and full protection and security are broader than the EU
market freedoms. Moreover, EU law does not provide for investor-state arbitration, which is
a fundamental mechanism of protection under BITs.101 In such situation where the subject
matter of one treaty goes clearly beyond that of another, it cannot be held that they cover the
same subject matter (even if there is some overlap).102
In any event, there is no indication that the states wanted to terminate their BITs when the ac- 51
cession treaties were concluded.103 What is more, the provisions of BITs are not incompatible
with EU law to an extent that would justify termination.104 While it is true that BIT provi97
98
99
100
101
102
103
104
OLGFrankfurt 10.05.2012, SchiedsVZ2013, 119.

Eastern Sugar B.V. (Netherlands) v. The Czech Republic, SCC Case No. 088/2004, Partial Award,
27March2007, paras159 seq.; Jan Oostergetel and Theodora Laurentius v. Slovak Republic, UNCITRAL,
Decision on Jurisdiction, 30 April 2010, paras74 et seq. Cf. also Tietje (2011), pp.13seq., who strongly
doubts that BITs and EU law cover the same subject matter, and Wehland, SchiedsVZ2008, 222 (226),
who is much more open to this proposition.
Jan Oostergetel and Theodora Laurentius v. Slovak Republic, UNCITRAL, Decision on Jurisdiction,
30April 2010, para.76.
Tietje (2011), pp.13seq.
Eastern Sugar B.V.(Netherlands) v. The Czech Republic, SCC Case No. 088/2004, Partial Award,
27March2007, para.165; Jan Oostergetel and Theodora Laurentius v. Slovak Republic, UNCITRAL, Decision on Jurisdiction, 30 April 2010, paras77 et seq.
Cf. e.g. the tribunal in Oostergetel that held that the objective of the two treaties has to be identical and that
they share a degree of general comparability, Jan Oostergetel and Theodora Laurentius v. Slovak Republic,
UNCITRAL, Decision on Jurisdiction, 30 April 2010, para.79.
Eastern Sugar B.V.(Netherlands) v. The Czech Republic, SCC Case No. 088/2004, Partial Award, 27 March
2007, para.167; Jan Oostergetel and Theodora Laurentius v. Slovak Republic, UNCITRAL, Decision on
Jurisdiction, 30 April 2010, paras 80 et seq.; Achmea B.V. v. The Slovak Republic, UNCITRAL, PCA Case
No. 2008-13 (formerly Eureko B.V. v. The Slovak Republic), Award on Jurisdiction, Arbitrability and Suspension, 26 October 2010, para.244; Tietje (2011), p.14.
2007, paras168 et seq.; Jan Oostergetel and Theodora Laurentius v. Slovak Republic, UNCITRAL, Decision
1038
sions grant protection going beyond that of EU law, EU law does not prohibit that member
states treat investors from other member states more favourable than EU law requires.105 In
this regard, no problem of discrimination in violation of Article18TFEU arises. While it is
true that a BIT only protects investors from a particular member state rather than from all
member states, this does not entail that the protection under the BIT must be invalidated
by means of Article59VCLT. The only consequence of discrimination could be that protection is extended to those investors not protected under a BIT, not that protection is taken
away from those investors that are already covered by it.106 Finally, there is also no conflict
between Article344TFEU or the competences of the ECJ (in general) on the one hand and
investor-state dispute clauses in BITs on the other. Article344TFEU stipulates the exclusive
competence of the ECJ for certain kinds of disputes between member states. It thus has
no relevance for disputes between member states and investors of other member states.107
Investor-state arbitration is also not prohibited by the principle that the ECJ has the exclusive
competence to give a final interpretation of EU law. This principle is not affected by investorstate arbitration, even if a tribunal should be required to interpret EU law in a particular case.
This is irrespective of the fact that a tribunal cannot refer a question of interpretation to the
ECJ for a preliminary ruling according to Article267TFEU.108 A final interpretation by the
ECJ can be realised by the state courts referring a question to the ECJ in the course of setaside proceedings.109 In fact, there are numerous commercial arbitrations in which EU law is
applied and this is generally not seen as a violation of the ECJs competences.110
2.
Lack of Jurisdiction Following from the Application of Article 30 (3) VCLT?
52 For essentially the same reasons, Article30(3)VCLT also does not entail that dispute resolution clauses in intra-EU BITs have become invalid with the accession of the new member
states to the EU.111 Article30(3)VCLT addresses the situation where a treaty is not invalid
under Article59VCLT but a specific and narrow incompatibility with a later treaty exists.
However, as explained above, investor-state arbitration is not in conflict with EU law;112 as
such, the investor-state dispute resolution clauses in BITs have not been invalidated.
105
106
107
108
109
110
111
112
on Jurisdiction, 30 April 2010, paras 86 et seq.; Achmea B.V. v. The Slovak Republic, UNCITRAL, PCA
Case No. 2008-13 (formerly Eureko B.V. v. The Slovak Republic), Award on Jurisdiction, Arbitrability and
Suspension, 26 October 2010, paras245 et seq.; Tietje (2011), p.14.
Wehland, SchiedsVZ 2008, 222 (229).
2007, para.170; Achmea B.V. v. The Slovak Republic, UNCITRAL, PCA Case No. 2008-13 (formerly Eureko B.V. v. The Slovak Republic), Award on Jurisdiction, Arbitrability and Suspension, 26 October 2010,
para.266; Wehland, SchiedsVZ 2008, 222 (232). Cf. also Tietje (2011), p.16, who argues that in any
event, no such obligation of most-favoured nation treatment follows from EU law.
OLGFrankfurt 10.05.2012, SchiedsVZ2013, 119 (123); Calliess/Ruffert-Wegener (2011), Article344
AEUV, para.1.
Case C-126/97 Eco Swiss China Time Ltd v Benetton International NV [1999] ECRI-3055.
OLGFrankfurt 10.05.2012, SchiedsVZ2013, 119 (123).
Wehland, SchiedsVZ 2008, 222 (233); Achmea B.V. v. The Slovak Republic, UNCITRAL, PCA Case No.
2008-13 (formerly Eureko B.V. v. The Slovak Republic), Award on Jurisdiction, Arbitrability and Suspension, 26 October 2010, para.274.
Cf. Tietje (2011), p.15.
Cf. also OLGFrankfurt 10.05.2012, SchiedsVZ2013, 119 (125); Achmea B.V. v. The Slovak Republic, UNCITRAL, PCA Case No. 2008-13 (formerly Eureko B.V. v. The Slovak Republic), Award on Jurisdiction,
Arbitrability and Suspension, 26 October 2010, paras268 et seq.
3.
1039
Lack of Jurisdiction because of EU Law Forming Part of the lex loci arbitri?
It has also been argued that tribunals seated in a member state of the EU should take into 53
account EU law with view to the lex loci arbitri. In particular, the tribunal in Achmea B.V. v. The
Slovak Republic, which was seated in Frankfurt am Main, stated that EU law might be applicable in this way.113 Moreover, it has been suggested that EU law has to be taken into account
by tribunals seated in the EU because of the tribunals obligation to render an enforceable
award and the possibility of an award being set aside due to violations of rules of EU law
that form part of public policy.114 To that end, it has to be noted that these approaches can in
any event not entail that a tribunal lacks jurisdiction. As set out above,115 dispute resolution
clauses in BITs are not in conflict with EU law. While a tribunal may indeed be called upon to
apply EU law as part of the lex loci arbitri, this does not entail the invalidity of a BITs dispute
resolution clause.
4.
Application of EU Law on the Merits?
Lastly, it is also conceivable that a situation arises in which a tribunal needs to ponder the ap- 54
plication of EU law on the merits. This may in particular be the case if a substantive provision
of a BIT is in conflict with a substantive provision of EU law. In this case, it may be argued
that the substantive provision of the BIT is inapplicable according to Article30(3)VCLT.
It may also be argued that a provision of the BIT needs to be interpreted in light of EU law
provisions so as to avoid conflicts between the two.116 Moreover, one could also seek to justify the application of EU law by reference to clauses in BITs that determine the applicable
law and provide for the application of applicable rules of international law (which arguably
includes EU law).117
In any event, as argued above, conflicts on substantive provisions seem very unlikely. Con- 55
ceivably, a BIT provision guaranteeing the transfer of profits and returns out of a host state
without limitations may be in conflict with Articles63et seq.TFEU, which allows the EU
institutions to limit the free movement of capital to states outside of the EU.118 However,
transfer of profit clauses in a BIT are not invoked very often and will only in very exceptional
circumstances be decisive to the outcome of a case.
113
114
115
116
117
118
Achmea B.V. v. The Slovak Republic, UNCITRAL, PCA Case No. 2008-13 (formerly Eureko B.V. v. The
Slovak Republic), Award on Jurisdiction, Arbitrability and Suspension, 26 October 2010, para.279.
Cf. supra paras 49 et seq.
Cf. Burgstaller 26(2) J.Int.Arb. 181 (191). Conversely, Tietje argues that this view should be rejected
because EU law claims to be a legal order sui generis rather than international law in the traditional sense.
It would hence be contradictory to apply it as international law in the meaning of an applicable law
clause in a BIT, Tietje (2011), p.9.
In fact, the ECJ has found transfer provisions in extra-EU BITs to be in conflict with EU law, cf. e.g. Case
C-205/06, Commission v. Austria [2009] ECRI-1301. At least if one holds the view that transfer provisions in intra-EU BITs guarantee the transfer from the host state to third states (and not only to the home
state), a conflict could arise in this setting as well.
1040
V.
Enforcement of Investment Awards in Germany
A.
Enforcement of a German Investment Award under 1060 ZPO
56 If the parties have chosen Germany as the place of arbitration, the enforcement of the award
will follow the rules of 1060 ZPO. This is the case both for an ad hoc and an institutional
award under the auspices e.g. of the DIS or the ICC.119 These rules apply both to German
commercial arbitration and German investment awards. If the German investment award
is intended to be enforced against the German or a foreign state, the issue of state immunity
may arise.120
B.
Enforcement of a Foreign Investment Award under 1061 ZPO
1.
Applicable Rules
57 If the parties have chosen a place outside Germany as the place of arbitration, the enforcement of such foreign award will follow the rules of 1061 ZPO in connection with in the
absence of any other applicable bilateral or international treaty such as the ICSID Convention121 the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of
10 June 1958 (NYC). As of 12March2014, the NYC is in force in 149countries.122 Germany
has been party to the NYC since 28 September 1961.123 The Higher Regional Courts in Germany have jurisdiction for enforcement requests according to 1061, 1062(1)No.4ZPO.
These rules apply, in principle, both to foreign commercial and investment awards.124
2.
Practical Recommendation
58 One general procedural recommendation shall be added that may become of particular
importance with regard to the recognition and enforcement of foreign investment awards:
59 The party which files a request for recognising and enforcing a foreign investment award in
Germany may ask the presiding judge of the senate in charge at the competent Higher Regional Court to order the preliminary enforcement of the foreign award according to 1063
(3) ZPO.125 This preliminary enforcement would only provide for the seizure of assets of the
defendant which are located in Germany, but not yet for the full satisfaction of the claimant
from these assets. It is in the discretion of the presiding judge whether to grant or to refuse
the preliminary enforcement of the foreign award. Much will depend on the individual
circumstances of the case, e.g. on the prospects of the defendant proving grounds for refusing recognition and enforcement of the foreign investment award according to 1061ZPO
in connection with Article V NYC. The presiding judge even has discretion to grant the
119
120
121
122
123
124
125
See Part II, Krll, 1060 for more details concerning the interpretation of this provision.
These rules are explored in detail under VI. of this chapter. An excellent analysis of the NYC is provided
by Haas (1991).
Regarding the enforcement of ICSID awards in Germany cf. supra paras 56 et seq.
A list of countries which have signed and ratified the NYC can be found at <http://www.uncitral.org/
uncitral/en/uncitral_texts/arbitration/NYConvention_status.html>. Some countries have made reservations to the NYC which are listed on the same website.
Federal Statute of 15.03.1961, reprinted in BGBl. 1961 II, 121; Announcement of 23.03.1962, reprinted
in BGBl. 1962 II, 102.
For a detailed discussion of 1061 et seq. ZPO and the NYC see Part II, Krll/Kraft, 1059 and Krll,
1061.
For further analysis see Sessler/Schreiber, SchiedsVZ 2006, 119.
1041
preliminary enforcement without a prior hearing of the defendant. This can be crucial for
the claimant because in such a situation the defendant would not be able to transfer his assets
abroad or, in the case of a foreign state being the defendant, to declare state immunity for its
assets located in Germany. For example, in a recent case, the claimant in an investment arbitration had obtained a 29.21million award against the Kingdom of Thailand.126 In seeking
enforcement, the claimant managed to convince the OLGMnchen, in an application pursuant to 1063(3)ZPO, to impound an airplane that allegedly belonged to the state. Thailand
was thus forced to provide a security in order to have the airplane released.127 Whether the
award could be recognised and enforced in Germany was only subsequently litigated.128
It seems to be advisable therefore that a claimant applies for the preliminary enforcement 60
together with his request for recognition and enforcement of a foreign investment award.
At the very beginning of enforcement proceedings, it is more likely that the presiding judge
will grant the preliminary enforcement than at a later stage of the proceeding, particularly
if the defendant is able to submit serious arguments in favour of refusing recognition and
enforcement of the foreign investment award.
C.
Enforcement of ICSID Awards in Germany
1.
Overview
The recognition and enforcement of ICSID awards in Germany is governed by Articles53, 61

54 and 55 ICSID Convention in connection with the German statute of 25 February 1969,
approving and implementing the ICSID Convention (German ICSID Approval Statute).129
These rules apply equally to ICSID awards resulting from proceedings having their place of
arbitration in or outside of Germany.130
The ICSID Convention was opened for signature on 18 March 1965 and entered into 62
force on October 14, 1966.131 As of 12 March 2014, the ICSIDConvention is in force in
150 countries.132 Germany is a Contracting Party to the ICSID Convention since 18 May
1969.133 One important feature of the ICSID Convention is that unlike under the NYC, the
competent court in the enforcement state may not conduct any review of an ICSID award or
126
127
128
129
130
131
132
133
Werner Schneider, acting in his capacity as insolvency administrator of Walter Bau AG (In Liquidation)
v. The Kingdom of Thailand, 01.07.2009, Award (UNCITRAL), available at <http://italaw.com/sites/
default/files/case-documents/ita0067.pdf>.
Cf. KGBerlin04.06.2012, SchiedsVZ2013, 112 (114).
KGBerlin04.06.2012, SchiedsVZ2013, 112; BGH30.01.2013, SchiedsVZ 2013, 110.
The updated version of the statute was published at BGBl. I S. 3224. It is reprinted in Geimer/Schtze
(2012), Internationaler Rechtsverkehr, Vol.IV, C I 5 c.
Under the ICSID Convention, the place of arbitration is irrelevant both with regard to the procedural
rules of the arbitration and the setting aside of an award (so-called delocalised proceedings). Normally,
ICSID proceedings take place at the seat of ICSID in Washington, D.C., Article 62 ICSID Convention.
However, parties may agree to have, e.g. FIAC in Frankfurt/Germany as the place of proceedings, Article
63 (a) ICSID Convention; see supra para. 38.
Cf. < https://icsid.worldbank.org/ICSID/Index.jsp>, About ICSID.
Cf. < https://icsid.worldbank.org/ICSID/Index.jsp>, Member States.
Announcement of 30.05.1969, reprinted in BGBl. 1969 II, 1191.
1042
the procedure which led to it.134 Rather, an ICSID award must in principle be recognised and
enforced if the claimant presents a duly certified copy thereof.135
2.
Procedure and Practice
63 In Germany, the Higher Regional Courts are competent for recognising and enforcing ICSID
awards.136 The party seeking enforcement must file its request with the locally competent
Higher Regional Court in Germany. Local competence primarily depends on the place of
living or the place of substantive business administration of the defendant in Germany, or,
otherwise, on the place of property of the defendant in Germany or on the place where the
claimant wishes to execute the award in Germany.137
64 There are practically no reasons for a court to refuse declaring an ICSID award enforceable.
According to Article 2 (4) German ICSID Approval Statute, a court can only refuse to
declare enforceability of the award in Germany if the award has been withdrawn in proceedings for the revision of the award (Article51ICSID Convention) or for the annulment of
the award (Article52 ICSID Convention). In addition, a court declares that enforcement
must be stopped for the time being if an ICSID tribunal or ICSID annulment committee
has stayed the enforcement of an award pending its decision on the interpretation, revision
or annulment of an award.138 Since Article 54ICSID Convention also does not provide for
any additional reasons under which enforcement could be declined, it can be expected that
German courts would equally not apply additional scrutiny in recognition proceedings.139
This would be in line with decisions of French and US courts.140 These courts have ultimately
followed a literal interpretation of Article54 ICSID Convention and have declined to review
the substance of the award.
65 If the Higher Regional Court has declared the award to be enforceable in Germany, the following execution procedure is governed by the normal German rules on executing a final
judgment, i.e. 704 et seq. ZPO.141 Notably, while Article54(1) sentence1 of the ICSID
Convention only obliges states to enforce the pecuniary obligations imposed with an award,
the German ICSID Approval Statute does not distinguish between pecuniary and non-pecuniary obligations. Unlike other states where the enforcement of non-pecuniary obligations
134
135
136
137
138
139
140
141
Article 54 (1) sentence 1 ICSID Convention; Article 53 (1) sentence 1 ICSID Convention states that an
award shall be binding on the parties and shall not be subject to any appeal or any other remedy except
those provided for in this Convention. See also Broches, 2 ICSID Review 287 (1987); Schreuer/Malintoppi/Reinisch/Sinclair, Article54.
Article 54 (2) sentence 1 ICSID Convention.
Article 54 (2) sentence 2 ICSID Convention in connection with Article 2 (2) German ICSID Approval
Statute in connection with 1062 (1) No.4 ZPO.
Article 2 (3) German ICSID Approval Statute; 12 et seq., 17 et seq., 23 ZPO.
Article 3 German ICSID Approval Statute.
There has however not been a case so far in which a party sought enforcement of an ICSID award in
Germany.
Decisions Cour de Cassation 21.07.1987, Benvenuti and Bonfant v. Banque Commerciale Congolaise, 1
ICSID Reports 373; id. 11.06.1991, SOABI v. Senegal, 2 ICSID Reports 341; United States District Court,
District of Columbia, 16.04.1987, Letco v. Liberia, 2 ICSID Reports 390. See also Schreuer/Malintoppi/
Reinisch/Sinclair, Article54 paras 50 et seq.; Gaillard, (1990) 5 ICSID Review 69; Hahn, RIW 1991, 459.
Article 54 (3) ICSID Convention in connection with Article 1 German ICSID Approval Statute.
1043
may be governed by the much more restrictive NYC,142 Germany directly applies the rules
pertaining to final judgements to all obligations imposed by an ICSID award.
Article2(2) of the German ICSID Approval Statute refers to the procedural rules for en- 66
forcing foreign awards. In our view, this allows the conclusion that 1063(3)ZPO applies
by analogy. This would mean that a claimant can apply for the preliminary enforcement of
an ICSID award without a prior hearing of the defendant before the presiding judge at the
Higher Regional Court with local jurisdiction in Germany. Such a request seems advisable
if the claimant fears that the debtor of an ICSID award would quickly transfer assets out of
Germany once he is informed of the enforcement application. Concerning the issue of state
immunity, Article55 ICSID Convention provides that nothing in Article54 ICSID Convention shall be construed as derogating from the law in force in any Contracting State relating
to immunity of that state or of any foreign state from execution.143
3.
No Special Relationship Needed for Enforcing ICSID Awards in Germany
Arguably, the question may arise as to whether the party seeking enforcement of an ICSID 67
award in Germany must state or even prove that the debtor party has assets in Germany. A
similar question has arisen in the context of enforcing a foreign ICC investment award in
Germany pursuant to 1061 ZPO in connection with the NYC. With regard to the wording
of 1062 (2) ZPO and general principles of the ZPO, the Kammergericht Berlin (which is a
special term for the OLG in Berlin) dismissed the enforcement request as not admissible because the party seeking enforcement did not prove that the debtors had assets in Germany.144
Under general principles of the German ZPO, a foreign claimant has to establish a special
relationship with Germany if he wants to bring a claim to a German court. This genuine link
can have various grounds, e.g. the defendant having its place of incorporation or having other
assets in Germany. Given the separate and independent legal regime for ICSID awards, it
can be concluded that the convincing reasoning of the Kammergericht Berlin in the context
of an ICC award cannot be transferred to the context of an ICSID award. A party seeking
enforcement of an ICSID award in Germany does not, therefore, need to prove or even
submit that the debtor has assets in Germany.
VI. State Immunity in Germany

A.
Introduction
The law of state immunity limits the subjection of a state to the jurisdiction of the courts of 68
another state. Generally, state immunity becomes relevant either in adjudication proceedings
(Erkenntnisverfahren) or in the phase of execution (Zwangsvollstreckung). In adjudication
proceedings, state immunity is an obstacle that hinders state courts ability to decide on a
legal dispute altogether. In the execution phase, state immunity forbids states to enforce judicial decisions against assets of another state. The concept of state immunity has developed
as summarized infra underB. from absolute immunity into the current concept of limited
immunity.
142
143
144
Schreuer/Malintoppi/Reinisch/Sinclair (2009), Article 54 para. 80.

Cf. infra para. 96.
KG Berlin 10.08.2006, SchiedsVZ 2007, 108; see also Escher/Reichert, SchiedsVZ 2007, 71.
1044
69 Particular considerations arise in relation to arbitration. As explained in detail below,145

state immunity may play a role in investment arbitration proceedings in Germany, in court
proceedings to declare an award enforceable under the NYC or ICSID Convention (Vollstreckbarerklrungsverfahren) or in execution proceedings after an award has been declared
enforceable.
70 Depending on the specific situation, the defence of immunity may also be waived either implicitly or explicitly.146 Moreover, it is of major importance to establish specifically the scope
of subjective application of immunity so as to define who is entitled to claim immunity.147
B.
The Notion of Limited Immunity
71 The law of state immunity is a concept found in customary international law.148 The justification for the existence of state immunity has always been a point of controversy in legal
literature and judicial decisions.149 According to the prevailing opinion, the concept of state
immunity derives from the sovereignty of states.150 It results in particular from the sovereign
equality of all states, grounded in Article2 (1) of the Charter of the United Nations and
was expressed at a very early stage by the principle par in parem non habet imperium,151 thus
affirming the independence of one state vis--vis all others.152
72 Initially, state immunity was understood as absolute and unlimited immunity,153 exempting
all state action and all state assets from the jurisdiction of other states. In the decades after the
Second World War, however, the concept evolved into the now generally accepted concept of
relative or limited immunity.154 For adjudication proceedings, this has led to the now prevailing distinction between sovereign acts (acta jure imperii) which enjoy immunity and commercial acts (acta jure gestionis) where immunity is not accepted.155 Regarding enforcement,
the distinction is based on the same principle. Enforcement is excluded when state assets are
used for sovereign purposes and allowed when they are used for commercial purposes.156
73 Some attempts have been made to codify the law of state immunity. In 1990, Germany ratified
the European Convention on State Immunity of 16 May 1972,157 which has been ratified by
only seven other states.158 For states which have not ratified the Convention, the customary
145
146
147
148
149
150
151
152
153
154
155
156
157
158

Maunz/Drig-Herdegen (2013), Article25, para.25.
See further references in Hess (1992), pp.299 et seq. who points out that some authors even refuted the
very reason for the existence of state immunity.
As for the normative hierarchy theory see Caplan, AJIL 2003, 742 et seq.; Hess (1992), pp.306 et seq.
Goes back to Bartolus de Sassoferrato (1314-1357), quoted after Verdross/Simma (1984), 1168.
Vitzthum (ed.) (2010), p.180; Geimer (2009), IZPR para.556.
Cf. e.g. RG 10.12.1921, RGZ 103, 274 after Schack (2010), para.172; for an overview of the development
see Hess (1992), pp.146 et seq.
Herdegen (2013), pp.273 et seq.
BVerfG 30.04.1963, BVerfGE 16, 27 (33); Vitzthum (ed.) (2010), p.181.
BVerfG 13.12.1977, BVerfGE 46, 342.
BGBl. 1990 II, 34; for a general overview see Kronke, IPRax 1991, 141 et seq.
These are Austria, Belgium, Cyprus, Luxembourg, the Netherlands, Switzerland and the United Kingdom. For a status of signatures and ratifications cf. < http://conventions.coe.int/>.
1045
international law rules of state immunity continue to be applied.159 In 2004, the United Nations General Assembly adopted the UN Convention on Jurisdictional Immunities of States
and Their Property.160 This Convention has not yet entered into force as it has not yet reached
the necessary number of ratifications.161 However, as it was drafted by the International Law
Commission based on a detailed and decades-long analysis of customary international law
and repeated comments from states, it can be used as a guideline for determining the current
state of customary international law.162 Both the European and the UN Convention reflect
the shift from absolute to relative immunity.163
Different from many other states,164 Germany does not have its own laws on state immunity. 74
Rather, in cases involving sovereigns, German courts directly apply international law. The
European Convention on State Immunity has the force of a federal law and German courts
thus have to apply it.165 Moreover, according to Article 25 of the German Constitution
and 20(2)GVG, the customary international law of state immunity is binding upon the
courts.166 If the courts have doubts as to the existence or scope of a rule of customary international law and if this rule is decisive for the outcome of the decision, the courts are obliged
under Article100(2) of the German Constitution to refer such questions to the German
Constitutional Court (BVerfG).167 Should a court fail to do so, a claimant may be entitled
to bring this failure to the attention of the BVerfG by means of a constitutional complaint.168
C.
German Case Law and Practice of State Immunity
1.
Immunity in Adjudication Proceedings
a. General Principles: In its leading judgment of 30 April 1963, the BVerfG affirmed the 75
concept of limited immunity in adjudication proceedings. According to the BVerfG, a state
can only claim immunity from judgments for its acta jure imperii. Where a foreign state has
acted like a private person as was the case in the underlying dispute regarding the costs for
repair of an embassy building it cannot claim immunity for such acta jure gestionis.169 This
leading judgment has been followed by the German courts.170 As a consequence, sovereign
159
160
161
162
163
164
165
166
167
168
169
170
ICJ 03.02.2012, Jurisdictional Immunities of the State (Germany v. Italy), available at <http://www.icj-cij.
org/docket/files/143/16883.pdf>; Schack (2010), para.173.
Schack (2010), para.173; Geimer (2009), IZPR para.571; also critical of the Convention and the drafts
preceding it: von Schnfeld, NJW 1986, 2980 (2983); Stewart, AJIL 2005, 194.
Germany has neither signed nor ratified the UN Convention so far. For a status of signatures and ratifications cf. < http://treaties.un.org/>.
BGH 04.07.2013, BeckRS 2013, 12429; Zller-Lckemann (2012), 20GVG para.5. Cf. also repeated
references to the UN Convention in ICJ 03.02.2012, Jurisdictional Immunities of the State (Germany v.
Italy), paras64, 69, available at <http://www.icj-cij.org/docket/files/143/16883.pdf>;
Articles4-11European Convention on State Immunity; Article10-16UN Convention on Jurisdictional
Immunities of States and Their Property.
Cf. e.g. the United States (Foreign Sovereign Immunities Act of 1976), the United Kingdom (State Immunity Act 1978) and Australia (Foreign States Immunities Act 1985).
Cf. BVerfG06.12.2006, NJW2007, 2605. 2606.
Schack (2010), para.173; Maunz/Drig-Herdegen (2013), Article 25 para.25.
von Schnfeld, NJW 1986, 2980.
BVerfG 12.10.2011, NJW2012, 293 (294) with further references.
BVerfG 30.04.1963, BVerfGE 16, 27 (34 et seq., 61 et seq.).
LG Frankfurt am Main 02.12.1975, NJW 1975, 1044; BGH 26.09.1978, NJW 1979, 1101.
1046
acts of foreign states are excluded from review by German courts whereas commercial acts
are not.171
76 Whether an act of sovereignty or one under private law is concerned will be decided objectively by the court seized with the matter based on the legal nature of the act.172 The purpose
of the states act may not be made the basis for the distinction, since commercial acts in
general also serve a sovereign purpose.173 Moreover, the distinction is to be made based on
the understanding of German law because international law does not provide criteria itself.174
77 As a consequence, state enforcement measures, legislative acts, administrative and court acts
of foreign states have been considered to be sovereign acts and are thus not subject to German court proceedings.175 Equally, acts of armed forces have been found to be sovereign acts
subject to state immunity.176
78 In principle, immunity should be restricted to indispensable requirements of state sovereignty.177 Therefore, the act should have direct reference to state functions. Activities which serve
procurement, the realization of assets or economic participation do not enjoy immunity.178
There is ample case law on the classification of acts of states as commercial acts, thereby
affirming the subjection of foreign states to German jurisdiction. This includes the case of
the activity of the Spanish tourist office and the payment of real estate agents fees.179 Other
acts that have been classified as commercial are the purchase of weapons, the operation of a
state shipping line or bus line by the state railway company, the operation of nuclear power
stations for the supply of energy, the construction of a dam, the granting of a guarantee for
a debt in private law, the issue of state bonds180 or shares of a central bank, pipeline and gas
pipes agreements, the operation of a public relations institute, traffic accidents and product
liability claims.181
79 b. Arbitration: Immunity from court jurisdiction related to arbitration is limited to possible
court interventions in assistance or in control of the arbitral proceedings.182 It is generally
held that a state that has accepted arbitration has also accepted the possible related court
intervention.183 Thus, where the state courts at the place of arbitration have jurisdiction to
intervene in relation to arbitration, the state may not claim immunity from jurisdiction.
171
172
173
174
175
176
177
178
179
180
181
182
183
Schack (2010), para.175; Ipsen (2004), p.374.

BVerfG 30.04.1963, BVerfGE 16, 27; BGH 26.09.1978, NJW 1979, 1101; Zller-Lckemann (2012),
20GVG para.4.
BVerfG 30.04.1963, BVerfGE 16, 27.
BVerfG 30.04.1963, BVerfGE 16, 27.
OLG Mnchen 08.12.1975, NJW 1975, 2144; von Schnfeld, NJW 1986, 2980 (2984).
BVerfG 15.02.2006, BeckRS 2006, 21450; BGH 26.06.2003, NJW 2003, 3488. Cf. also ICJ03.02.2012,
Jurisdictional Immunities of the State (Germany v. Italy), paras60, 77 seq., 91, available at <http://www.
icj-cij.org/docket/files/143/16883.pdf>.
Schoch/Schneider/Bier-Ehlers (2012), 40 VwGO para.44.
Schoch/Schneider/Bier-Ehlers (2012), 40 VwGO para.44.
OLG Mnchen 19.12.1974, RIW 1977, 49; OLG Frankfurt 30.06.1977, RIW 1977, 720.
BVerfG06.12.2006, NJW2007, 2605 (2607).
Cf. lists in Nagel/Gottwald (2013), 2 para.11; Schack (2010), para.176 und von Schnfeld, NJW 1986,
2980 (2984).
See supra, Part II, Schroeder/Wortmann, Introduction to 10621065 paras 2 et seq.
Langkeit (1989), p.51; Stein/Jonas-Schlosser (2002), 1030 para. 8.
2.
1047
Immunity from Execution
The question of immunity in execution proceedings is to be dealt with separately and in 80

accordance with its own rules.184 Even where immunity from adjudication is not granted,
immunity may still be recognized in execution proceedings. With regard to immunity,
in principle there is no difference between the enforcement of court judgements and the
enforcement of awards.185
As for the defence of immunity from execution, a distinction is to be made between sover- 81
eign and non-sovereign assets. Basis of the distinction is the purpose to which specific assets
are dedicated. Assets used for sovereign purposes enjoy immunity while assets used for nonsovereign purposes may be subject to execution.186 The decisive point in time for determining
the purpose of the assets is the time of the beginning of the enforcement measures.187 As in
adjudication proceedings, the distinction between a sovereign and a non-sovereign purpose
is to be made based on the understanding of German law.188
The most important group of assets states hold in the territory of other states are assets used 82
for the diplomatic missions of states; in particular, their real property and bank accounts.
It has long been recognised that these assets are protected by sovereign immunity because
the missions conduct sovereign activity.189 This applies even if the assets are used for both
sovereign and non-sovereign purposes at the same time, as is typical for the bank accounts
of a diplomatic mission.190 There is not even a requirement that assets have to be used at
least predominantly for sovereign purposes in order for immunity to apply.191 Assets used
for cultural purposes, such as the promotion of a states culture in another state, are also
deemed immune.192 This even extends to claims for rent held by a state cultural institution
against its tenants in Germany if the proceeds from the leases are supposed to be used for
cultural purposes.193 Currency reserves of a foreign state at the German Central Bank serve
sovereign purposes because they can be used to protect the states own currency, to conduct
international payments and in a state of necessity for essential imports. These reserves are
184
185
186
187
188
189
190
191
192
193
BVerfG 13.12.1977, BVerfGE 46, 342; Geimer (2009), IZPR para.562; Krll, IPRax 2004, 223 (225).
For the specific considerations governing the enforcement of ICSIDawards cf. supra paras 61 et seq.
von Schnfeld, NJW 1986, 2980 (2985).
BVerfG12.10.2011, NJW2012, 293 (295); BGH04.07.2013, BeckRS2013, 12429; BGH 01.10.2009,
NJW2009, 769 (770).
BVerfG12.10.2011, NJW2012, 293 (295); BGH04.07.2013, BeckRS2013, 12429; BGH 01.10.2009,
NJW2009, 769 (770); OLGKln, NJOZ2004, 788 (791). For a different view cf. Hess (1992), p.149.
BVerfG 13.12.1977, BVerfGE 46, 342 (388 et seq.) (Accounts of the Embassy of the Philippines); BVerfG
12.04.1983, BVerfGE 64, 1 (Accounts of the National Iranian Oil Company); BVerfG 06.12.2006,
NJW2007, 2605 (Argentinean Government Bonds).
Cf. also KGBerlin14.06.2010, BeckRS2010, 15531, according to which it is sufficient for assuming immunity that three apartments in a state-owned building are rented out to diplomats, even if other rooms
are used for non-sovereign purposes.
BVerfG12.10.2011, NJW2012, 293 (296). Such a rule is contained in some sovereign immunity laws,
notably in the Australian Foreign States Immunities Act1985.
BGH 01.10.2009, NJW 2010, 769 (770); KG Berlin 05.03.2010, IPRax 2011, 594. Cf. also BVerfG06.12.2006, NJW2007, 2605 (2608) which mentions cultural institutions in passing.
BGH01.10.2009, NJW2010, 769 (770). For a different view cf. LGHagen16.01.2008, BeckRS2008,
21608.
1048
thus also exempt from enforcement.194 The BVerfG also mentioned scientific institutions
and trade missions as further potential sovereign assets of foreign states.195
83 Immunity also hinders the enforcement against assets that are not held by the foreign state
directly but by independent state enterprises, such as central banks, so long as these state
enterprises pursue sovereign activity and the assets are used for sovereign purposes.196
84 Moreover, receivables of the Russian Federation in Germany out of VAT refunds and out of
air transport rights are deemed to be protected by immunity. The BGH held that air transport
and the fees connected thereto were protected by immunity since such assets were to be
classified as assets of sovereign use. The same was held with regard to the right of the Russian
Federation to the refund of VAT paid, since the payment anticipated was intended to be used
for the maintenance of diplomatic representation.197
85 Immunity cannot be invoked if an asset used for non-sovereign purposes is being administered by a state cultural institution as part of its sovereign administrative duties. To hold
otherwise would allow states to circumvent the limitations of immunity simply by creating a
sovereign administration of assets that are used for non-sovereign purposes.198
86 There is some debate as to what is required of a state in order to invoke and prove a claim of
state immunity. While the matter is essentially clear with regard to the assets of diplomatic
missions, unclarity remains with a view to assets used for purposes other than diplomatic.
87 The BVerfG and the BGH have regularly applied a very low standard of proof with regard
to the assets of diplomatic missions, forbidding any enforcement action that could in the
abstract endanger the diplomatic activity; a specific danger to the activities of the mission
need not be proven.199 To that end, the courts have deemed sufficient that a competent
organ of the state in question assures that the asset in question is used for keeping up the
diplomatic activity.200 This low standard of proof is justified with the view to the high level of
protection extended to diplomatic concerns in public international law.201 A state should not
scrutinise the use of specific assets of another states mission. This would create the danger of
an inadmissible interference in the activities of the mission which is not allowed under the
international law rules of diplomatic missions.202
88 In 2006, the BVerfG indicated that the low standard of proof for assets of diplomatic missions
equally applies to consular missions, state ships, state airplanes and assets of the armed forces
194
195
196
197
198
199
200
201
202
BGH04.07.2013, BeckRS2013, 12429.

BVerfG06.12.2006, NJW2007, 2605 (2608)
BGH 04.07.2013, BeckRS 2013, 12429. Cf. for the immunity of a central banks assets also Article21(1)(c) United Nations Convention on Jurisdictional Immunities of States and Their Property.
BGH 04.10.2005, SchiedsVZ 2006, 47; cf. Krll, IPRax 2004, 223 et seq.
BVerfG15.12.2008, BeckRS2011, 87026.
BVerfG 13.12.1977, BVerfGE 46, 342 (394 seq.); BVerfG 06.12.2006, NJW 2007, 2605 (2608);
BGH01.10.2009, NJW2010, 769; BGH 04.07.2007, NJW-RR2007, 1498. Cf. also BGH04.10.2005,
SchiedsVZ2006, 44 (46), according to which it cannot be required of a state to provide other financial
means to its diplomatic mission in case of enforcement measures against assets of the diplomatic mission.
BGH 04.07.2007, NJW-RR2007, 1498.
Cf. for the high level of protection of diplomatic concerns BVerfG06.12.2006, NJW2007, 2605 (2606
seq.). Regarding the development and legal nature of diplomatic immunity compared to state immunity,
cf. Kleinlein, NJW2007, 2591 (2593).
BVerfG 13.12.1977, BVerfGE 46, 342 (400 seq.); BGH 04.07.2007, NJW-RR2007, 1498 (1499).
1049
of a state, but not to other assets such as cultural institutions or trade missions.203 The courts
ruling suggested that in cases of other assets used for sovereign purposes, a different standard
of proof had to apply as the situation was different. However, in a 2009 decision the BGH
held that the low standard of proof should be applied equally to all assets used for sovereign
purposes,204 referring to decisions of lower instance courts.205 This approach seems questionable, given that the BVerfG had developed the lower standard of proof specifically with a
view to assets with a special status, such as assets of diplomatic missions that are protected by
the principle of non-interference in diplomatic activity. The BGH has not shown that under
international law, this principle of non-interference applies equally to other activities of states
on foreign territory. In fact, no justification comes to mind why it could not be expected of
a state to explain comprehensively why and how an asset is used for e.g. cultural purposes.206
Moreover, the principle of limited immunity would likely be turned into a practice of absolute immunity if states were invited to simply declare that assets are being used for sovereign
purposes without any scrutiny. The better approach hence seems to be to limit the application of a lower standard of proof to the specific situation of diplomatic missions, consular
missions, state ships, state airplanes and assets of the armed forces of a state.207
With view to claims for payment arising out of public law, a 2010 decision by the BGH is 89
also noteworthy, even though it is not dealing directly with issues of immunity. In this case,
a creditor of Argentinean state bonds tried to enforce his claim by seizing tax and customs
claims of Argentina against persons situated in Germany. Without addressing questions of
immunity, the BGH declared that German courts lacked the competence for such seizure.
23ZPO, allowing proceedings against persons with assets in Germany, could not be applied because the claims of Argentina derived from public law and thus were localised in
Argentina, irrespective of the domicile or seat of the debtors.208
3.
Immunity and Execution of ICSID Awards
As regards ICSID awards, no specific considerations arise at the enforcement stage.209 Ar- 90
ticle55 ICSID Convention recognizes the defence of state immunity.210 This means that a
foreign state can raise the defence of immunity if an ICSID award should be executed against
its assets located in Germany after having been declared enforceable by the competent
German court. The same would apply in the unlikely event that an ICSID award should be
executed against the Federal Republic of Germany.211 Nevertheless, in view of the publicity of
203
204
205
206
207
208
209
210
211
BVerfG06.12.2006, NJW2007, 2605 (2608).

BGH01.10.2009, NJW2010, 769 (770).
E.g. OLG Kln06.10.2003, NJOZ 2004, 788 (792).
This does not mean that a court cannot set lower requirements for the states explanations as to the
sovereign purpose of assets where such purpose is obvious. As the KGBerlin held, the sovereign purpose
of promoting a states culture on the territory of another state is obvious when objects of art are made
available for an exhibition, KGBerlin 05.03.2010, IPRax2011, 594.
Cf. also Dutta, IPRax 2007, 109 (111); Krll, IPrax 2004, 223 (227).
BGH 25.11.2010, NJW-RR2011, 647.
For the stage of declaration of enforceability cf. however infra para. 91.
Semler, SchiedsVZ 2003, 97.
Since pecuniary obligations imposed by an ICSIDaward are to be enforced like a final judgement of a
court, 882a(2)ZPO and/or 170(3)VwGO would apply. According to these provisions, enforcement against assets of the state is inadmissible if the assets are indispensable for the fulfilment of public
functions or if the public interest precludes their sale.
1050
ICSID awards and possible economic consequences in the future, awards may be complied
with voluntarily.
4.
Immunity in Proceedings for the Declaration of Enforceability of Awards
91 According to German jurisprudence, proceedings for the declaration of enforceability of

awards are adjudication proceedings sui generis.212 With regard to state immunity, the rules
pertaining to adjudication proceedings not the rules pertaining to enforcement proceedings are applicable.213 This is only logical, given that immunity in enforcement proceedings
always refers to specific assets214 which are not yet at issue in the recognition phase.
92 Thus in practice, German courts have to analyse the subject matter of the arbitral proceedings
in question and have to decide whether the arbitration dealt with acta iure imperii or acta iure
gestionis.215 Since investment arbitration proceedings almost exclusively deal with acta iure
imperii, immunity seems at first sight as an easy excuse for states to avoid the enforcement of
investment awards. However, if a state enters into an arbitration agreement, this will typically
be deemed a waiver of immunity for subsequent proceedings for the declaration of enforceability.216 Otherwise, investment arbitration would become an ineffective legal remedy, as
states could always avoid recognition by relying on immunity.
93 While the BGH has not yet endorsed this view in an unqualified way, it did hold in a recent
decision concerning an investment award against Thailand that if the arbitration agreement
derives from a BIT and the BIT provides that [t]he award shall be enforced in accordance
with domestic law,217 this must be deemed a waiver of immunity in proceedings for the
declaration of enforceability.218 Notably, many German BITs use this phrase or comparable
phrases.219
94 Of some consequence, the BGH also held in the same decision that a waiver of immunity
cannot be derived from a BIT unconditionally. Rather, a state can only be deemed to have
waived immunity insofar as the BIT applies to the dispute that was arbitrated. Consequently,
the courts must analyse whether the prerequisites of the BITs application ratione personae,
ratione materia and ratione temporis are fulfilled. If it turns out that these prerequisites are not
met, the claim for the declaration of enforceability has to be rejected as inadmissible due to
immunity.220
212
213
214
215
216
217
218
219
220
BGH 30.01.2013, SchiedsVZ 2013, 110 (111); BGH 17.07.2008, NJW-RR 2009, 279 (regarding
proceedings for the declaration of enforceability of foreign court judgements); BGH 27.03.2002, NJWRR2002, 933; OLG Mnchen SchiedsVZ2007, 164 (165); Zller-Geimer (2012), 1060 para.3.
BGH 30.01.2013, SchiedsVZ2013, 110 (111); Zller-Geimer (2012), 722 para.63 (regarding proceedings for the declaration of enforceability of foreign court judgements).
OLGFrankfurt 29.04.2008, BeckRS 2011, 22178.
BGH 30.01.2013, SchiedsVZ2013, 110 (111).
Wilske/Nettlau, LMK 2013, 345597; Zller-Geimer (2012), 1061 para. 57; Schwab/Walter (2005),
Chap.4 para. 12. Regarding the specific requirements and legal consequences of a waiver cf. infra paras 99
et seq.
Article10(2)sentence3 of the German-Thai BIT which entered into force on 20.10.2004, reprinted in
BGBl. 2004 II, 48.
BGH 30.01.2013, SchiedsVZ2013, 110 (112).
Cf. Article10(3)sentence2 of the 2009German Model BIT.
BGH 30.01.2013, SchiedsVZ2013, 110 (112). Cf. also Krll 05.04.2013, Sovereign Immunity in Enforcement Proceedings The decision of the German Supreme Court in Walter Bau vs. Government of
Thailand, available at <http://blogs.law.nyu.edu/transnational>.
1051
In the specific dispute, this was of some relevance: regarding a decision on jurisdiction 95
by the tribunal, the lower instance court (KG Berlin) had held that Thailand had failed to
pursue set aside proceedings at the seat of arbitration. According to the KG Berlin, Thailand
was thus precluded from raising in the proceedings for the declaration of enforceability the
objection under Article V (1)(a) NYC that the tribunal lacked jurisdiction because the BIT
was inapplicable.221 Conversely, the BGH found that even prior to looking into the objection
regarding the Tribunals jurisdiction, the KG Berlin should have analysed whether the claim
for the declaration of enforceability was not precluded because of immunity.222 This analysis
necessarily requires a determination as to whether the prerequisites of the BITs application
are fulfilled. Importantly, the BGH found that Thailand had not waived its right to claim
immunity by failing to pursue set aside proceedings.223 Thus, Thailand was given another
chance at raising objections to the applicability of the BIT, even though it had failed to pursue
the setting aside of the tribunals decision on jurisdiction.224
While the constellation in the specific case may be rather rare, the BGHs ruling could also 96
have repercussions with regard to proceedings for the declaration of enforceability of ICSID
awards. As explained above,225 in such proceedings state courts are not allowed to scrutinise
ICSID awards on their substance in any way and may not analyse whether the tribunals findings on jurisdiction and thus on the applicability of the BIT were correct. However, applying
the BGHs approach, it could be argued that state courts may, and in fact must, look into
the applicability of the BIT in order to determine whether the claim for the declaration of
enforceability is not barred due to state immunity. At least from a perspective of German
law, there is no reason not to assume that proceedings for the declaration of enforceability of ICSID awards are adjudication proceedings sui generis to which the immunity rules
pertaining to adjudication proceedings apply.226 Something else could only follow from the
ICSIDConvention itself. To that end, it could be argued that Article54(1)sentence1 of the
ICSIDConvention supersedes the customary international law rules of state immunity227
and thus requires states to recognise ICSID awards irrespective of state immunity. However,
reliance on Article54(1)sentence1 of the ICSIDConvention could be excluded because
221
222
223
224
225
226
227
KGBerlin 04.06.2012, SchiedsVZ2013, 112 (117).

BGH 30.01.2013, SchiedsVZ2013, 110 (111seq.).
BGH 30.01.2013, SchiedsVZ2013, 110 (112). Conversely, Krll argues that [i]f the state party entitled
to sovereign immunity decides not to [make use of the remedies existing at the place of arbitration] but
continues to participate in the arbitration and to defend on the merits it should be considered to be also
precluded with its immunity defense in enforcement proceedings., cf. Krll 05.04.2013, Sovereign Immunity in Enforcement Proceedings The decision of the German Supreme Court in Walter Bau vs.
Government of Thailand, available at <http://blogs.law.nyu.edu/transnational>.
Notably, the finding by the KG Berlin that Thailand was precluded from raising an objection under
ArticleV(1)(a)NYC was rather questionable as such. The finding was based on the application of ArticleV(1) and(2) of the European Convention on International Commercial Arbitration of 21.04.1961
(ECICA) which the KGBerlin sought to apply through the provision of ArticleVII(1)NYC. As the
BGH rightfully noted, Thailand is not a contracting state to the ECICA. Outside the scope of application
of the ECICA, German courts will in general not deny the enforcement of a foreign award solely because
no set aside proceedings at the seat of arbitration were pursued, cf. BGH17.04.2008, NJW-RR2008,
1083. See also generally supra, Part II, Krll/Kraft, 1059.
See supra paras 62 et seq.
See supra para. 91.
States are allowed to derogate from customary international law by way of concluding an international
treaty as long as a specific rule of customary international law does not have the status of ius cogens, cf.
Articles53, 64VCLT.
1052
Article55 of the ICSIDConvention states that [n]othing in Article 54 shall be construed as

derogating from the law in force in any Contracting State relating to immunity of that State
or of any foreign State from execution. Based on this provision, and assuming execution
refers both to proceedings for the declaration of enforceability as well as to specific acts of
enforcement, it could be suggested that the obligation to recognise ICSID awards is subject
to the rules of immunity. Therefore, in proceedings for the declaration of enforceability of an
ICSID award, a German court would have to analyse whether immunity was waived.
97 In our opinion, it is more compelling to understand the term execution in Article55 of the
ICSIDConvention to refer only to specific acts of enforcement, but not to proceedings for
the declaration of enforceability.228
98 Article54(1)sentence1 of the ICSIDConvention juxtaposes the terms recognition and
enforcement, meaning that one excludes the other.229 It stands to reason that the term execution in Article55 of the ICSIDConvention is synonymous with the term enforcement
in Article54(1)sentence1 of the ICSIDConvention.230 In fact, in the French and Spanish
language versions of the ICSIDConvention, the same term is used.231 Thus, Article55 of the
ICSIDConvention does not allow states to claim immunity in the recognition phase, i.e. in
proceedings for the declaration of enforceability. This interpretation is also in line with the
spirit of the ICSIDConvention as practised over the last decades not to have state courts
scrutinize the applicability of a BIT.
D.
German Law and Practice on Waiver of Immunity
99 Immunity can be waived both for adjudication and for enforcement proceedings by a declaration of the state concerned.232 A waiver can be declared explicitly or follow implicitly from
the states actions.233 With regard to implied waivers, caution needs to be applied both in
adjudication and in enforcement proceedings.
100 As regards adjudication proceedings, a simple statement of response in court proceedings
brought by a private party as such is not sufficient. This applies in particular where the statement of response serves to raise the defence of immunity.234 However, where the state takes
steps relating to the merits of the dispute, an implied waiver can be assumed.235 A counterclaim filed by a state is also considered to be a waiver with regard to the principal claim.236
228
229
230
231
232
233
234
235
236
Schreuer/Malintoppi/Reinisch/Sinclair (2009), Article54 para.55 and paras50 et seq. for references to

French court decisions. Cf. also Buckley, 14Sidney Law Review, 358 (369) (1992); van den Berg, Arb.
Int.1989, 2 (12).
Cf. Schreuer/Malintoppi/Reinisch/Sinclair (2009), Article54 paras70seq.
Schreuer/Malintoppi/Reinisch/Sinclair (2009), Article54 para.70.
Cf. Schreuer/Malintoppi/Reinisch/Sinclair (2009), Article54 para.64.
BVerfG 06.12.2006, BGH NJW2007, 2605 (2607); BGH 04.07.2013, BeckRS2013, 12429; Kleinlein,
NJW2007, 2591 (2592); von Schnfeld, NJW 1986, 2980 (2983).
Schreuer/Malintoppi/Reinisch/Sinclair (2009), Article55 para.73.
Cf. Article 8(2)(a) of the United Nations Convention on Jurisdictional Immunities of States and Their
Property.
Cf. Article 8(1)(b) of the United Nations Convention on Jurisdictional Immunities of States and Their
Property.
Geimer (2009), IZPR para.634a. Cf. also Article 9(3) of the United Nations Convention on Jurisdictional Immunities of States and Their Property.
1053
With a view to enforcement proceedings, caution is equally warranted. A waiver of immu- 101
nity in enforcement proceedings requires the clearly recognisable intent of the state to make
available for enforcement those of its assets that are in principle protected by international
law.237 Hence, if a state waives immunity for adjudication proceedings, this waiver does not
automatically extend to execution proceedings.238
Specific considerations apply with regard to assets used for diplomatic purposes. As the 102
diplomatic missions of states are granted a higher level of protection,239 even a general waiver
of immunity from enforcement is not considered to extend to assets serving diplomatic
purposes.240 The same applies to state owned aircraft or ships and to materials belonging to
the armed forces.241 As a consequence, a general waiver of immunity from enforcement only
extends to assets that are not granted special protection such as cultural and research institutions or trade missions.242 To extend the effects of a waiver of immunity from enforcement to
diplomatic assets, such extension must be expressly mentioned in the waiver declaration.243
Since immunity exists only vis--vis the exercise of sovereignty of another state, states cannot 103
invoke immunity in arbitral proceedings.244 However, the entering into an arbitration clause
is generally understood as a waiver for state court proceedings in support of arbitration.245 An
arbitration clause generally cannot be understood as a waiver of immunity for the enforcement of the eventual award.246 Equally, if the arbitration clause derives from a BIT and the
BIT provides that awards shall be recognized and implemented in accordance with the
NYC,247 this cannot be understood as a waiver of immunity from specific acts of enforcement.248 The NYC does not explicitly state that it excludes claims of sovereign immunity.
Moreover, ArticleIIINYC establishes that the contracting states of the NYC shall enforce
awards in accordance with their own rules of procedure. These rules of procedure include the
rules of sovereign immunity.249
If a state declares a waiver of immunity, it is irrelevant as a matter of international law and 104
thus also in proceedings in a German court if the state later claims that it was not entitled to
waive immunity under its own laws.250
237
238
239
240
241
242
243
244
245
246
247
248
249
250
BGH04.07.2013, BeckRS2013, 12429.

BVerfG06.12.2006, NJW2007, 2605 (2607); BGH04.07.2013, BeckRS2013, 12429; Geimer (2009),
IZPR para.631.
Cf. supra para. 81 and paras 85 et seq.
BVerfG06.12.2006, NJW2007, 2605 (2608).
BVerfG06.12.2006, NJW2007, 2605 (2608).
BVerfG 06.12.2006, NJW2007, 2605 (2608). Cf. for a different but unsupported view von Schnfeld,
NJW1986, 2980 (2985).
BVerfG 06.12.2006, NJW2007, 2605 (2608); BGH04.07.2007, NJW2007, 1498 (1499). For a possible
formulation for a waiver clause in a contract cf. Kleinlein, NJW2007, 2591 (2593).
Langkeit (1989), pp.51 et seq.; Fox (2008), p.33.
Fox (2008), p. 496.
BGH04.10.2005, SchiedsVZ2006, 44 (46); Langkeit (1989), pp.51 et seq.; Nagel/Gottwald (2013), 2
para.26.
Cf. Article 10(4)sentence2 of the German-Soviet BIT which entered into force on 05.08.1991, reprinted
in BGBl. 1990II, 342.
Regarding the waiver of immunity from proceedings for the declaration of enforceability cf. supra para. 92.
BGH04.10.2005, SchiedsVZ2006, 44 (47).
KGBerlin, 10.08.2006, SchiedsVZ2007, 108 (111).
1054
E.
German Law and Practice on Who Can Claim Immunity
105 Immunity may be claimed by sovereign states. This extends to the individual member states
of a federal country251 and is justified by the organizational freedom of a state which can delegate its sovereign tasks in a federal or decentralized structure.252 Heads of state, state organs
and authorities also enjoy immunity for official acts.253 Under public international law, states
are entitled to grant immunity only to those states which they recognize.254
106 In the case of legally independent state enterprises, the application of immunity is discussed.
The prevailing case law of the higher courts generally holds that immunity cannot be recognized unless the state enterprises act is to be classified as sovereign in the specific case.255 This
is in accordance with the better opinion according to which the availability of the immunity
defence depends on the classification of specific acts as acta jure imperii or acta jure gestionis
and not on the formal status of the entity.256 Thus, immunity should be granted if the state
enterprise is subject to the complete control of the state and serves the state for sovereign
purposes. The same considerations apply to central banks. Since these have various sovereign
and non-sovereign functions, it is important to ascertain the specific nature of their acts or
the specific purpose of their assets.257
VII. Investment Risk Insurance: the Investment Guarantees of the Federal

Republic Of Germany 258
A.
Basics
107 For more than 50 years the German Federal Government has supported direct investments
of German companies in developing and emerging countries by offering investment guarantees as a long-term protection against political risks. Investments in such countries are
particularly at risk from political insecurity. Very often the legal framework is not sufficiently
developed and stable, so that sudden changes or arbitrary acts by the authorities could seriously jeopardize an investment. The political risks in host countries are beyond the investors
sphere of influence and not predictable. Investment guarantees of the German government
can therefore provide valuable assistance, especially for long-term investments, and represent
an important element of risk management.
108 The backing of the German government helps to solve problems arising from adverse political developments in the host country. In the event of an impending loss, it may strengthen
the investors own position in negotiations. The involvement of the German government
may resolve the matter before an actual loss is incurred and may offer the chance that the
costs of loss prevention are shared between the German government and the investor.
251
252
253
254
255
256
257
258
Nagel/Gottwald (2013), 2 para.5.

Verdross/Simma (1984), 1176; Geimer (2009), IZPR para.567.
Nagel/Gottwald (2013), 2 paras 31 et seq.
Geimer (2009), IZPR para. 563.
BGH 07.06.1955, BGHZ 18, 1 (9); OLG Frankfurt 22.09.1987, NJW-RR 1988, 682.
Krauskopf/Steven, WM 2000, 269 (270).
Schack (2010), paras185, 187; Krauskopf/Steven, WM 2000, 269. For a recent case in which immunity
was granted in case of foreign currency reserves of a central bank, cf. BGH04.07.2013, BeckRS2013,
12429.
The authors wish to sincerely thank Mr. Tilmann Prechtl of PricewaterhouseCoopers AG, Hamburg, for
his valuable assistance in the writing of this part.
B.
1055
Risks Covered
The investment guarantees cover losses resulting from the following risks:
expropriation risk nationalization, expropriation or sovereign acts which, in their effects, are equivalent to expropriation;
breach of contract risk the breach of legally binding commitments made by the government or other entities directed or controlled by the government (payment obligations
and obligations of sub-sovereigns under certain conditions);
war risk war or other armed conflicts, revolutions or civil disturbance or terrorist acts;
moratorium risk payment embargoes or moratoriums; and
convertibility and transfer risk impossibility of converting or transferring amounts

deposited with a sound bank for their transfer to the Federal Republic of Germany.
109
The question of whether one of these risks has occurred is evaluated in the event of loss 110
by verifying the actual circumstances on the basis of the German principles of law and in
consideration of international law.
C.
Eligible Investments and Requirements
The investment guarantee may cover the following direct investments:
equity participations, i.e. shares in a project company (including participations through

holding companies);
endowment capital for foreign branches of German companies;
investment-like loans, i.e. shareholder or bank loans which, in their purpose and conditions, resemble equity; and
other rights qualifying as assets in the form of long-term investments, e.g. concessions,
production sharing agreements for oil and gas, bonds etc.
111
There is no ceiling regarding the amount of coverage for a host country or a project. On the 112
investors application, earnings in the form of dividends or capital gains on investments or
interest may be included in the policy.
An Interministerial Committee (IMC) decides on the basic issues of cover policy and the 113
granting of guarantees. An investment guarantee may be granted if the following requirements are fulfilled:
the investor must be domiciled in Germany;
there must be an explicit German interest in the realization of the project abroad;
the project must be a new direct investment (not a portfolio investment);
the investment must be economically sound and feasible;
the project must contribute to host countrys development;
appropriate environmental standards are to be observed;
there must be positive reverse effects in Germany;
the investment must enjoy sufficient legal protection in the host country (generally by a
BIT); and
1056
D.
the application for a guarantee has to be handed in before the first contribution is made.
Loss Prevention and Event of Loss
114 As soon as the investor anticipates a political risk, loss prevention measures will be initiated
by diplomatic channels. The objective is the continuity of the investment. Unlike property
insurance, the German government does not wait until the loss has actually occurred, but
becomes active at an early stage. To prevent losses in foreign projects of German investors,
the German government will for example:
contact relevant authorities of the host country (especially through the German
embassies);
support the investors during negotiations;
point out negative effects to the host government;
write letters and verbal notes to ministries;
take restructuring measures; and/or
participate in the investors costs of damage prevention (under certain conditions).
115 Due to this active crisis management, losses to several projects because of negative sovereign
acts have been successfully avoided in recent years.
116 In the case of loss, the indemnification to be paid by the German government is calculated on
the basis of the evidence provided by the insured investor. The indemnification is to compensate the insured for the loss incurred. The calculation of the indemnification is based on the
current market value of the investment at the time of the loss event, though not more than
the covered contribution value can be paid.
117 The German government decides on the investors application for insurance on the basis of
the general terms and conditions and German law. A court decision against the host country
or an award in favour of the investor is not required.
118 After payment of a claim, the German government together with the indemnified investor initiates recourse measures against the host country to enforce claims resulting from the
BIT. Apart from political and diplomatic initiatives, international arbitral proceedings against
the host country are possible.
E.
Miscellaneous
119 The term of the policy is usually limited to 15 years; in justified cases, it may be extended to
20 years. Upon expiration, the term of the policy may be extended.
120 No handling fee is charged for investments of up to EUR 5 million. For amounts exceeding
EUR 5 million, a handling fee of 0.5 flat has to be paid, but the total fee for each application
may not exceed EUR 10,000 EUR. After the issuance of the policy, a premium of 0.5 per cent
is charged annually.
121 The maximum liability of the German government from outstanding commitments under
the investment guarantee scheme is EUR 16,8 billion. Since the introduction of the guarantee scheme, more than 7,500 applications for cover were made for a total volume of about
EUR 64 billion; more than 4,400 guarantee policies with a volume of about EUR 40 billion
were issued as of the end of 2006.
1057
The government appointed a consortium formed by PricewaterhouseCoopers AG 122

Wirtschaftsprfungsgesellschaft (PwC AG) as lead partner and Euler Hermes Kreditversicherungs-AG (Euler Hermes) to manage the investment guarantee scheme. PwC AG
accompanies investors through all stages from the initial application for cover up to, and
including, the settlement in case of loss.
VIII. The Practitioners View: Commercial and/or Investment Arbitration

AWelcome but Difficult Choice for Investors
A.
Introduction
As a rule, at least in large projects, the investor enters into a detailed investment contract 123
with the host state. Such contracts may relate to an investment project subsidized by the
state, a public private partnership or concessions, e. g. to develop, finance, build and operate
a toll way. In the event of a dispute between the investor and the host state related to alleged
violations of contractual rights of the investor, the following question arises: can such violations be brought before an arbitral tribunal as provided in the concession agreement and/
or is an arbitral tribunal as foreseen in the applicable BIT competent to decide on the contractual dispute? Generally speaking, both ways of recourse are separate from one another.
The jurisdiction for contract claims in addition to treaty claims depends on the scope of the
arbitration offer contained in the respective BIT. However, irrespective of the answer to the
question as before, the breach of a contract may contemporaneously constitute a breach of a
BIT where the latter contains a so-called umbrella clause.259 By including an umbrella clause
in a BIT, the host state is bound to respect all contractual duties entered into with investors
of other contracting states.260
Given the rights and obligations contained in an investment agreement on the one hand, and 124
rights and obligations provided in a BIT on the other hand, an investor will, in general, be
confronted with various options for the resolution of a dispute. However, particular attention must be given to the so-called fork-in-the-road provisions. BITs often include a forum
selection clause obliging investors to choose either international arbitration under the BIT or
litigation in municipal courts.261 Any action taken must thus be carefully weighed so as not to
be deemed as a waiver of international arbitration under the respective BIT.
B.
Options
A BIT can be seen as an invitation to individuals or legal entities to invest in the country of 125
the host state. The essence of a BIT consists in the protection of the investment in abstract
by the host state. However, the specific investment in each individual case will, as a rule, be
made by the investor under a separate investment agreement. Such agreement can either be
made with a private party in the host state (e.g. with the owner of an immovable property for
erection and operation of a hotel) or it can be concluded with the host state itself or any of its
subsidiaries, agencies and the like (e.g. a concession agreement for erection and operation of
a toll way). In the first category of contracts, the host states obligation under a BIT consists in
what is laid down in the BIT (e.g. fair and equitable treatment, most-favourite-nation clause,
259
260
261
See in detail infra, paras 127 et seq.; on the absence of a uniform practice of ICSID tribunals concerning
umbrella clauses, e.g. Walter, RIW 2006, 815 et seq.
Schreuer, in: Hofmann/Tams (eds) (2007), p.1 (7).
Schreuer, The Journal of World Investment & Trade 2004, 231.
1058
no expropriation without compensation etc.). In the second category of contracts, i.e. those
with the host state itself or its agencies, the host state has not only to provide the protection
of the investment as laid down in the BIT. Depending on the content of the BIT the host
state is also bound to comply with the obligations as laid down in the investment agreement.
126 In this connection, it must be seen that frequently BITs contain clauses like the following:
Either Contracting Party shall constantly guarantee the observance of the commitments it has entered into with respect to the investments of the investors of the other
Contracting Party262 or
Each Contracting Party shall observe any obligation it has assumed with regard to
specific investments in its territory by investors of the other the Contracting Party.263
127 These clauses are called umbrella clauses.264
128 At first sight, one might be inclined to say that, by virtue of such clauses, the breach of an investment agreement means at the same time a breach of the BIT. Under these circumstances,
therefore, the following questions arise for the investor: does he have to pursue his rights
affected by a breach of the investment agreement according to the dispute resolution clause
provided in this agreement, e.g. through commercial arbitration? Or can he pursue his rights
according to the dispute resolution clause of the applicable BIT, i.e. through investment arbitration? Are both procedures available to him successively or even in parallel and what are
the implications and consequences of his chosen approach?
129 The background to this question is that in the majority of cases, the dispute resolution clause
provided in the investment agreement is less favourable than that of the BIT. The investor
will, in practice, find himself under pressure to accept a local dispute resolution mechanism
when negotiating an investment agreement, whereas BITs concluded between states on an
equal level will, as a general rule, contain arbitration clauses providing for neutral arbitral
proceedings at neutral venues. It would therefore mean a welcome opportunity for an investor to pursue his contractual rights by investment arbitration.
130 It must be furthermore borne in mind that as to enforcement, the quality of an award from
an investment arbitration is preferable to that of a commercial arbitration: non-compliance
by a state with an award of an investment arbitration tribunal means a breach of a BIT, i.e. of
a convention between two states whilst the claimant that obtained an award in a commercial
arbitration is left with the normal burden and risks of enforcement proceedings.
C.
The Options with a Specific View to the German Model BIT
131 The German Model BIT contains in Article 8 (2) the following clause:
Each Contracting State shall observe any other obligation it has assumed with regard
to investments in its Territory by Investors of the other Contracting State.
132 It is apparent from the wording of this clause that any investor may, in the case of a German BIT providing an umbrella clause (identical or similar to the one above), consider the
breach of an obligation under the investment agreement as a breach of the obligations of the
host state according to the BIT.
262
263
264
Article XI of the BIT between Switzerland and Pakistan.

Article X.II of the BIT between Switzerland and the Philippines.
As to the general meaning of umbrella clauses see Happ, SchiedsVZ 2005, 21 (25).
1059
In other words: an investor protected by a German BIT will, as a rule, be faced with the 133
alternative of commercial or/and investment arbitration. On the face of it, this seems to be
a welcome option.
D.
Considerations and Criteria for the Decision of an Investor
It must be stated that to date there is no unequivocal tendency of investment arbitration 134
tribunals as to whether, under the circumstances described, the one or the other or both
procedural alternatives are open to an investor. In fact, there are conflicting judgments.265
The following arguments and criteria are considered to be relevant:
Argument of the nature of the breach: Some investment arbitration tribunals have tended
to differentiate as to the nature of the breach by the host state. The question is whether
actions or non-actions have been committed in the exercise of the host states sovereign
authority or whether such behaviour can be classified as that of an entrepreneur and
therefore of an ordinary contracting party? In this connection it must be understood
that there are totally different standards for evaluating breaches of the host state under
an investment agreement than under a BIT. The standards for judging a breach of an investment agreement have their origin in private civil law, whilst the standards for breach
of investment protection obligations under a BIT are derived from public international
law. The question to be answered by an investor in any specific case will therefore be
whether a breach by a host state must be considered (totally or predominantly) to have
been committed when exercising sovereign authority or whether it must be considered
to have been committed by the host state as an entrepreneur. The answer to this question
may frequently determine whether commercial arbitration or investment arbitration is
the appropriate way to resolve a dispute.
Argument of good faith of the investor: BITs can be seen as invitations to foreign investors to engage in the host state, enjoying the protection granted by BITs. The wording
265
As to judgments regarding umbrella clauses and related problems, see ICSID Case No. ARB/01/13,
06.08.2003, SGS Socit Gnrale de Surveillance S.A. v. Islamic Republic of Pakistan (2003) 18 ICSID
Review 301 (decision on objections to jurisdiction); ICSID Case No. ARB/02/6, 29.01.2004, SGS
Socit Gnrale de Surveillance S.A. v. Republic of the Philippines (2005) 8 ICSID Review 518 (decision
of the tribunal on objections to jurisdiction) and (2005) 8 ICSID Review 568 (declaration by one of the
arbitrators); ICSID Case No. ARB/03/11, 06.08.2004, Joy Mining Machinery Limited v. Arab Republic
of Egypt (2004) 19 ICSID Review 486; ICSID Case No. ARB/02/13, 29.11.2004, Salini Costruttori
S.p.A. and Italstrade S.p.A. v. Hashemite Kingdom of Jordan (2005) 20 ICSID Review 148 (decision of
the tribunal on jurisdiction) and award of 31.01.2006 at <http://www.worldbank.org/icsid/cases/
awards.htm#awardARB0213>; ICSID Case No. ARB/02/2, 22.04.2005, Impregilo S.p.A. v. Islamic
Republic of Pakistan, decision on jurisdiction at <http://www.worldbank.org/icsid/cases/impregilodecision.pdf>; ICSID Case No. ARB/01/11, 12.10.2005, Noble Ventures, Inc. v. Romania (award not
published yet); ICSID Case No. ARB/03/15, 27.04.2006, El Paso Energy International Company v. Argentine Republic, <http://www.worldbank.org/icsid/cases/ARB0315-DOJ-E.pdf>; Court of First Instance
of Brussels, 19.08.2005, Eureko B.V. v. Poland, <http://www.investmentclaims.com/oa1.html>; ICSID
Case No. ARB/07/29, 12.02.2010, SGS Socit Gnrale de Surveillance S.A. v. Republic of Paraguay,
decision on jurisdiction at: https://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesR
H&actionVal=showDoc&docId=DC3533_En&caseId=C258 and award of 10.02.2012 at: <https://
icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=showDoc&docId=
DC3532_En&caseId=C258>. For further literature on the topic, see e.g. Griebel, SchiedsVZ 2006, 306;
Reinisch, YILJ 2005, 1653; Schramke, SchiedsVZ 2006, 249; Schreuer, The Journal of World Investment &
Trade 2004, 231; Walter, RIW 2006,815.
135
1060
and the reasonable interpretation of an umbrella clause would prima facie mean that
the investor has the choice of commercial arbitration or investment arbitration in the
case of breaches by the host state of provisions of the investment agreement. It would
therefore mean a surprise, if not a disappointment, for him to be debarred from investment arbitration with sophisticated legal arguments leaving him only with commercial
arbitration and its disadvantages as described above. Therefore, it seems that an investor
has a legitimate interest in relying on the wording of an umbrella clause and in having
this clause interpreted as it reads. Of course, subject to the details of any specific case,
violations of the obligations of investment agreements shall, in principle, be considered
at the same time to be breaches of a BIT, giving the investor the choice which way to
go if such breach fulfils both the standards of the investment agreement and of the BIT,
i.e. of public international law.
266
Considerations in case of both commercial arbitration and investment arbitration: The time
and cost efforts in the case of such parallel proceedings may be enormous and not justified. Furthermore, there is a risk of discrepancies between an award of a commercial
arbitration and an investment arbitration. There may be circumstances where the one
proceeding might be suspended until the other proceeding is completed. Given the
uncertainty of investment arbitration tribunals rulings on these issues, it is up to the
investor in any concrete case to determine which way to go. The determining factors
are the specific BIT and its content and the nature of any concrete action or non-action
of the host state. Most important is certainly whether the prospects of a commercial
arbitration according to the investment agreement are promising as to neutrality and effectiveness and what would happen once the award is available: which options are there
if the award is not be complied with? Enforcement in the country of the host state entails
the well-known problems arising out of the necessary involvement of state courts in the
host state. However, the behaviour of such local state courts (and maybe of other local
authorities) blocking de facto enforcement against the host state may amount to denial
of justice or may in other ways be classified as breach of a BIT, opening the avenue of an
investment arbitration after commercial arbitration.266
White Industries Limited v. The Republic of India, UNCITRAL, Final Award, 30.11.2011, paras 10.4 et seq
Enforcement of Court Orders Declaring Awards

Enforceable in Germany
Stefan Rtzel / Claudia Krapfl
Short Bibliography: Both (ed.), Praxis der Zwangsvollstreckung, Mnster 2005; Braun, Commentary on the German Insolvency Code, Dsseldorf 2006; Gottwald/Mock, Zwangsvollstreckung,
Kommentar zu den 704-915h ZPO mit Antrags- und Klagemustern fr die Rechtspraxis, Berlin
2012; Gres/Frege, German Insolvency Act, Kln 2002; Hess, Different Enforcement Structures, in:
van Rhee/Uzelac (eds), Enforcement and Enforceability Tradition and Reform, Antwerp 2010;
Kennett, Enforcement of Judgments, (1997) 5 Eur. Rev. Priv. Law 321; Kennett, Enforcement of Judgments in Europe, Oxford 2000; Lackmann, Zwangsvollstreckungsrecht mit Grundzgen des Insolvenzrechts, Mnchen 2013; Mes (ed.), Becksches Prozeformularbuch, Mnchen 2013; Murray/
Strner, German Civil Justice, Durham, North Carolina 2004; Rtzel/Wegen/Wilske, Commercial
Dispute Resolution in Germany, Mnchen 2005; Stewart, Insolvency Code and Act Introducing the
Insolvency Code, Frankfurt 1997.
Para.
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Enforcement Strategy: Identification
of the Debtors Assets . . . . . . . . . . . . . . . . . . . . 5
A. General Sources of Information. . . . . . . 7
B. Debtors Own Statement of Assets . . . 19
C. Evasion Tactics by the Debtor . . . . . . . 22
III. Prerequisites of Enforcement and
Limitation Period . . . . . . . . . . . . . . . . . . . . . . . 24
A. Enforceable Title . . . . . . . . . . . . . . . . . . . . 25
B. Certificate of Enforceability . . . . . . . . . 27
C. Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
D. Limitation Period for Enforcement . . 30
E. Competent Entities . . . . . . . . . . . . . . . . . 31
IV. Enforcement of Titles for the Payment
of Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
A. Enforcement against Movables . . . . . . 34
1. Movables . . . . . . . . . . . . . . . . . . . . . . . . 35
2. Enforcement by the
Gerichtsvollzieher . . . . . . . . . . . . . . . . . 36
3. Seizure (Pfndung). . . . . . . . . . . . . . . 39
4. Realisation of Goods Seized . . . . . . 43
B. Garnishment of Money Claims
and Other Economic Rights . . . . . . . . . 47
1. Money Claims and Other
Economic Rights. . . . . . . . . . . . . . . . . 47
2. Enforcement by the
Enforcement Court . . . . . . . . . . . . . . 49
I.
II.
Para.
3. Attachment Order
(Pfndungsbeschluss) . . . . . . . . . . . . . 50
4. Limits to Attachment . . . . . . . . . . . . 56
5. Transfer Order
(berweisungsbeschluss) . . . . . . . . . . 59
6. Transfer of Garnished Claim. . . . . . 62
7. Preliminary Attachment
(Vorpfndung) . . . . . . . . . . . . . . . . . . . 63
C. Enforcement against Immovable
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
1. Compulsory Mortgage . . . . . . . . . . . 68
2. Compulsory Sale. . . . . . . . . . . . . . . . . 69
3. Compulsory Administration . . . . . 70
V. Enforcement of Non-Money Titles . . . . . . 71
A. Non-Personal Undertakings . . . . . . . . . 73
B. Personal Undertakings . . . . . . . . . . . . . . 74
C. Enforced Abstention and Enforced
Sufferance . . . . . . . . . . . . . . . . . . . . . . . . . . 77
D. Recovery or Delivery of Things
and Declaration of Intention. . . . . . . . . 79
VI. Legal Remedies. . . . . . . . . . . . . . . . . . . . . . . . . 81
A. Objection (Erinnerung) . . . . . . . . . . . . . 84
B. Action against Enforcement
(Vollstreckungsgegenklage). . . . . . . . . . . . 87
C. Third Party Action against Enforcement (Drittwiderspruchsklage) . . . . . . . 91
D. Stay of Enforcement. . . . . . . . . . . . . . . . . 93
VII. Enforcement Costs . . . . . . . . . . . . . . . . . . . . . 95
1062
I.
Introduction1
1 The enforcement2 of awards i.e. to be precise, of the court order declaring the award enforceable, whereby the court order constitutes the enforceable title (Vollstreckungstitel) is
governed by the general rules of enforcement of judgments and other titles. These rules can
primarily be found in the Code of Civil Procedure (Zivilprozessordnung ZPO).3 Regarding
the enforcement against immovable property, ships and aircraft, the ZPO is supplemented
by the Law on Compulsory Sale and Administration (Gesetz ber die Zwangsversteigerung
und Zwangsverwaltung ZVG). These provisions govern all proceedings brought by one or
more creditors for the individual enforcement of enforceable titles. The creditor who is first
to initiate enforcement proceedings will take priority over other creditors (804 (3) ZPO).
2 These provisions do not apply in insolvency proceedings which aim at giving each creditor
an equal share in the debtors assets. In the case of a title against an insolvency debtor, the
insolvency creditor must register his claim in writing with the liquidator. The proceeds of the
debtors assets will eventually be distributed among the creditors in accordance with their
respective priorities. Insolvency proceedings are generally based on the principle of equal
treatment of creditors.4
3 The rules governing individual enforcement proceedings are quite complex. This chapter
can only serve to provide a brief overview of the options for identifying the debtors assets
in order to be able to develop an enforcement strategy (infra, paras 5 et seq.), the general
prerequisites of enforcement (infra, paras 24 et seq.), the methods of enforcement of titles for
the payment of money against movables (infra, paras 34 et seq.), enforcement against money
claims (infra, paras 47 et seq.) or enforcement against immovable property (infra, paras 66 et
seq.). The chapter will also cover methods of enforcement of non-money titles (infra, paras
71 et seq.), the possible remedies in enforcement proceedings (infra, paras 81 et seq.) and the
costs of enforcement (infra, paras 95 et seq.).
4 How enforcement is effected in practice depends primarily on whether the content of the
award is a title for the payment of money or a non-money title, and on the enforcement strategy selected by the creditor in light of the existing assets. Different rules apply for enforcement
against movables or immovable property, the garnishment of money claims, or non-money
titles. These rules also lead to the competence of different enforcement authorities. There is
no single enforcement authority in Germany. Depending on the concrete measure, jurisdiction for enforcement measures either lies with (i.) the local court (Amtsgericht AG) as
the enforcement court (Vollstreckungsgericht), acting either through a competent judge or
the court administrator (Rechtspfleger), (ii.) the bailiff (Gerichtsvollzieher), (iii.) the office
of the land register (Grundbuchamt), or (iv.) the court of first instance. In cases where an
award has been declared enforceable, the court of first instance is the Higher Regional Court
(Oberlandesgericht OLG). One downside of this division of competencies is that no single
entity has an overview of all enforcement measures a creditor has initiated, although the Gerichtsvollzieher will generally have the best overview. None of these authorities will take the
initiative regarding the enforcement of a decision. It is therefore up to the creditor to devise
1
2
The term enforcement will be used in this context to mean Zwangsvollstreckung, i.e. the legal process of
enforcing a title.
An English translation of the ZPO can be found under www.gesetze-im-internet.de/englisch_zpo/
index.html.
For books on German insolvency law in English, see Braun (2006); Gres/Frege (2002); Stewart (1997).
Movables
(808-827 ZPO)
Enforced by Bailiff
Money Claims
(828-856 ZPO)
Enforced by Local
Court
Other Economic
Rights (857-863
ZPO) Enforced by
Local Court
Against Movable Property
Compulsory
Administration
(869 ZPO)
Enforced by Local
Court
Compulsory Sale
( 869 ZPO)
Enforced by Local
Court
Against Immovable Property
Compulsory
Mortgage
(867 et seq.
ZPO)
Enforced by Office
of Land Register
For the Payment of Money

( 803-882h ZPO)
Enforcement of Titles (704-945 ZPO) Figure 1
Enforcement of Court Orders in Germany Rtzel/Krapfl

1063
an enforcement strategy. The following figures give an overview of the different enforcement
measures and the provisions relevant for each measure.
Non-Personal
Undertaking (887
ZPO)
Personal
Undertaking
(888 ZPO)
Declaration
of Intention
(894 ZPO)
For Non-Money Titles

( 883-898 ZPO)
Enforced by OLG
Enforced Abstention
(890 ZPO)
Enforcement of Titles (704-945 ZPO) Figure 2
Recovery or Delivery
of Things
(883-885a ZPO)
Enforced by Bailiff
1064
II.
1065
Enforcement Strategy: Identification of the Debtors Assets
To develop an expedient and meaningful enforcement strategy, it is necessary for the creditor 5
to be aware of the debtors assets available for enforcement. The debtor himself will seldom
be willing to provide such information voluntarily if he has refused to pay. However, public
access to information about the debtors assets is fairly limited because of the emphasis
placed by German law on privacy and confidentiality.
As of 1January 2013, the enforcement provisions of the ZPO were reformed in order to 6
improve the creditors options in identifying the debtors assets. The new provisions make
use of modern information technology and are therefore an important step in modernizing
enforcement measures in Germany.5
A.
General Sources of Information
A creditor and his lawyers may retrieve information about the debtor and his assets from a 7
number of sources available to the public.
A creditor should generally be able to gain access to the debtors current address from the 8
German Melderegister. It is available to all members of the public on payment of a small fee.
A creditor can also request the Gerichtsvollzieher to determine the address of the debtor (
755 ZPO). Aside from the German Melderegister, the Gerichtsvollzieher has access to information from the Central Register of Foreigners (Auslnderzentralregister), the State Pension
Agency (Trger der gesetzlichen Rentenversicherung) and the Federal Office for Motor Traffic
(Kraftfahrtbundesamt).
For legal entities, an official address must be recorded in the appropriate register. However, 9
this is not always the case for sole traders and certain forms of partnerships. The company
and commercial registers kept at the local courts also provide useful information, such as the
annual accounts of a commercial enterprise.
As of 1 January 2013, a designated central local court in each German State maintains a debt- 10
ors register (Schuldnerverzeichnis) listing instances where (i.) a debtor has failed to fulfil his
duty of providing a statement of assets, (ii.) a statement of assets shows that the debtor does
not have sufficient assets to meet his liabilities, or (iii.) a debtor fails to satisfy his creditor
within one month after providing a statement of assets (882c ZPO). This debtors register
is available online at www.vollstreckungsportal.de. Any interested person may register with
the database and obtain information upon payment of a fee (EUR 4.50 per dataset). Specific
rules apply to this process in order to safeguard data protection and data security.
This debtors register contains information about debtors as of 1January 2013. The informa- 11
tion in this register is available, inter alia, to any person who can show that he needs the information for the purpose of enforcement or simply in order to avoid economic disadvantages
if the debtor does not fulfil his payment obligations (882f ZPO).
Registration lapses after three years, but a debtor can also get his name removed from the 12
register if he satisfies the creditors claim in the interim (882e ZPO). This is one incentive
for the debtor to assist with enforcement.
For an overview of the new provisions see Volkommer, Die Reform der Sachaufklrung in der Zwangsvollstreckung ein berblick, NJW 2012, 3681.
1066
13 The debtors registers available prior to this date are maintained separately by the local courts
and list those debtors who have sworn before that specific court that they lack sufficient assets to meet their liabilities. This data is not centralized and is only available in paper form at
the local court.
14 Information on real estate may be obtained from the land register (Grundbuch) also kept at
the local courts. Ships are registered in the ship register (Schiffsregister), and aircraft in the aircraft register (Luftfahrzeugrolle) and the register for liens on aircraft (Register fr Pfandrechte
an Luftfahrzeugen).
15 Access to commercial information about a debtor may also be provided by the Schutzgemeinschaft fr allgemeine Kreditsicherung (Schufa).6 The Schufa is a private organisation of
credit providers which gives details on bad credit, unpaid cheques, applications for payment
orders (Mahnbescheide), declarations of assets and known forced seizures. In principle, such
information is only provided to banks as members of the organisation, but the bank of an individual creditor may be willing to provide at least general Schufa information about a debtor.
There are also other commercial providers of information, such as Creditreform,7 which
obtain their information mostly from public records but also provide a broader economic
picture of each business as a result of further investigations. The use of detective agencies to
provide commercial information is a further although expensive source of information.
Finally, the internet of course provides a plethora of information that may help the creditor
identify assets of a debtor.
16 The Gerichtsvollzieher may also be able to assist a creditor in finding out more about the
debtors assets by methods other than formal interrogation. If it is clear to the Gerichtsvollzieher when undertaking a seizure of property that the property present will not suffice to satisfy
the creditors debt, he can question the debtor about any money claims the debtor may have
or seek to inspect documents about such money claims and can then give this information to
the creditor (806a (1)ZPO). He can also ask any adult third party in the debtors household about the debtors employer and also pass this information on to the creditor. However,
the third parties are not required to respond to such questions (806a (2) ZPO).
17 Furthermore, upon application and if the debtor has refused to provide a statement of assets,
the Gerichtsvollzieher is authorized to request information from certain entities such as the
State Pension Agency (Trger der gesetzlichen Rentenversicherung), the Federal Central Tax
Office (Bundeszentralamt fr Steuern) and the Federal Office for Motor Traffic (Kraftfahrtbundesamt) to gather information about the debtors employer, his bank accounts and/or
vehicles owned by the debtor (802l ZPO).
18 Other third parties have only limited obligations to provide information. Employers have
such obligation in the context of an attachment of wages. More generally, third parties have
certain obligations to provide information when their debt is garnished.
B.
Debtors Own Statement of Assets
19 In order to facilitate enforcement, the Gerichtsvollzieher has the duty to attempt to find an
amicable settlement between the debtor and the creditor at any stage during the enforcement
proceedings, such as payment by instalments (802b ZPO).
6
7
SCHUFA Holding AG, <www.schufa.de> (partially available in the English language).

Verband der Vereine Creditreform e.V., <www.creditreform.de>.
1067
Furthermore, the Gerichtsvollzieher will upon application request a statement of assets 20

(Vermgensverzeichnis) from the debtor (802c ZPO). Such a request is possible prior to
any attempted enforcement measure if the debtor continues to refuse to pay voluntarily. The
debtor must attend a hearing to provide the required information regarding his assets on
solemn affirmation. The Gerichtsvollzieher is in charge of conducting the hearing (802e,
802f ZPO). Failure to attend a hearing or provide information can lead to imprisonment
(802g et seq. ZPO) and will be registered in the debtors register (Schuldnerverzeichnis).
The information gathered from the statement of assets is then set out in an electronic docu- 21
ment which is available in the centralized debtors register to certain entities, but not to any
interested person. An interested person can obtain the statement of assets by applying to the
competent Gerichtsvollzieher. The statement of assets lapses after two years. During this two
year period, the debtor cannot be requested to provide a further statement of assets unless a
creditor can show that there has likely been a substantial change in the asset situation of the
debtor.
C.
Evasion Tactics by the Debtor
If a debtor is determined to resist payment, he has several options to keep the creditor from 22
identifying his whereabouts, his employment details or anything else about his assets. He
may transfer assets to a third party or keep bank accounts in the name of a third party. Legal
entities involved may have a complex system of related companies which make the debtors
financial transactions hard to unravel. Such evasion tactics by the debtor may make it difficult
to enforce a title.
However, if the debtor attempts to avoid enforcement by purposely giving away items of 23
property to a third party, the creditor may, by bringing an action against the third party or by
pleading avoidance (Anfechtung), levy enforcement against such items of property the debtor
has given away. This procedure is a valuable help for the creditor in enforcing a decision
against a debtor who is trying to hide assets. However, the creditor has to prove the debtors
intention to undermine the creditors position, which may be extremely difficult.
III. Prerequisites of Enforcement and Limitation Period

The general prerequisites for any type of enforcement measure in Germany are (i.) the exist- 24
ence of an enforceable title (Titel), (ii.) the issuance of a certificate of enforceability (Klausel)
and (iii.) service (Zustellung).
A.
Enforceable Title
To constitute an enforceable title, the award must be declared enforceable in proceedings 25

pursuant to 1060, 1061 ZPO.8 It follows from 794 (1) No.4(a)ZPO that the title is
not the award as such, but the court order declaring the award enforceable.9 In principle,
under German law decisions only become enforceable when either the time period allowed
for an appeal has expired without an appeal being lodged, or, if an appeal is lodged, until a
decision has been given on the appeal. Therefore, German decisions including court orders
declaring an award enforceable are usually declared provisionally enforceable (1064 (2)
ZPO). This means that the creditor may provisionally enforce the decision, but bears the
8
9
For details, see Part II, Krll, 1060, 1061.

1068
risk of repayment and liability for any damages caused if the decision is later overturned on
appeal. The creditor need not provide security prior to enforcing the court order declaring
the award enforceable.
26 If a creditor wishes to enforce a title based on an award which is subject to setting aside proceedings, he can nevertheless request preliminary enforcement pursuant to 1063 (3) ZPO,
whereby the enforcement measures may not go beyond measures of protection.
B.
Certificate of Enforceability
27 Once a party has obtained a German court order declaring an award enforceable, the first step
to enforce the award is to further obtain the certificate of enforceability (Vollstreckungsklausel,
725 ZPO).10 The Vollstreckungsklausel is a form of words appended to a title which furnishes
documentary proof of its enforceability.11 It is issued by the clerk of the courts registry where
the action was last pending (724 (2) ZPO) in the case of a court order declaring an award
enforceable the OLG (1062 (1) No. 4 ZPO). The certificate will be issued (i.) if there is a
duly signed court order, (ii.) if the operative part of the court order is sufficiently precise to
enable the court or the Gerichtsvollzieher to act upon it, (iii.) as long as any condition precedent to enforcement has been satisfied, and (iv.) if the parties mentioned in the court order
are the creditor and debtor for the purpose of enforcement. If there is a documented change
in parties, for example because of death or assignment, the certificate will be issued on behalf
of the legal successor (727728 ZPO).
28 When the certificate of enforceability is affixed to the copy of the court order, the order
thereby becomes an enforceable copy (vollstreckbare Ausfertigung), and the creditor has to
produce this enforceable copy when applying for enforcement.
C.
Service
29 As a rule, all court orders must be served on the debtor prior to enforcement or at the time
when enforcement is levied against the debtor. Service is effected either by the court (317
ZPO) or by the Gerichtsvollzieher on the creditors motion (750 ZPO).
D.
Limitation Period for Enforcement
30 There is no absolute time bar in enforcement proceedings. The statute of limitation is 30years.
The debtor may plead limitation when the 30 year period after the court order declaring the
award enforceable was rendered has expired. However, it is important to note that this long
limitation period does not apply to interest payable on the awarded sum it is time-barred
after three years (197 (2), 195 BGB).12
10
11
12
OLG Hamburg 26.05.2000, BB 2000 Beilage No. 12, p. 13; BayObLG 27.07.1999, BB 2000, Beilage
No.12, p.14; Stein/Jonas-Schlosser (2002), 1060 para.2.
725 ZPO: The above execution copy is issued to (designation of the party) for the purpose of compulsory enforcement is to be added to the execution copy of the judgment at its end, it is to be signed by
the record clerk of the court registry, and is to be furnished with the court seal. (Translation available at
<www.gesetze-im-internet.de/englisch_zpo/index.html>).
197 BGB:
(1) Unless otherwise provided, the following claims are statute-barred after thirty years:
1. claims for return based on ownership, other real rights, sections 2018, 2130 and 2362, as well
as claims serving to assert the claims for return
2. (repealed)
E.
1069
Competent Entities
A creditor may initiate enforcement proceedings by applying for a specific enforcement meas- 31
ure with the competent entity most often, the local court as enforcement court in whose
district the enforcement procedure is to take place or has taken place (764 (2) ZPO). In
case the bailiff (Gerichtsvollzieher) is competent, application is usually made to the enforcement court in the local court, and is then forwarded to the competent Gerichtsvollzieher, who
normally has his own office outside of the court. A Gerichtsvollzieher is usually assigned to
one particular local court, and is entitled to carry out enforcement measures in the district
allotted to him. In many respects, the Gerichtsvollzieher acts completely independently. The
activities of the Gerichtsvollzieher are, however, supervised by the local court, which will deal
with objections to his acts.
As a rule, neither creditors nor debtors require the services of an attorney, since the bulk 32
of enforcement proceedings are dealt with by the local courts where non-lawyers are also
allowed to plead. However, if a party has retained an attorney as is necessary in proceedings to have an award declared enforceable, at least if an oral hearing takes place (1063 (4)
ZPO) that attorney will also have authority to act for his client in enforcement proceedings
(81ZPO).
IV. Enforcement of Titles for the Payment of Money

The creditor has an almost completely free choice regarding the method of enforcement of a 33
title for the payment of money. He can choose among the assets suitable for enforcement.13
Titles for the payment of money may be enforced either against movable or immovable
property (see infra, paras 66 et seq.) of the debtor. Movable property means movables (see
infra, paras 34 et seq.) and money claims or other economic rights of the debtor (see infra,
paras 47 et seq.).
A.
Enforcement against Movables
Enforcement against movables may be initiated by applying directly to the competent Ge- 34
richtsvollzieher or to the local court in the relevant district of the Gerichtsvollzieher. In the application, the creditor will generally request the Gerichtsvollzieher to undertake any measures
3. claims that have been declared final and absolute,

4. claims under enforceable settlements or enforceable documents,
5. claims that have become enforceable upon being recognised in insolvency proceedings, and
6. claims to reimbursement of the costs of execution.
(2) To the extent that claims under subsection (1), nos. 3 to 5 are concerned with periodically recurring acts of performance that will fall due in the future, the standard limitation period takes the
place of the period of thirty years.
13
195 BGB: The standard limitation period is three years. (Translation available at <www.gesetze-iminternet.de/englisch_bgb/index.html>).
It is planned to adopt standard forms for the necessary written applications for specific measures of
enforcement. So far, a binding standard form is available for attachment and transfer orders for ordinary
money claims, available at <www.bmj.de>. For further samples of written applications for specific
measures of enforcement see <www.dgvz.de/wir-uber-uns/AuftragVollstreckungVS10Speicherbar.pdf/
view> and Gottwald/Mock (2012) 802a et seq.
1070
that may satisfy the debt. If the creditor is aware of specific assets of the debtor, he may point
this out to the Gerichtsvollzieher in his application.14
1.
Movables
35 In principle, movables include all physical objects (90-100 BGB). An exception to the
rule is accessories (Zubehr) that belong to the owner of an estate, such as office furniture
and equipment of an office building or the agricultural fixture of a farm. These items are generally treated as immovable property (97 BGB, 865ZPO). Negotiable instruments are
included in the definition of movables, but are subject to a number of special rules (808
(2), 821 et seq., 831 ZPO).
2.
Enforcement by the Gerichtsvollzieher
36 The Gerichtsvollzieher levies enforcement against the movables the debtor has in actual possession. The Gerichtsvollzieher does not enquire into the debtors ownership in the property
he possesses, but if the debtor cannot reasonably be expected to be the owner, the Gerichtsvollzieher will not normally continue enforcement. Some items of household, trade, or farm
use are, however, not subject to seizure. An example of movables not subject to seizure is
sufficient food and fuel for the debtor and his family for a four week period (or the money to
buy the same).
37 The Gerichtsvollzieher may search the person of the debtor for seizable property. Should the
debtor offer resistance, the Gerichtsvollzieher may seek the support of a police guard. He may
also enter and search the debtors dwelling (758 ZPO). Should a debtor refuse to allow
entry (758a ZPO), a judge must grant permission to the Gerichtsvollzieher to exercise the
right of forcible entry and search because of the stringent provisions contained in the German Constitution (Grundgesetz GG) that protect a persons dwelling against unlawful
entry (Article 13 (2) GG). This does not apply if there is an urgent need to act immediately.
38 The Gerichtsvollzieher may levy enforcement against the debtor on Sundays, public holidays
or at night outside of a dwelling without a special court order. However, if such measures are
to take place in a dwelling, the judge of the enforcement court must grant permission (758a
(4) ZPO). It will usually be granted if there was at least one unsuccessful attempt of enforcement and if enforcement at night or on a Sunday is likely to be successful. The permission is
valid for one attempt of enforcement only.
3.
Seizure (Pfndung)
39 Seizure of movables is effected by the Gerichtsvollzieher taking possession of the property. He

may either take the goods physically away from the debtor or take possession by affixing a
Gerichtsvollziehers stamp (Pfandsiegel) to the seized goods, or by attaching a notice of seizure
(Pfandanzeige) ( 808 (2) ZPO). The Gerichtsvollzieher will usually physically take away
from the debtor money, valuables and securities (808 (2) ZPO).
40 A seizure is valid unless it infringes central procedural provisions. Therefore, a seizure will be
void only if (i.) the Gerichtsvollzieher does not take possession; (ii.) the enforcement court
seizes movables (since the Gerichtsvollzieher is exclusively competent); or (iii.) enforcement
is levied against a person who is not the debtor pursuant to the certificate of enforceability.
14
For specifics on an application for enforcement against movables see Mes (ed.) (2013), Part III.B.
1071
An invalid seizure does not adversely affect the debtors position, and he may freely use and
dispose of his assets.
A valid seizure creates attachment (Verstrickung). The attachment is an act of state 41
(staatlicher Hoheitsakt) prohibiting the destruction or hiding of the property under seizure.
Interference with property under attachment is a criminal offence (136 Criminal Code
(Strafgesetzbuch StGB).
A forced lien (Pfndungspfandrecht, 804 ZPO) is created if there is attachment, if the debtor 42
is the owner of the goods seized by the Gerichtsvollzieher and if a debt to the creditor actually
exists. The forced lien gives the creditor a right to the property that ranks equal with a statutory or contractual lien (804 (1) ZPO). Priority of liens depends only on the chronological
order in which the liens were created.
4.
Realisation of Goods Seized
If the Gerichtsvollzieher has seized money, this is passed on directly to the creditor (815 (1) 43
ZPO).
If other movables are seized, they are sold at a public auction by the Gerichtsvollzieher (814 44
ZPO). The public auction may be effected as an auction on site or as a generally accessible
internet auction via an auction platform. The auction is held at least one week after the seizure of goods unless the parties agree on a quick public sale, and the Gerichtsvollzieher must
publicly announce the forthcoming sale (816 ZPO). He must appraise the goods because
the property may only be knocked down to a buyer if the bid made amounts to at least half
the saleable value of the goods (813, 817a ZPO). The highest bidder acquires ownership
when the Gerichtsvollzieher puts him into possession.
When the Gerichtsvollzieher receives payment from the buyer, the debtor is discharged from 45
his liability to pay the debt (819 ZPO). Instead, the creditors forced lien now rests on the
proceeds of sale. Enforcement proceedings come to an end at the time when the Gerichtsvollzieher distributes the proceeds of sale among the creditors and pays a possible surplus to the
debtor.
Securities with market value may be sold on the open market (821 ZPO). The same applies 46
to other goods, but the Gerichtsvollzieher will only do so on the creditors or debtors motion
(825 ZPO).
B.
Garnishment of Money Claims and Other Economic Rights
1.
Money Claims and Other Economic Rights
The creditor may either instead of or in addition to enforcement against the debtors mova- 47
bles enforce the decision by garnishing the debtors money claims (829 et seq. ZPO),
his claims for the recovery or delivery of goods (846 et seq. ZPO), or his other economic
rights (Vermgensrechte, 857 et seq. ZPO).
Garnishment means that a creditors claim is enforced by requiring a third party who owes 48
money to the debtor to pay that money to the creditor instead. The third partys debt to the
debtor is attached by the creditor, thus forcing payments to be made to the creditor instead
of the debtor. This will commonly concern situations where a creditor wishes to access funds
of the debtor held in a bank account or to attach a portion of the debtors wages or salary.
The provisions on garnishment of claims (829 et seq. ZPO) also apply to a range of other
1072
enforcement situations, such as the attachment of company shares or seizure of movables in

the hands of a third party.
2.
Enforcement by the Enforcement Court
49 The creditor must usually apply to the enforcement court, acting through the Rechtspfleger
(a court administrator with specialised legal training). in the district in which the debtor is
habitually resident. Jurisdiction based on the domicile of the garnishee (i.e. the third party)
is applicable if the debtor has no domicile in Germany (828 (2), 23 ZPO). The necessary
application bound to a specific standard form will request the enforcement court to issue
an attachment and transfer order (Pfndungs- und berweisungsbeschluss).15
3.
Attachment Order (Pfndungsbeschluss)
50 The Rechtspfleger will issue an attachment order (829 ZPO) without hearing the debtor
and without enquiring into the existence of the debt. The Rechtspfleger will only refuse to
attach an alleged claim if it appears from the creditors application that such a claim is not
valid in law or if it is not attachable.
51 The application for enforcement must include the names and addresses of the creditor, debtor
and garnishee, a specification of the alleged claim to be garnished and the legal foundation
of the claim. The specification of the alleged claim must be as precise as possible in order for
the attachment order to be valid. It is insufficient to describe the debt in vague terms such
as claims arising out of contractual relations. The debtor and the garnishee, as well as other
creditors, should be able to see from the attachment order without taking recourse to other
documents which claim was attached.
52 The attachment order will include a garnishment order prohibiting the garnishee from making payments to the debtor (Arrestatorium, 829 (1) sentence 1 ZPO) and an order prohibiting the debtor from collecting the debt or otherwise disposing of the debt (Inhibitorium,
829 (1) sentence 2 ZPO). The garnishment order is indispensable for the attachment order
to be valid.
53 Attachment of the debt is effected by service of the attachment order on the garnishee, requiring that he does not make payment to the debtor, and notice of this is then also served on
the debtor by the Gerichtsvollzieher (829 ZPO). Attachment of the debt creates a forced lien
on the debt (Pfndungspfandrecht) and secures the right of priority for the creditor in relation
to other creditors (804 ZPO).
54 Once the attachment order has been served, the garnishee has the opportunity to dispute the
existence of the debt before the creditor is permitted to take further steps in enforcement.
The garnishee is required to declare within two weeks, inter alia, whether he acknowledges
the debt, whether he is prepared to make payments, whether other parties claim to be entitled
to the debt and whether there was prior attachment for the benefit of other creditors (840
ZPO). The garnishee must make this declaration to the Gerichtsvollzieher. If the garnishee
refuses to make this declaration, he cannot be brought to court for his refusal, but he can become liable for damages (840 (2) ZPO). The same is true if the garnishee releases payment
in satisfaction of the debt contrary to the order for attachment. However, if the garnishee
pays the debtor in ignorance of the attachment, the creditor has no means of enforcement
15
The binding standard application form for attachment and transfer orders for ordinary money claims is
available at <www.bmj.de>; for further details see Mes (ed.) (2013), Part III.B.6.
1073
in relation to the garnishee. In contrast, once the garnishee knows of the attachment, any
payment to the debtor will not discharge his obligation.
If the garnishee refuses to pay, the creditor has the right to pursue the claim against the gar- 55
nishee in place of the debtor, and thus where necessary, to bring legal proceedings to establish
the existence and well-foundedness of the claim. If he does so, he must give third party notice
to the debtor (841 ZPO).
4.
Limits to Attachment
The attachment of assets in excess of the amount required to satisfy the creditors claim and 56
the costs of enforcement is, in principle, not permitted (803 (1) ZPO). For this reason, it
is possible to effect a partial attachment of a debt. In practice, however, uncertainty about
the extent to which attachment of an alleged debt owed by the garnishee to the debtor will
actually result in payment to the creditor means that it is not considered improper to attach
the whole debt initially. Any order for attachment that does not specify a particular amount
will be assumed to relate to the whole debt. The debtor can then bring an application for the
attachment to be restricted to reflect the amount actually owed to the creditor.
A money claim of the debtor against a garnishee may be attached even if it is not yet due. At- 57
tachment is available even if it is dependent on the debtor performing his part of the contract
or if it is conditional on some external event. Future claims may also be attached. If a debtor
has an overdraft agreement with his bank, this does not generally mean that the creditor can
attach this line of credit up to the agreed limit. The creditor usually only has access to sums
standing to the debtors credit in the account.
Various assets of the debtor are protected from enforcement. In particular, special rules 58
apply in relation to the attachment of wages, pensions and other forms of regular income
(850a850l ZPO). A certain portion of them will be protected from attachment to ensure
that the debtor has adequate means of subsistence.
5.
Transfer Order (berweisungsbeschluss)
The realisation of an attached claim is usually effected by means of the transfer of the debtors 59
claim against the garnishee to the creditor (835 ZPO). The transfer order is generally issued
with the attachment order. It entitles the creditor to collect a sum of money owing to the
debtor. The debt is not satisfied until the creditor receives payment. The debtor is obliged to
supply information to the creditor about the garnished debt, and to hand over the relevant
documents (836 (3) ZPO). The creditor may, if necessary, instruct the Gerichtsvollzieher to
seize such documents.
The garnishees position is not weakened by the attachment of the debt. He can, in particular, 60
plead all defences he could have pleaded against the debtor, e.g. set-off. However, because of
the garnishment order, he is no longer discharged from his liability if he makes payments to
the debtor after the attachment order was served on him.
Similar protection is given to the garnishee if the attachment order should not have been 61
made. As long as the attachment order is not lifted, the garnishee is discharged from his liability by making payments to the creditor (836 (2)ZPO).
1074
6.
Transfer of Garnished Claim
62 There are three different ways of proceeding in relation to the realisation of a garnished claim
(835, 844 ZPO). Once the court has ordered attachment of the claim, the creditor has to
choose which procedure to adopt to realise the value of the claim. First, the creditor may obtain a transfer of the right to claim payment. This means that the claim against the garnishee
itself remains the property of the debtor, but the creditor is able to take all steps necessary to
effect payment. The garnishee can then raise all defences that would have been available in
relation to the debtor. To assist the creditor, the debtor is obliged to provide him with all relevant documentation. Since the claim does not become the creditors property, the creditor
is in a position to resort to alternative methods of enforcement if the garnishee fails to make
payment. Under the second procedure, however, the claim itself is transferred to the creditor,
who then takes the risk of whether the garnishee will meet his payment obligations. Not
surprisingly, of these procedures, creditors tend to prefer the first method. The third alternative is to realise the value of the claim by other means, such as the auctioning or sale of the
claim. This applies when there are difficulties in simply transferring the claim (844 ZPO).
7.
Preliminary Attachment (Vorpfndung)
63 Preliminary attachment is particularly advantageous to the creditor where he has knowledge

of an attachable claim but where the court order has not yet been served on the debtor. This
is because it is sufficient for the creditor to have an enforceable court order. Service of the
court order and the certificate of enforceability are only necessary for the court order of
attachment.
64 If such quick action is necessary for the creditor in order to successfully attach a claim, he
may notify the debtor and the garnishee that the judicial attachment of the debt owing to
the debtor is imminent (845 ZPO). The notification must contain an order prohibiting
the garnishee from making payments to the debtor and an order prohibiting the debtor from
collecting the debt or otherwise disposing of the debt. It must also specify the claim to be
attached. The notification must be served on the garnishee and the debtor by the Gerichtsvollzieher. The court is not involved in making the notification, but it is also not sufficient if the
creditor serves the notification the acting entity must be the Gerichtsvollzieher.
65 The notification takes effect once served on the garnishee, provided the court order for attachment is issued and served within one month after service of the notification. A valid
notification secures priority of rank to the creditor because the court order of attachment is
deemed to have been served on the day the notification was served.
C.
Enforcement against Immovable Property
66 Enforcement against immovables, as well as registered ships and registered aircraft, takes
place if a creditor files a relevant application with the local court where the respective asset
is located.16
67 Three types of enforcement measures are available: (i.) registration of a compulsory mortgage, (ii.) compulsory sale, and (iii.) compulsory administration. The creditor may initiate
one or more enforcement measures at the same time. It is occasionally advisable to have a
mortgage registered in order to obtain priority of rank over other creditors. Compulsory
16
For sample applications, see Mes (ed.) (2013), Part III.B.32. et seq.
1075
sale is an adequate way of enforcing a decision for a large sum of money, and compulsory
administration gives the creditor a right to the yields of the estate.
1.
Compulsory Mortgage
An unsecured creditor may apply for the registration of a compulsory mortgage (866868 68
ZPO) in order to obtain priority of rank over other unsecured creditors. The registration of a
compulsory mortgage furthermore entitles the creditor to apply for compulsory sale by submitting the enforceable title, including the note of registration of the compulsory mortgage
(867 (3) ZPO). The creditor must apply to the office of the land register (Grundbuchamt)
for registration of the compulsory mortgage, which acts as enforcement authority in this
event.
2.
Compulsory Sale
The application for compulsory sale must be filed with the local court. It has to give details 69
about the estate against which enforcement is requested, the owner of the property, and the
court order the applicant wishes to have enforced. The order for compulsory sale (15 ZVG)
is usually made ex parte in order to prevent a sale by the debtor to the detriment of the creditor. The order must be served on the debtor (22 ZVG) and, upon motion of the creditor, on
the tenants and lessees (57b ZVG). The enforcement court also requests the office of the
land register to register the notice of compulsory sale (19 ZVG). The court is then given,
after registration, an up to date abstract of the relevant land register (Grundbuchauszug). The
procedure for the sale of the property is regulated in detail in 15-145a ZVG. The acting
enforcement authority is the local court.
3.
Compulsory Administration
The general rules relating to compulsory sale are applicable if compulsory administration 70
(146 et seq. ZVG) is applied for and ordered. The order attaches, for example, agricultural
produce, claims to rent or lease payments and to periodical payments arising from a right
accessory to ownership of an estate. The debtor loses his right to administrate and use the
property; instead, the local court must appoint an administrator. The administrator has to do
everything necessary for the preservation of the property and to make the best use possible
of the property.
V.
Enforcement of Non-Money Titles
Enforcement situations regarding non-money titles are quite common and important in 71
Germany, since there is an emphasis on claims for performance rather than damages. Five
different types of situations can be distinguished under German law:17
The debtor is required to undertake a particular action or series of actions, but these
are of a kind which could be performed by someone else (e.g. the debtor was under a
contract to repair a machine and the work can be done by someone else). These are
termed non-personal undertakings (vertretbare Handlungen);
The debtor is required to undertake a particular action or series of actions which only
he can adequately perform and performance lies within the debtors power (e.g. the
17
For this categorisation and examples, see Kennett (2000), pp.288-299.
1076
debtor possesses certain information which he is required to provide). These are termed
personal undertakings (nicht vertretbare Handlungen);
The debtor is required to refrain from a certain action or series of actions (e.g. the debtor
is marketing products which infringes the creditors intellectual property rights). This is
termed enforced abstention (Unterlassung);
The debtor is required to tolerate a certain action or series of actions which are undertaken by someone else (e.g. the creditor landlord wishes to make alterations to rental
property and requires the compliance of the tenant to gain access to the property). This
is termed enforced sufferance (Duldung); and
The debtor is required to hand over a specific piece of goods or make a declaration of
intention.
72 For the enforcement of this type of decision, the judge of the court of first instance is the
competent enforcement authority (887890 ZPO). In cases where an award has been
declared enforceable, this is the OLG.
A.
Non-Personal Undertakings
73 For non-personal undertakings, German law relies on enforcement through substitute

performance. This means that the creditor may have the work done by a third party at the
debtors expense. German law does not provide for fines to enforce non-personal undertakings. Court authorisation must be sought for substitute performance prior to employing a
third party to perform the debtors undertakings (887-888 ZPO). An order for substitute
performance will be made after hearing the debtor (891 ZPO). At the same time, it is possible to obtain an order requiring the debtor to advance the money needed to pay the third
party (887 (2) ZPO). If the debtor is in a position to resist enforcement, such as when
performance necessitates access to the debtors premises, the Gerichtsvollzieher may be called
upon to lend assistance (892 ZPO). The Gerichtsvollzieher has the same powers and obligations in this respect as in the case of forcible entry for the seizure of movables. In these cases,
the same considerations to privacy are applied.
B.
Personal Undertakings
74 Enforced performance of personal undertakings is not possible under German law if service contracts are to be enforced (888 (3) ZPO). It is also understood that fundamental
rights must be respected and this restricts the range of undertakings that can be enforced.
For example, it is not possible to oblige someone to make a will (2302 BGB and Article
14 (1) German Constitution (Grundgesetz GG). However, enforced performance may
be allowed in cases where for example the debtor controls access to information or property.
75 To enforce a personal undertaking the court can either impose a fine or imprisonment
(888(1) ZPO). It is not necessary to threaten the imposition of a fine before actually
imposing it (888 (2) ZPO). The law specifies maximum amounts for the fine. While the
minimum fine is EUR 5 (Article 6 Introductory Law to the Criminal Code (Einfhrungsgesetz zum Strafgesetzbuch EGStGB), the maximum fine is EUR 25,000 (888 (1) ZPO).
Rather than imposing a fine per day or week, the fine is a set amount which gives the creditor
an enforceable title. The debtor can prevent enforcement of this title at any time, however,
1077
by performing his obligation.18 If the debtor fails to perform, the creditor may enforce the
fine (by means of the methods of enforcement for payment of money as described supra),
and then seek the imposition of a new fine again subject to the maximum amount. Any
imposition of a fine presupposes an application by the creditor, but the fine itself must be
paid to the state.
The court may choose between imposing a fine and ordering imprisonment. It may also 76
order imprisonment in cases where the fine cannot be collected. However, imprisonment is
excluded for certain categories of persons, notably the sick and elderly (802h ZPO). The
maximum period of imprisonment is limited to six months (888 (1) sentence 3, 802j
ZPO). In practice, imprisonment is rarely ordered.
C.
Enforced Abstention and Enforced Sufferance
Generally, the same principles as those for enforcement of a personal undertaking apply to 77
enforced abstention and enforced sufferance. These can also be enforced by using fines (at
a maximum amount of EUR 250,000) or imprisonment (890 ZPO). However, fines or
imprisonment can only be enforced if the debtor was given warning beforehand (890 (2)
ZPO). This warning may be issued already in the order declaring an award enforceable. Additionally, fines or imprisonment may only be used if the debtor was negligent in not complying with the decision or if he wilfully refused to comply, and if the debtor was heard prior to
the imposition of an order of fine or imprisonment (891 ZPO).
Decisions regarding enforced abstention or sufferance must precisely describe the action that 78
is proscribed or to be tolerated, along with the circumstances under which it is forbidden or
to be allowed. Actions which are the substantial equivalent of the action proscribed are generally also covered. In many cases, for example in patent infringement or unfair competition
cases, it may be difficult to describe potential infringements or violations with particularity in
advance. On an application for enforcement, the court must determine whether the proven
conduct is sufficiently similar to that described in the decision to warrant sanctions.
D.
Recovery or Delivery of Things and Declaration of Intention
A decision that orders the debtor to hand over a movable asset or a number of specific mov- 79
able objects (883ZPO) or a specific number or amount of fungible goods (884 ZPO)
is enforced by the Gerichtsvollzieher, who takes away the goods if the debtor has actual possession and delivers them to the creditor. If the goods are in the possession of a third party
who does not consent to the taking away of the goods, the realisation of the creditors right
to the goods will be delayed, as he must then apply for an order of attachment relating to the
debtors right to reclaim possession against the third party (886 ZPO).
Where the decision orders the debtor to make a declaration of intention (Willenserklrung), 80
e.g. to accept an offer made by the creditor and specified in the operative part of the decision,
the creditor need not take any action in order to enforce the decision. In the case of an award
being declared enforceable, the debtor is deemed to have made the declaration of intention
specified in the award when the court order declaring the award enforceable becomes final
18
In a recent court decision the BGH held that it is up to the court and not the arbitral tribunal to review
whether the debtor has in fact performed his obligations, unless the arbitration agreement is to be interpreted to include disputes on the enforcement level, BGH 06.06.2013, BB 2013, 2323.
1078
( 894 ZPO).19 If the award demands mutual simultaneous performance (Zug-um-ZugLeistung), the declaration is deemed to have been made at the time when the creditor obtains
an enforceable copy of the court order declaring the award enforceable. In order to obtain the
enforceable copy, the creditor must show that he has fulfilled his obligations.
VI. Legal Remedies

81 The legal remedies available in enforcement proceedings enable the creditor, the debtor, or
third parties to challenge enforcement measures or decisions taken. There are a variety of
remedies available for each stage of the proceedings. The applicable type of remedy depends
on the party wishing to challenge enforcement, the type of measure to be challenged, the
acting enforcement agent and the type of challenge regarding procedural or substantive
aspects.
82 In on-going enforcement proceedings, the debtor can at any point raise the objection of
having performed his obligations (Erfllungseinwand). The Federal Court of Justice has
explicitly confirmed that this principle applies in enforcement proceedings of awards, unless
the arbitration agreement is to be interpreted to include disputes on the enforcement level.20
83 This chapter can only give an overview of some of the most important remedies: the objection (766 ZPO), the action against enforcement (767 ZPO) and the third party action
against enforcement (771 ZPO).
A.
Objection (Erinnerung)
84 The objection serves to challenge acts by the Gerichtsvollzieher or decisions by the enforcement court (judge or Rechtspfleger) that are issued without hearing the debtor (766 ZPO).21
For decisions by the enforcement court that are issued after hearing both parties, a different
remedy of complaint (sofortige Beschwerde, 793 ZPO) exists. However, the boundary
between these two types of remedies may be difficult to discern in certain situations.
85 The objection is lodged with the judge of the enforcement court. There is no mandatory
legal representation. It is admissible at any time from the beginning to the end of a particular
act of enforcement. The decision on an objection is always made by the judge, and may, for
example, declare one specific enforcement act inadmissible. The judge is entitled to make
an order for the provisional stay of enforcement until a decision on the objection is reached.
86 An objection may not be directed against enforcement as a whole, and questions of substantive law are not dealt with. Nevertheless, this type of objection has a wide range of application. For example, the debtor may object against (i.) the seizure of goods if there is no
certificate of enforceability attached to the court order, (ii.) seizure of non-attachable goods,
19
20
21

BGH 06.06.2013, BB 2013, 2323.
766 ZPO: (1) The court responsible for execution shall rule on petitions, objections, and reminders concerning the nature and manner of compulsory enforcement or the manner of proceeding to be
observed by the court-appointed officer in the course of compulsory enforcement. The execution court
is authorised to deliver the orders designated in section 732 (2). (2) The court responsible for execution
shall also be entitled to hand down the decision should a court-appointed enforcement officer refuse
to assume the enforcement instructions or to perform an enforcement action in accordance with the
instructions, or if reminders are lodged for the costs charged by the court appointed enforcement officer.
(Translation available at <www.gesetze-im-internet.de/englisch_zpo/index.html>).
1079
and (iii.) excessive distraint (berpfndung). The objection is only applicable where procedural defects are concerned. Therefore, the debtor cannot lodge an objection if he claims, for
example, that he does not own the object seized by the Gerichtsvollzieher.
B.
Action against Enforcement (Vollstreckungsgegenklage)
The action against enforcement (767 ZPO)22 is an action that challenges the enforce- 87
ability of a court order for reasons of substantive law. The action can only be brought by the
debtor and it has to be brought in the court where the original court order was rendered. In
proceedings where an award has been declared enforceable, that is the OLG.23 Such an action
is for declaring enforcement inadmissible, meaning not just a specific act of enforcement,
but all acts of enforcement under the court order.
The action can be successfully brought if the debtor can plead defences arising from substan- 88
tive law, such as satisfaction of the debt, set-off or settlement. The action against enforcement
can only be based on defences that arose after the final pleadings in the original action (767
(2) ZPO). According to prevailing case law, the relevant time is the day on which the defence
came into existence, not the day the debtor learned of the defence.24
The court acting in the matter can make an order for the stay of enforcement. The debtor may 89
in urgent cases apply for a provisional stay of enforcement to the enforcement court (769,
770 ZPO).
Difficulties may arise in this context if the defence from substantive law is already available 90
in the proceedings to have the award declared enforceable or even prior to the creditor
initiating such proceedings. It is generally accepted that a debtor may lodge an action against
enforcement even if the creditor has not initiated proceedings to have the award declared
enforceable either before the arbitral tribunal or, if the arbitral tribunal denies jurisdiction, before the OLG.25 If the creditor has initiated proceedings to have the award declared
enforceable, the debtor may according to the prevailing view raise his defences there.26
C.
Third Party Action against Enforcement (Drittwiderspruchsklage)
The rights of third parties (i.e. persons other than creditor and debtor) can be easily infringed 91
in enforcement proceedings because enforcement is levied against the movable goods that
are in the debtors possession, and thereby the third partys right of ownership may be violated. The third party action against enforcement enables the third party to plead his title to
22
23
24
25
26
767 ZPO: (1) Debtors are to assert objections that concern the claim itself as established by the judgment by filing a corresponding action with the court of first instance hearing the case. (2) Such objections
by way of an action may admissibly be asserted only insofar as the grounds on which they are based arose
only after the close of the hearing that was the last opportunity, pursuant to the stipulations of the present
Code, for objections to be asserted, and thus can no longer be asserted by entering a protest. (3) In the
action that he is to file, the debtor must assert all objections that he was able to assert at the time at which
he filed the action. (Translation available at <www.gesetze-im-internet.de/englisch_zpo/index.html>).
Stein/Jonas-Schlosser (2002), 1063 paras4-5; see also Wagner, Note BayObLG 12.04.2000, JZ 2000,
1171; controversial.
See Zller-Herget (2014), 767 para.14 with references to case law.
Stein/Jonas-Schlosser (2002), 1063 paras5-7.
Controversial; for details and a different view see Part II, Krll, 1061 paras 160 et seq.
1080
goods or rights (771ZPO).27 The action is brought before the court in the district in which
the enforcement was effected. Depending on the amount in dispute, the local court or the
regional court (Landgericht LG) will be competent. The action is for a judgment that orders the inadmissibility of enforcement regarding the particular piece of property belonging
to the third party.
92 The action is directed against a specific enforcement measure and does not challenge the
validity of enforcement as a whole. The third party must have a right to the seized or attached
property that would make it unlawful for the debtor to dispose of it. The most important example is ownership. Retention of title (Eigentumsvorbehalt), where the seller remains owner
of goods delivered into the possession of the purchaser until payment of the purchase price
in full, is also a valid reason for a third party to bring an action against enforcement. This is
because the third party is the owner of the property as long as the purchasers contingent
right does not change into full title.
D.
Stay of Enforcement
93 A temporary stay of enforcement may be ordered in all cases where a remedy is lodged
against a particular enforcement measure or against enforcement as a whole (707, 719
ZPO). The enforcement measures that were taken before the temporary stay of enforcement
was ordered are not lifted in order to preserve the creditors rank, unless the lifting is expressly
ordered (776 ZPO). The creditor is furthermore in a position to grant a de facto stay of
enforcement to the debtor by temporarily withdrawing his application for enforcement.
94 Enforcement must be finally stayed if the debtor furnishes proof that the debt was paid or
that the creditor has granted the debtor a respite (775 Nos 4 and 5 ZPO).
VII. Enforcement Costs

95 The costs incurred in the enforcement of a court order must be borne by the debtor (788
(1) ZPO). The only exception to this rule is where it would appear to be unjust and inequitable to burden the debtor with all or part of the costs, owing to the conduct of the creditor
(788 (4) ZPO).
96 In all cases of enforcement, the creditor can only recover necessary costs, i.e. the costs that the
creditor has to incur in order to succeed in enforcing the decision. This rule aims at protecting
the debtor from obviously unavailing attempts of enforcement. The fees of the creditors attorney are necessary costs, regardless of whether legal representation was mandatory or not.
97 The creditors costs can be enforced together with the awarded sum. Regarding the costs incurred in the proceedings to have the award declared enforceable, the creditor may apply for
an additional court order (Kostenfestsetzungsbeschluss, 104 ZPO), which serves as a further
enforceable title. This application can be filed with the OLG competent for the declaration
27
771 ZPO: (1) If a third party claims to have title preventing the disposal of an object subject to
compulsory enforcement, it shall lodge the opposition against compulsory enforcement by filing a
corresponding court action with the court in the district of which compulsory enforcement is being
pursued. (2) Where the action is filed both against the creditor and the debtor, they are to be deemed
joined parties. (3) The stipulations of sections 769 and 770 shall apply mutatis mutandis to instances
in which compulsory enforcement is stayed, and to the abrogation of any enforcement activities already
pursued. Enforcement activities admissibly may be abrogated also without any security being provided.
(Translation available at <www.gesetze-im-internet.de/englisch_zpo/index.html>).
1081
of enforceability. Regarding the costs of enforcement, it suffices to simply attach a list of the
costs incurred in the enforcement of the decision. It only becomes necessary for the creditor
to justify these costs if the debtor, the Gerichtsvollzieher or the Rechtspfleger, expresses doubts
as to these costs.
The creditor must advance costs and expenses in enforcement proceedings. To avoid in- 98
curring non-reimbursable costs, the creditor should carefully weigh the pros and cons of a
particular enforcement measure and should try to assess in advance the probability of obtaining adequate recovery. However, the costs of enforcement are not necessarily substantial.
Court measures will generally only incur small flat fees of up to EUR 35 for each measure.
The activities of the Gerichtsvollzieher also incur flat fees per activity between EUR 16 and
130 depending on the type of measure and the amount of time necessary to carry out the
activity. He must also be reimbursed for any travelling costs. More substantial amounts may
accrue if the creditor chooses to use an attorney to conduct the enforcement proceedings.
The attorneys fees will be calculated based on the amount in dispute, and therefore, will vary
accordingly.
Annex I
SYNOPSIS ON THE UNCITRAL MODEL LAW AND THE
GERMAN ARBITRATION LAW
UNCITRAL MODEL LAW
GERMAN ARBITRATION LAW
on International Commercial Arbitration
Tenth Book of the Code of Civil

Procedure
(United Nations document A/40/17,

annex I)
(As adopted by the United Nations
Commission on International Trade Law
on 21 June 1985)
CHAPTER I. GENERAL PROVISIONS
Article 1. Scope of application*
(1) This Law applies to international commercial** arbitration, subject to any agreement in force between this State and any
other State or States.
(2) The provisions of this Law, except articles
8, 9, 17 H, 17 I, 17 J, 35 and 36, apply only
if the place of arbitration is in the territory of
this State.
Act on the Reform of the Law relating to

Arbitral Proceedings of 22 December 1997
Bundesgesetzblatt (Federal Law Gazette)
1997 Part I page 3224 et seq.) as in force
since 1 January 1998
CHAPTER I. GENERAL PROVISIONS
1025 Scope of application
[]1
(1) The provisions of this Book apply if the
place of arbitration as referred to in 1043
subs. 1 is situated in Germany.
(2) The provisions of sections 1032, 1033 and
1050 (court support) also apply if the place of
arbitration is situated outside Germany or has
not yet been determined.
()2
* Article headings are for reference purposes only and are not to be used for purposes of interpretation.
** The term commercial should be given a wide interpretation so as to cover matters arising from all
relationships of a commercial nature, whether contractual or not. Relationships of a commercial nature
include, but are not limited to, the following transactions: any trade transaction for the supply or exchange
of goods or services; distribution agreement; commercial representation or agency; factoring; leasing;
construction of works; consulting; engineering; licensing; investment; financing; banking; insurance;
exploitation agreement or concession; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or road.
1 Not included into German law as its scope of application is not limited to international or commercial arbitration
and the prevalence of international treaties is self-understood.
2 Addition for constitution of tribunal where place of arbitration has not yet been determined:
1025
(3) If the place of arbitration has not yet been determined, the German courts are competent to perform
the court functions specified in 1034, 1035, 1037 and 1038 if the respondent or the claimant has his
place of business or habitual residence in Germany.
1084
(4) 1061 to 1065 apply to the recognition

and enforcement of foreign arbitral awards.
(3) An arbitration is international if:
(a) the parties to an arbitration agreement
have, at the time of the conclusion of that
agreement, their places of business in different States; or
(b) one of the following places is situated
outside the State in which the parties have
their places of business:
(i) the place of arbitration if determined in, or
pursuant to, the arbitration agreement;
(ii) any place where a substantial part of the
obligations of the commercial relationship is
to be performed or the place with which the
subject-matter of the dispute is most closely
connected; or
(c) the parties have expressly agreed that the
subject matter of the arbitration agreement
relates to more than one country.
(4) For the purposes of paragraph (3) of this
article:
(a) if a party has more than one place of
business, the place of business is that which
has the closest relationship to the arbitration
agreement;
(b) if a party does not have a place of business, reference is to be made to his habitual
residence.
(5) This Law shall not affect any other law of
this State by virtue of which certain disputes
may not be submitted to arbitration or may
be submitted to arbitration only according to
provisions other than those of this Law.
3
5
[]3
1030 Arbitrability
()5
(3) Statutory provisions outside this Book by
virtue of which certain disputes may not be
submitted to arbitration, or may be submitted
to arbitration only under certain conditions,
remain unaffected.
Not required as no limitation to international arbitration.

1030 Arbitrability
(1) Any claim involving an economic interest (vermgensrechtlicher Anspruch) can be the subject of an
arbitration agreement. An arbitration agreement concerning claims not involving an economic interest
shall have legal effect to the extent that the parties are entitled to conclude a settlement on the issue in
dispute.
(2) An arbitration agreement relating to disputes on the existence of a lease of residential accommodation
within Germany shall be null and void. This does not apply to residential accommodation as specified in
556a subs. 8 of the Civil Code.
Annex I
Article 2. Definitions and rules of interpretation

For the purposes of this Law:
(a) arbitration means any arbitration
whether or not administered by a permanent
arbitral institution;
(b) arbitral tribunal means a sole arbitrator
or a panel of arbitrators;
(c) court means a body or organ of the
judicial system of a State;
(d) where a provision of this Law, except
article 28, leaves the parties free to determine
a certain issue, such freedom includes the
right of the parties to authorize a third party,
including an institution, to make that determination;
(e) where a provision of this Law refers to
the fact that the parties have agreed or that
they may agree or in any other way refers to
an agreement of the parties, such agreement
includes any arbitration rules referred to in
that agreement;
(f) where a provision of this Law, other than
in articles 25(a) and 32(2) (a), refers to a
claim, it also applies to a counter-claim, and
where it refers to a defence, it also applies to a
defence to such counter-claim.
Article 3. Receipt of written
communications
(1) Unless otherwise agreed by the parties:
(a) any written communication is deemed to
have been received if it is delivered to the addressee personally or if it is delivered at his place of
business, habitual residence or mailing address;
if none of these can be found after making a
reasonable inquiry, a written communication
is deemed to have been received if it is sent to
the addressees last-known place of business,
habitual residence or mailing address by
registered letter or any other means which
provides a record of the attempt to deliver it;
(b) the communication is deemed to have
been received on the day it is so delivered.
Definitions are considered to be self-explanatory.
1085
[]6
1028 Receipt of written

communications in case of unknown
whereabouts
(1) Unless otherwise agreed by the parties, if
the whereabouts of a party or of a person entitled to receive communications on his behalf
are not known, any written communication
shall be deemed to have been received on the
day on which it could have been received at
the addressees last-known mailing address,
place of business or habitual residence after
proper transmission by registered mail/
return receipt requested or any other means
which provides a record of the attempt to
deliver it there.
1086
(2) The provisions of this article do not apply

to communications in court proceedings.
(2) Subsection 1 does not apply to communications in court proceedings.
Article 4. Waiver of right to object

A party who knows that any provision of this
Law from which the parties may derogate or
any requirement under the arbitration agreement has not been complied with and yet
proceeds with the arbitration without stating
his objection to such non-compliance without undue delay or, if a time-limit is provided
therefor, within such period of time, shall be
deemed to have waived his right to object.
1027 Loss of right to object

A party who knows that any provision of this
Book from which the parties may derogate
or any agreed requirement under the arbitral
procedure has not been complied with and
yet proceeds with the arbitration without
stating his objection to such non-compliance
without undue delay or, if a time-limit is
provided therefor, within such period of time,
may not raise that objection later.
Article 5. Extent of court intervention

In matters governed by this Law, no court
shall intervene except where so provided in
this Law.
1026 Extent of court intervention

In matters governed by sections 1025 to
1061, no court shall intervene except where
so provided in this Book.
Article 6. Court or other authority for

certain functions of arbitration assistance
and supervision
The functions referred to in articles 11(3),
11(4), 13(3), 14, 16(3) and 34(2) shall be
performed by [Each State enacting this
model law specifies the court, courts or,
where referred to therein, other authority
competent to perform these functions.]
[]8
CHAPTER II. ARBITRATION

AGREEMENT
CHAPTER II. ARBITRATION

AGREEMENT
Article 7. Definition and form of

arbitration agreement (As adopted by the
Commission at its thirty-ninth session,
in 2006)
(1) Arbitration agreement is an agreement
by the parties to submit to arbitration all or
certain disputes which have arisen or which
may arise between them in respect of a defined legal relationship, whether contractual
or not. An arbitration agreement may be in
the form of an arbitration clause in a contract
or in the form of a separate agreement.
1029 Definition
(1) Arbitration agreement is an agreement
by the parties to submit to arbitration all or
certain disputes which have arisen or which
may arise between them in respect of a defined legal relationship, whether contractual
or not.
(2) An arbitration agreement may be in the
form of a separate agreement (separate arbitration agreement) or in the form of a clause
in a contract (arbitration clause).
Specified in 1062 in Chapter IX. COURT PROCEEDINGS, which regulates the general questions of arbitration related court proceedings.
Annex I
(2) The arbitration agreement shall be in

writing. An agreement is in writing if it is contained in a document signed by the parties
or in an exchange of letters, telex, telegrams
or other means of telecommunication which
provide a record of the agreement, or in an
exchange of statements of claim and defence in
which the existence of an agreement is alleged
by one party and not denied by another. The
reference in a contract to any document
containing an arbitration clause constitutes
an arbitration agreement in writing, provided
that the reference is such as to make that
clause part of the contract.
Article 8. Arbitration agreement and
substantive claim before court
(1) A court before which an action is brought
in a matter which is the subject of an arbitration agreement shall, if a party so requests not
later than when submitting his first statement
on the substance of the dispute, refer the
parties to arbitration unless it finds that the
agreement is null and void, inoperative or
incapable of being performed.
10
11
12
13
1087
1031 Form of arbitration agreement

(1) The arbitration agreement shall be contained either in a document signed by the
parties or in an exchange of letters, telefaxes,
telegrams or other means of telecommunication which provide a record of the agreement.
()9
(3) The reference in a contract complying
with the form requirements of subsection 1
or 2 to a document containing an arbitration
clause constitutes an arbitration agreement
provided that the reference is such as to make
that clause part of the contract.
()10
1032 Arbitration agreement and
substantive claim before court
(1) A court before which an action is brought
in a matter which is the subject of an arbitration agreement shall, if the respondent raises
an objection prior to the beginning of the oral
hearing on the substance of the dispute,11 reject
the action as inadmissible12 unless the court
finds that the arbitration agreement is null
and void, inoperative or incapable of being
performed.
()13 [Deviation of practical importance]
Alleviation of the form requirement:

(2) The form requirement of subsection 1 shall be deemed to have been complied with if the arbitration
agreement is contained in a document transmitted from one party to the other party or by a third party to
both parties and if no objection was raised in good time the contents of such document are considered
to be part of the contract in accordance with common usage.
(4) An arbitration agreement is also concluded by the issuance of a bill of lading, if the latter contains an
express reference to an arbitration clause in a charter party.
(5) Arbitration agreements to which a consumer is a party must be contained in a document which has
been personally signed by the parties. No agreements other than those referring to the arbitral proceedings may be contained in such a document; this shall not apply in the case of a notarial certification. A
consumer is a natural person who, in respect of the transaction in dispute, is acting for a purpose which
can be regarded as being outside his trade or self-employed profession (gewerbliche oder selbstndige
berufliche Ttigkeit).
(6) Any non-compliance with the form requirements is cured by entering into argument on the substance of the dispute in the arbitral proceedings.
Later than under the Model Law where the first statement on the merits is relevant.
Mere stay of court proceedings is not possible, but the action has to be rejected as inadmissible.
(2) Prior to the constitution of the arbitral tribunal, an application may be made to the court to determine whether or not arbitration is admissible.
1088
(2) Where an action referred to in paragraph

(1) of this article has been brought, arbitral
proceedings may nevertheless be commenced or continued, and an award may be
made, while the issue is pending before the
court.
(3) Where an action or application referred

to in subsection 1 or 2 has been brought,
arbitral proceedings may nevertheless be
commenced or continued, and an arbitral
award may be made, while the issue is pending before the court.
Article 9. Arbitration agreement and

interim measures by court
It is not incompatible with an arbitration
agreement for a party to request, before or
during arbitral proceedings, from a court an
interim measure of protection and for a court
to grant such measure.
1033 Arbitration agreement and

interim measures by court
It is not incompatible with an arbitration
agreement for a court to grant, before or during arbitral proceedings, an interim measure
of protection relating to the subject-matter of
the arbitration upon request of a party.
CHAPTER III. COMPOSITION OF

ARBITRAL TRIBUNAL
CHAPTER III. CONSTITUTION OF

ARBITRAL TRIBUNAL
Article 10. Number of arbitrators

(1) The parties are free to determine the
number of arbitrators.
(2) Failing such determination, the number
of arbitrators shall be three.
1034 Composition of arbitral tribunal

(1) The parties are free to determine the number of arbitrators. Failing such determination,
the number of arbitrators shall be three.
()14
Article 11. Appointment of arbitrators

(1) No person shall be precluded by reason
of his nationality from acting as an arbitrator,
unless otherwise agreed by the parties.
(2) The parties are free to agree on a procedure of appointing the arbitrator or arbitrators, subject to the provisions of paragraphs
(4) and (5) of this article.
1035 Appointment of arbitrators
(3) Failing such agreement,

(a) in an arbitration with three arbitrators,
each party shall appoint one arbitrator, and
the two arbitrators thus appointed shall appoint the third arbitrator; if a party fails to
appoint the arbitrator within thirty days of
[]15
(1) The parties are free to agree on a procedure of appointing the arbitrator or arbitrators.
()16
(3) Failing an agreement between the parties on the appointment of the arbitrators, a
sole arbitrator shall, if the parties are unable
to agree on his appointment, be appointed,
upon request of a party, by the court. In an
arbitration with three arbitrators, each party
14 (2) If the arbitration agreement grants preponderant rights to one party with regard to the composition
of the arbitral tribunal which place the other party at a disadvantage, that other party may request the
court to appoint the arbitrator or arbitrators in deviation from the nomination made, or from the agreed
nomination procedure. The request must be submitted at the latest within two weeks of the party becoming aware of the constitution of the arbitral tribunal. 1032 subs. 3 applies mutatis mutandis.
15 Considered to be self-explanatory.
16 (2) Unless otherwise agreed by the parties, a party shall be bound by his appointment of an arbitrator as
soon as the other party has received notice of the appointment.
Annex I
1089
receipt of a request to do so from the other

party, or if the two arbitrators fail to agree
on the third arbitrator within thirty days of
their appointment, the appointment shall be
made, upon request of a party, by the court or
other authority specified in article 6;
(b) in an arbitration with a sole arbitrator, if
the parties are unable to agree on the arbitrator, he shall be appointed, upon request of a
party, by the court or other authority specified in article 6.
(4) Where, under an appointment procedure
agreed upon by the parties,
(a) a party fails to act as required under such
procedure, or
(b) the parties, or two arbitrators, are unable
to reach an agreement expected of them under such procedure, or
(c) a third party, including an institution, fails
to perform any function entrusted to it under
such procedure,
any party may request the court or other
authority specified in article 6 to take the
necessary measure, unless the agreement on
the appointment procedure provides other
means for securing the appointment.
(5) A decision on a matter entrusted by paragraph (3) or (4) of this article to the court or
other authority specified in article 6 shall be subject to no appeal.17 The court or other authority, in appointing an arbitrator, shall have due
regard to any qualifications required of the
arbitrator by the agreement of the parties and
to such considerations as are likely to secure
the appointment of an independent and impartial arbitrator and, in the case of a sole or
third arbitrator, shall take into account as well
the advisability of appointing an arbitrator of
a nationality other than those of the parties.
shall appoint one arbitrator, and the two arbitrators thus appointed shall appoint the
third arbitrator who shall act as chairman of
the arbitral tribunal. If a party fails to appoint
the arbitrator within one month of receipt of
a request to do so from the other party, or if
the two arbitrators fail to agree on the third
arbitrator within one month of their appointment, the appointment shall be made, upon
request of a party, by the court.
Article 12. Grounds for challenge

arbitrator, he shall disclose any circumstances
1036 Challenge of an arbitrator

arbitrator, he shall disclose any circumstances
(4) Where, under an appointment procedure

agreed upon by the parties, a party fails to act
as required under such procedure, or if the
parties, or two arbitrators, are unable to reach
an agreement expected of them under such
procedure, or a third party fails to perform
any function entrusted to it under such procedure, any party may request the court to take
the necessary measure, unless the agreement
on the appointment procedure provides
other means for securing the appointment.
(5) The court, in appointing an arbitrator,

shall have due regard to any qualifications
required of the arbitrator by the agreement of
the parties and to such considerations as are
likely to secure the appointment of an independent and impartial arbitrator. In the case
of a sole or third arbitrator, the court shall
take into account as well the advisability of
appointing an arbitrator of a nationality other
than those of the parties.
17 Under German Law an appeal is excluded by virtue of 1065 ZPO in the special chapter on arbitration related
court proceedings..
1090
likely to give rise to justifiable doubts as to

his impartiality or independence. An arbitrator, from the time of his appointment and
throughout the arbitral proceedings, shall
without delay disclose any such circumstances to the parties unless they have already
been informed of them by him.
(2) An arbitrator may be challenged only if
circumstances exist that give rise to justifiable
doubts as to his impartiality or independence,
or if he does not possess qualifications agreed
to by the parties. A party may challenge an
arbitrator appointed by him, or in whose
appointment he has participated, only for
reasons of which he becomes aware after the
appointment has been made.
likely to give rise to justifiable doubts as to

his impartiality or independence. An arbitrator, from the time of his appointment and
throughout the arbitral proceedings, shall
without delay disclose any such circumstances to the parties unless they have already
been informed of them by him.
(2) An arbitrator may be challenged only if
circumstances exist that give rise to justifiable
doubts as to his impartiality or independence,
or if he does not possess qualifications agreed
to by the parties. A party may challenge an
arbitrator appointed by him, or in whose
appointment he has participated, only for
reasons of which he becomes aware after the
appointment has been made.
Article 13. Challenge procedure

the provisions of paragraph (3) of this article.
(2) Failing such agreement, a party who intends to challenge an arbitrator shall, within
fifteen days after becoming aware of the
constitution of the arbitral tribunal or after
becoming aware of any circumstance referred
to in article 12(2), send a written statement
of the reasons for the challenge to the arbitral
tribunal. Unless the challenged arbitrator
withdraws from his office or the other party
agrees to the challenge, the arbitral tribunal
shall decide on the challenge.
(3) If a challenge under any procedure agreed
upon by the parties or under the procedure of
paragraph (2) of this article is not successful,
the challenging party may request, within
thirty days after having received notice of the
decision rejecting the challenge, the court or
other authority specified in article 6 to decide
on the challenge, which decision shall be subject
to no appeal;18 while such a request is pending,
the arbitral tribunal, including the challenged
arbitrator, may continue the arbitral proceedings and make an award.
1037 Challenge procedure

the provisions of subsection 3 of this section.
(2) Failing such agreement, a party who
intends to challenge an arbitrator shall,
within two weeks after becoming aware of the
constitution of the arbitral tribunal or after
becoming aware of any circumstance referred
to in 1036 subs. 2, send a written statement
of the reasons for the challenge to the arbitral
tribunal. Unless the challenged arbitrator
withdraws from his office or the other party
agrees to the challenge, the arbitral tribunal
shall decide on the challenge.
(3) If a challenge under any procedure agreed
upon by the parties or under the procedure of
subsection 2 of this section is not successful,
the challenging party may request, within
one month after having received notice of the
decision rejecting the challenge, the court to
decide on the challenge; the parties may agree
on a different time-limit. While such a request
is pending, the arbitral tribunal, including
the challenged arbitrator, may continue the
arbitral proceedings and make an award.
court proceedings..
Annex I
Article 14. Failure or impossibility to act

(1) If an arbitrator becomes de jure or de facto
unable to perform his functions or for other
reasons fails to act without undue delay, his
mandate terminates if he withdraws from his
office or if the parties agree on the termination. Otherwise, if a controversy remains concerning any of these grounds, any party may
request the court or other authority specified
in article 6 to decide on the termination of
the mandate, which decision shall be subject to
no appeal.20
(2) If, under this article or article 13(2), an
arbitrator withdraws from his office or a party
agrees to the termination of the mandate of an
arbitrator, this does not imply acceptance of
the validity of any ground referred to in this
article or article 12(2).
Article 15. Appointment of substitute
arbitrator
Where the mandate of an arbitrator terminates under article 13 or 14 or because of his
withdrawal from office for any other reason or
because of the revocation of his mandate by
agreement of the parties or in any other case
of termination of his mandate, a substitute
arbitrator shall be appointed according to the
rules that were applicable to the appointment
of the arbitrator being replaced.
1091
1038 Failure or impossibility to act

(1) If an arbitrator becomes de jure or de facto
unable to perform his functions or for other
reasons fails to act without undue delay, his
mandate terminates if he withdraws from his
office or if the parties agree on the termination. If the arbitrator does not withdraw from
his office or if the parties cannot agree on the
termination, any party may request the court
to decide on the termination of the mandate.19
(2) If, under subsection 1 of this section or
1037 subs. 2, an arbitrator withdraws from his
office or a party agrees to the termination of
the mandate of an arbitrator, this does not imply acceptance of the validity of any ground
for withdrawal referred to in subsection 1 of
this section or 1036 subs. 2.
1039 Appointment of substitute
arbitrator
(1) Where the mandate of an arbitrator terminates under 1037 or 1038 or because of
his withdrawal from office for any other reason or because of the revocation of his mandate by agreement of the parties, a substitute
arbitrator shall be appointed according to the
rules that were applicable to the appointment
of the arbitrator being replaced.
()21
CHAPTER IV. JURISDICTION OF

ARBITRAL TRIBUNAL
CHAPTER IV. JURISDICTION OF

ARBITRAL TRIBUNAL
Article 16. Competence of arbitral tribunal

to rule on its jurisdiction
(1) The arbitral tribunal may rule on its own
jurisdiction, including any objections with
respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract
1040 Competence of arbitral tribunal

to rule on its jurisdiction
(1) The arbitral tribunal may rule on its own
jurisdiction and in this connection on the
existence or validity of the arbitration agreement. For that purpose, an arbitration clause
which forms part of a contract shall be treated
19 Considered to be self-explanatory.
20 Appeal excluded by virtue of 1065 ZPO in the special chapter on arbitration related court proceedings.
21 (2) The parties are free to agree on another procedure.
1092
shall be treated as an agreement independent

of the other terms of the contract. A decision
by the arbitral tribunal that the contract is null
and void shall not entail ipso jure the invalidity
of the arbitration clause.22
(2) A plea that the arbitral tribunal does not
have jurisdiction shall be raised not later than
the submission of the statement of defence. A
party is not precluded from raising such a plea
by the fact that he has appointed, or participated in the appointment of, an arbitrator. A
plea that the arbitral tribunal is exceeding the
scope of its authority shall be raised as soon as
the matter alleged to be beyond the scope of
its authority is raised during the arbitral proceedings. The arbitral tribunal may, in either
case, admit a later plea if it considers the delay
justified.
(3) The arbitral tribunal may rule on a plea
referred to in paragraph (2) of this article either as a preliminary question or in an award
on the merits. If the arbitral tribunal rules as a
preliminary question that it has jurisdiction,
any party may request, within thirty days
after having received notice of that ruling, the
court specified in article 6 to decide the matter, which decision shall be subject to no appeal;23
while such a request is pending, the arbitral
tribunal may continue the arbitral proceedings and make an award.
as an agreement independent of the other

terms of the contract.
Article 17. Power of arbitral tribunal to

order interim measures
Unless otherwise agreed by the parties, the
arbitral tribunal may, at the request of a party,
order any party to take such interim measure
of protection as the arbitral tribunal may
consider necessary in respect of the subjectmatter of the dispute. The arbitral tribunal
may require any party to provide appropriate
security in connection with such measure.
1041 Interim measures of protection

(1) Unless otherwise agreed by the parties,
the arbitral tribunal may, at the request of a
party, order such interim measures of protection as the arbitral tribunal may consider
necessary in respect of the subject-matter of
the dispute. The arbitral tribunal may require
any party to provide appropriate security in
connection with such measure.
(2) A plea that the arbitral tribunal does not

have jurisdiction shall be raised not later than
the submission of the statement of defence. A
party is not precluded from raising such a plea
by the fact that he has appointed, or participated in the appointment of, an arbitrator. A
plea that the arbitral tribunal is exceeding the
scope of its authority shall be raised as soon as
the matter alleged to be beyond the scope of
its authority is raised during the arbitral proceedings. The arbitral tribunal may, in either
case, admit a later plea if it considers that the
party has justified the delay.
(3) If the arbitral tribunal considers that it
has jurisdiction, it rules on a plea referred to
in subsection 2 of this section in general 24 by
means of a preliminary ruling. In this case, any
party may request, within one month after
having received written notice of that ruling,
the court to decide the matter. While such a
request is pending, the arbitral tribunal may
continue the arbitral proceedings and make
an award.
22 Omitted in the German Arbitration Law as it is considered to be self- understood.

court proceedings.
24 Preliminary ruling should be the rule.
Annex I
1093
()25
CHAPTER V. CONDUCT OF
ARBITRAL PROCEEDINGS
CHAPTER V. CONDUCT OF
ARBITRAL PROCEEDINGS
Article 18. Equal treatment of parties

The parties shall be treated with equality and
each party shall be given a full opportunity of
presenting his case.
1042 General rules of procedure

(1) The parties shall be treated with equality
and each party shall be given a full opportunity of presenting his case.
()26
Article 19. Determination of rules of

procedure
(1) Subject to the provisions of this Law, the
parties are free to agree on the procedure to
be followed by the arbitral tribunal in conducting the proceedings.
(2) Failing such agreement, the arbitral tribunal may, subject to the provisions of this Law,
conduct the arbitration in such manner as it
considers appropriate. The power conferred
upon the arbitral tribunal includes the power
to determine the admissibility, relevance,
materiality and weight of any evidence.
Article 20. Place of arbitration
(1) The parties are free to agree on the place
of arbitration. Failing such agreement, the
place of arbitration shall be determined by the
arbitral tribunal having regard to the circumstances of the case, including the convenience
of the parties.
(2) Notwithstanding the provisions of paragraph (1) of this article, the arbitral tribunal
may, unless otherwise agreed by the parties,
meet at any place it considers appropriate for
consultation among its members, for hearing
witnesses, experts or the parties, or for inspection of goods, other property or documents.
(3) Otherwise, subject to the mandatory

provisions of this Book, the parties are free
to determine the procedure themselves or by
reference to a set of arbitration rules.
(4) Failing an agreement by the parties, and
in the absence of provisions in this Book, the
arbitral tribunal shall conduct the arbitration
in such manner as it considers appropriate.
The arbitral tribunal is empowered to determine the admissibility of taking evidence,
take evidence and assess freely such evidence.
1043 Place of arbitration
(1) The parties are free to agree on the place
of arbitration. Failing such agreement, the
place of arbitration shall be determined by the
arbitral tribunal having regard to the circumstances of the case, including the convenience
of the parties.
(2) Notwithstanding the provisions of subsection 1 of this section, the arbitral tribunal
may, unless otherwise agreed by the parties,
meet at any place it considers appropriate
for an oral hearing,27 for hearing witnesses,
experts or the parties, for consultation among
its members or for inspection of property or
documents.
25 Additions concerning court enforcement of such measures:

(2) The court may, at the request of a party, permit enforcement of a measure referred to in subsection
1, unless application for a corresponding interim measure has already been made to a court. It may recast
such an order if necessary for the purpose of enforcing the measure.
(3) The court may, upon request, repeal or amend the decision referred to in subsection 2.
26 (2) Counsel may not be excluded from acting as authorised representatives.
27 Clarification.
1094
Article 21. Commencement of arbitral

proceedings
arbitral proceedings in respect of a particular
dispute commence on the date on which a
request for that dispute to be referred to arbitration is received by the respondent.
1044 Commencement of arbitral

proceedings
arbitral proceedings in respect of a particular
dispute commence on the date on which
a request for that dispute to be referred to
arbitration is received by the respondent. The
request shall state the names of the parties, the
subject-matter of the dispute and contain a reference to the arbitration agreement.28
Article 22. Language

proceedings. Failing such agreement, the
arbitral tribunal shall determine the language
or languages to be used in the proceedings.
This agreement or determination, unless
otherwise specified therein, shall apply to any
written statement by a party, any hearing and
any award, decision or other communication
by the arbitral tribunal.
(2) The arbitral tribunal may order that any
documentary evidence shall be accompanied
by a translation into the language or languages
agreed upon by the parties or determined by
1045 Language of proceedings

proceedings. Failing such agreement, the
arbitral tribunal shall determine the language
or languages to be used in the proceedings.
This agreement or determination, unless
otherwise specified therein, shall apply to any
written statement by a party, any hearing and
any award, decision or other communication
by the arbitral tribunal.
(2) The arbitral tribunal may order that any
documentary evidence shall be accompanied
by a translation into the language or languages
agreed upon by the parties or determined by
Article 23. Statements of claim and

defence
(1) Within the period of time agreed by the
parties or determined by the arbitral tribunal,
the claimant shall state the facts supporting
his claim, the points at issue and the relief or
remedy sought, and the respondent shall state
his defence in respect of these particulars,
unless the parties have otherwise agreed as to
the required elements of such statements. The
parties may submit with their statements
all documents they consider to be relevant
or may add a reference to the documents or
other evidence they will submit.
either party may amend or supplement
his claim or defence during the course of
1046 Statements of claim and defence

(1) Within the period of time agreed by the
parties or determined by the arbitral tribunal,
the claimant shall state his claim and the facts
supporting the claim, and the respondent
shall state his defence in respect of these
particulars. The parties may submit with their
statements all documents they consider to
be relevant or may add a reference to other
evidence they will submit.
28 Considered primarily to be a clarification.

either party may amend or supplement
his claim or defence during the course of
the arbitral proceedings, unless the arbitral
Annex I
the arbitral proceedings, unless the arbitral

tribunal considers it inappropriate to allow
such amendment having regard to the delay
in making it.
Article 24. Hearings and written
proceedings
(1) Subject to any contrary agreement by
the parties, the arbitral tribunal shall decide
whether to hold oral hearings for the presentation of evidence or for oral argument, or
whether the proceedings shall be conducted
on the basis of documents and other materials. However, unless the parties have agreed
that no hearings shall be held, the arbitral
tribunal shall hold such hearings at an appropriate stage of the proceedings, if so requested
by a party.
(2) The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes
of inspection of goods, other property or
documents.
(3) All statements, documents or other information supplied to the arbitral tribunal by
one party shall be communicated to the other
party. Also any expert report or evidentiary
document on which the arbitral tribunal may
rely in making its decision shall be communicated to the parties.
Article 25. Default of a party
Unless otherwise agreed by the parties, if,
without showing sufficient cause,
(a) the claimant fails to communicate his
statement of claim in accordance with article
23(1), the arbitral tribunal shall terminate the
proceedings;
(b) the respondent fails to communicate his
statement of defence in accordance with article 23(1), the arbitral tribunal shall continue
the proceedings without treating such failure
in itself as an admission of the claimants allegations;
1095
tribunal considers it inappropriate to allow

such amendment having regard to the delay
in making it without sufficient justification.
()29
1047 Oral hearings and written
proceedings
(1) Subject to agreement by the parties, the
arbitral tribunal shall decide whether to hold
oral hearings or whether the proceedings
shall be conducted on the basis of documents
and other materials. Unless the parties have
agreed that no hearings shall be held, the
arbitral tribunal shall hold such hearings at
an appropriate stage of the proceedings, if so
requested by a party.
(2) The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purpose of
taking evidence.
(3) All statements, documents or other information supplied to the arbitral tribunal by
one party shall be communicated to the other
party. Also, any expert report or evidentiary
document on which the arbitral tribunal may
rely in making its decision shall be communicated to both parties.
1048 Default of a party
(1) If the claimant fails to communicate his
statement of claim in accordance with 1046
subs. 1, the arbitral tribunal shall terminate
the proceedings.
(2) If the respondent fails to communicate
his statement of defence in accordance with
1046 subs. 1, the arbitral tribunal shall
continue the proceedings without treating
such failure in itself as an admission of the
claimants allegations.
29 (3) Subsections 1 and 2 apply mutatis mutandis to counter-claims.
1096
(c) any party fails to appear at a hearing or to

produce documentary evidence, the arbitral
tribunal may continue the proceedings and
make the award on the evidence before it.
(3) If any party fails to appear at an oral hearing or to produce documentary evidence
within a set time-limit, the arbitral tribunal
may continue the proceedings and make the
award on the evidence before it.
()30
Article 26. Expert appointed by arbitral

tribunal
the arbitral tribunal
(a) may appoint one or more experts to report to it on specific issues to be determined
by the arbitral tribunal;
(b) may require a party to give the expert any
relevant information or to produce, or to provide access to, any relevant documents, goods
or other property for his inspection.
a party so requests or if the arbitral tribunal
considers it necessary, the expert shall, after
delivery of his written or oral report, participate in a hearing where the parties have the
opportunity to put questions to him and to
present expert witnesses in order to testify on
the points at issue.
1049 Expert appointed by arbitral

tribunal
the arbitral tribunal may appoint one or more
experts to report to it on specific issues to be
determined by the arbitral tribunal. It may
also require a party to give the expert any
relevant information or to produce, or to
provide access to, any relevant documents or
property for his inspection.
a party so requests or if the arbitral tribunal
considers it necessary, the expert shall, after
delivery of his written or oral report, participate in an oral hearing where the parties have
the opportunity to put questions to him and
to present expert witnesses in order to testify
on the points at issue.
(3) 1036 and 1037 subs. 1 and 2 apply
mutatis mutandis to an expert appointed by the
arbitral tribunal.
Article 27. Court assistance in taking

evidence
from a competent court of this State assistance in taking evidence. The court may
execute the request within its competence
and according to its rules on taking evidence.
1050 Court assistance in taking

evidence and other judicial acts
from a court assistance in taking evidence
or performance of other judicial acts which the
arbitral tribunal is not empowered to carry out.
Unless it regards the application as inadmissible, the court shall execute the request
according to its rules on taking evidence or
other judicial acts. The arbitrators are entitled
to participate in any judicial taking of evidence
and to ask questions.31
30 Clarification as to a possible justification:

(4) Any default which has been justified to the tribunals satisfaction will be disregarded. Apart from that,
the parties may agree otherwise on the consequences of default.
31 Extension of courts supportive powers in relation to: (i) measure that can be taken by courts, and (ii) extension
of application to foreign proceedings pursuant to 1025 (2).
Annex I
1097
CHAPTER VI. MAKING OF

AWARD AND TERMINATION OF
PROCEEDINGS
CHAPTER VI. MAKING OF

AWARD AND TERMINATION OF
PROCEEDINGS
Article 28. Rules applicable to

substance of dispute
(1) The arbitral tribunal shall decide the
dispute in accordance with such rules of law
as are chosen by the parties as applicable to
the substance of the dispute. Any designation
of the law or legal system of a given State shall
be construed, unless otherwise expressed, as
directly referring to the substantive law of that
State and not to its conflict of laws rules.
(2) Failing any designation by the parties,
the arbitral tribunal shall apply the law determined by the conflict of laws rules which it
considers applicable.
(3) The arbitral tribunal shall decide ex aequo
et bono or as amiable compositeur only if the
parties have expressly authorized it to do so.
(4) In all cases, the arbitral tribunal shall
decide in accordance with the terms of the
contract and shall take into account the usages of the trade applicable to the transaction.
1051 Rules applicable to

substance of dispute
(1) The arbitral tribunal shall decide the
dispute in accordance with such rules of law
as are chosen by the parties as applicable to
the substance of the dispute. Any designation
of the law or legal system of a given State shall
be construed, unless otherwise expressed, as
directly referring to the substantive law of that
State and not to its conflict of laws rules.
(2) Failing any designation by the parties, the
arbitral tribunal shall apply the law of the State
with which the subject-matter of the proceedings
is most closely connected.32
(3) The arbitral tribunal shall decide ex aequo
et bono or as amiable compositeur only if the
parties have expressly authorized it to do so.
The parties may so authorize the arbitral tribunal up to the time of its decision.33
(4) In all cases, the arbitral tribunal shall
decide in accordance with the terms of the
contract and shall take into account the usages of the trade applicable to the transaction.
Article 29. Decision-making by panel of

arbitrators
In arbitral proceedings with more than one
arbitrator, any decision of the arbitral tribunal
shall be made, unless otherwise agreed by
the parties, by a majority of all its members.
However, questions of procedure may be
decided by a presiding arbitrator, if so authorized by the parties or all members of the
arbitral tribunal.
1052 Decision making by panel

of arbitrators
(1) In arbitral proceedings with more than
one arbitrator, any decision of the arbitral
tribunal shall be made, unless otherwise
agreed by the parties, by a majority of all its
members.
()34
(3) Individual questions of procedure may
be decided by a presiding arbitrator alone if
32 Change with little practical effects as the closest connection criterion is often used as relevant connecting factors
in the conflict of laws rules which could be considered to be applicable.
33 Clarification for avoidance of doubt.
34 Amendment to deal with cases of non-cooperative arbitrator:
(2) If an arbitrator refuses to take part in the vote on a decision, the other arbitrators may take the decision without him, unless otherwise agreed by the parties. The parties shall be given advance notice of the
intention to make an award without the arbitrator refusing to participate in the vote. In the case of other
decisions, the parties shall subsequent to the decision be informed of the refusal to participate in the vote.
1098
so authorized by the parties or all members of

Article 30. Settlement
(1) If, during arbitral proceedings, the parties
settle the dispute, the arbitral tribunal shall
terminate the proceedings and, if requested
by the parties and not objected to by the
arbitral tribunal, record the settlement in the
form of an arbitral award on agreed terms.
(2) An award on agreed terms shall be made
in accordance with the provisions of article
31 and shall state that it is an award. Such an
award has the same status and effect as any
other award on the merits of the case.
1053 Settlement
(1) If, during arbitral proceedings, the parties
settle the dispute, the arbitral tribunal shall
terminate the proceedings. If requested by the
parties, it shall record the settlement in the
form of an arbitral award on agreed terms, unless the contents are in violation of public policy
(ordre public).35
(2) An award on agreed terms shall be made
in accordance with 1054 and shall state that
it is an award. Such an award has the same
effect as any other award on the merits of the
case.
()36
Article 31. Form and contents of award

(1) The award shall be made in writing and
shall be signed by the arbitrator or arbitrators.
arbitrator, the signatures of the majority of
all members of the arbitral tribunal shall suffice, provided that the reason for any omitted
signature is stated.
(2) The award shall state the reasons upon
which it is based, unless the parties have
agreed that no reasons are to be given or the
award is an award on agreed terms under
article 30.
(3) The award shall state its date and the
place of arbitration as determined in accordance with article 20(1). The award shall be
deemed to have been made at that place.
(4) After the award is made, a copy signed by
the arbitrators in accordance with paragraph
(1) of this article shall be delivered to each
party.
1054 Form and contents of award

(1) The award shall be made in writing and
shall be signed by the arbitrator or arbitrators.
arbitrator, the signatures of the majority of
all members of the arbitral tribunal shall suffice, provided that the reason for any omitted
signature is stated.
(2) The award shall state the reasons upon
which it is based, unless the parties have
agreed that no reasons are to be given or the
award is an award on agreed terms under
1053.
(3) The award shall state its date and the
place of arbitration as determined in accordance with 1043 subs. 1. The award shall be
deemed to have been made on that date and
at that place.
(4) A copy of the award signed by the arbitrators shall be delivered to each party.
35 Clarification for avoidance of doubt.

36 (3) If notarial certification is required for a declaration to be effective, it will be substituted, in the case of
an arbitral award on agreed terms, by recording the declaration of the parties in the award.
(4) An award on agreed terms may, upon agreement between the parties, also be declared enforceable by
a notary whose notarial office is in the district of the court competent for the declaration of enforceability
according to 1062 subs. 1, no. 2. The notary shall refuse the declaration of enforceability, if the requirements of subsection 1, sentence 2 are not complied with.
Annex I
1099
()37
Article 32. Termination of proceedings
(1) The arbitral proceedings are terminated
by the final award or by an order of the arbitral
tribunal in accordance with paragraph (2) of
this article.
(2) The arbitral tribunal shall issue an order
for the termination of the arbitral proceedings when:
(a) the claimant withdraws his claim, unless the respondent objects thereto and the
arbitral tribunal recognizes a legitimate interest on his part in obtaining a final settlement
of the dispute;
(b) the parties agree on the termination of the
proceedings;
(c) the arbitral tribunal finds that the continuation of the proceedings has for any other reason
become unnecessary or impossible.
proceedings, subject to the provisions of
articles 33 and 34(4).
Article 33. Correction and interpretation
of award; additional award
(1) Within thirty days of receipt of the award,
unless another period of time has been agreed
upon by the parties:
1056 Termination of proceedings

(1) The arbitral proceedings are terminated
by the final award or by an order of the arbitral
tribunal in accordance with subsection 2 of
this section.
(2) The arbitral tribunal shall issue an order
for the termination of the arbitral proceedings when
1. the claimant:
()38
b) withdraws his claim, unless the respondent objects thereto and the arbitral tribunal
recognizes a legitimate interest on his part in
obtaining a final settlement of the dispute, or
2. the parties agree on the termination of the
proceedings, or
()39
proceedings, subject to the provisions of
sections 1057 subs. 2, 1058 and 1059 subs. 4.
1058 Correction and interpretation of
award; additional award
(1) Any party may request the arbitral tribunal
37 1055 Effect of arbitral award

The arbitral award has the same effect between the parties as a final and binding court judgment.
38 a) fails to state his claim according to 1046 subs. 1 and 1048 subs. 4 does not apply, or
39 3. the parties fail to pursue the arbitral proceedings in spite of being so requested by the arbitral tribunal
or when the continuation of the proceedings has for any other reason become impossible.
40 1057 Decision on costs
(1) Unless the parties agree otherwise, the arbitral tribunal shall allocate, by means of an arbitral award,
the costs of the arbitration as between the parties, including those incurred by the parties necessary for
the proper pursuit of their claim or defence. It shall do so at its discretion and take into consideration the
circumstances of the case, in particular the outcome of the proceedings.
(2) To the extent that the costs of the arbitral proceedings have been fixed, the arbitral tribunal shall
also decide on the amount to be borne by each party. If the costs have not been fixed or if they can only
be fixed once the arbitral proceedings have been terminated, the decision shall be taken by means of a
separate award.
1100
(a) a party, with notice to the other party, may

request the arbitral tribunal to correct in the
award any errors in computation, any clerical or typographical errors or any errors of
similar nature;
1. to correct in the award any errors in computation, any clerical or typographical errors or
any errors of similar nature,
(b) if so agreed by the parties, a party, with notice

to the other party, may request the arbitral
tribunal to give an interpretation of a specific
point or part of the award.
2. to give an interpretation of specific parts of

the award, ()
If the arbitral tribunal considers the request

to be justified, it shall make the correction or
give the interpretation within thirty days of
receipt of the request. The interpretation shall
form part of the award.
(2) The arbitral tribunal may correct any error of the type referred to in paragraph (1)(a)
of this article on its own initiative within thirty
days of the date of the award.
a party, with notice to the other party, may
request, within thirty days of receipt of the
award, the arbitral tribunal to make an additional award as to claims presented in the
arbitral proceedings but omitted from the
award. If the arbitral tribunal considers the
request to be justified, it shall make the additional award within sixty days.
(4) The arbitral tribunal may extend, if
necessary, the period of time within which it
shall make a correction, interpretation or an
additional award under paragraph (1) or (3)
of this article.
(5) The provisions of article 31 shall apply to
a correction or interpretation of the award or
to an additional award.

the request shall be made within one month
of receipt of the award.
(3) The arbitral tribunal shall make the correction or give the interpretation within one
month ().
(4) The arbitral tribunal may make a correction of the award on its own initiative.
1058 (1) Any party may request the arbitral
tribunal ( see above)
3. to make an additional award as to claims
presented in the arbitral proceedings but
omitted from the award.
the request shall be made within one month of
receipt of the award.
(3) The arbitral tribunal shall () make an
additional award within two months.
(5) 1054 shall apply to a correction or interpretation of the award or to an additional

award.
Annex I
1101
CHAPTER VII. RECOURSE

AGAINST AWARD
CHAPTER VII. RECOURSE

AGAINST AWARD
Article 34. Application for setting

aside as exclusive recourse against
arbitral award
(1) Recourse to a court against an arbitral
award may be made only by an application
for setting aside in accordance with paragraphs (2) and (3) of this article.
(2) An arbitral award may be set aside by the
court specified in article 6 only if:
(a) the party making the application furnishes proof that:
(i) a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said agreement is not valid under
the law to which the parties have subjected it
or, failing any indication thereon, under the
law of this State; or
1059 Application for setting aside

(1) Recourse to a court against an arbitral
award may be made only by an application
for setting aside in accordance with subsections 2 and 3 of this section.
(ii) the party making the application was not

given proper notice of the appointment of
an arbitrator or of the arbitral proceedings or
was otherwise unable to present his case; or
(iii) the award deals with a dispute not contemplated by or not falling within the terms
of the submission to arbitration, or contains
decisions on matters beyond the scope of
the submission to arbitration, provided that,
if the decisions on matters submitted to arbitration can be separated from those not so
submitted, only that part of the award which
contains decisions on matters not submitted
to arbitration may be set aside; or
(iv) the composition of the arbitral tribunal
or the arbitral procedure was not in accordance with the agreement of the parties,
unless such agreement was in conflict with a
provision of this Law from which the parties
cannot derogate, or, failing such agreement,
was not in accordance with this Law; or
41 Conflict of laws rule for capacity included.

42 Effect on award requirement.
(2) An arbitral award may be set aside only

if:
1. the applicant shows sufficient cause that:
a) a party to the arbitration agreement
referred to in sections 1029 and 1031 was
under some incapacity pursuant to the law
applicable to him;41 or the said agreement is
not valid under the law to which the parties
have subjected it or, failing any indication
thereon, under German law; or
b) he was not given proper notice of the appointment of an arbitrator or of the arbitral
proceedings or was otherwise unable to
present his case; or
c) the award deals with a dispute not contemplated by or not falling within the terms
of the submission to arbitration, or contains
decisions on matters beyond the scope of
the submission to arbitration; provided that,
if the decisions on matters submitted to arbitration can be separated from those not so
submitted, only that part of the award which
contains decisions on matters not submitted
to arbitration may be set aside; or
d) the composition of the arbitral tribunal
or the arbitral procedure was not in accordance with a provision of this Book or with an
admissible agreement of the parties and this
presumably affected the award; or
1102
(b) the court finds that:

(i) the subject-matter of the dispute is not
capable of settlement by arbitration under the
(ii) the award is in conflict with the public
policy of this State.
(3) An application for setting aside may not
be made after three months have elapsed
from the date on which the party making
that application had received the award or,
if a request had been made under article 33,
from the date on which that request had been
disposed of by the arbitral tribunal.
(4) The court, when asked to set aside

an award, may, where appropriate and so
requested by a party, suspend the setting aside
proceedings for a period of time determined by
it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings
or to take such other action as in the arbitral
tribunals opinion will eliminate the grounds
for setting aside.
2. the court finds that

a) the subject-matter of the dispute is not
capable of settlement by arbitration under
German law; or
b) recognition or enforcement of the award
leads to a result which is in conflict with public policy (ordre public).
(3) Unless the parties have agreed otherwise,
an application for setting aside to the court
may not be made after three months have
elapsed. The period of time shall commence
on the date on which the party making the application had received the award. If a request
had been made under 1058, the time-limit
shall be extended by not more than one month
from receipt of the decision on the request. No
application for setting aside the award may be
made once the award has been declared enforceable by a German court.
(4) The court, when asked to set aside an
award, may, where appropriate, set aside the
award and remit the case to the arbitral tribunal.43
()44
CHAPTER VIII. RECOGNITION AND

ENFORCEMENT OF AWARDS
CHAPTER VIII. RECOGNITION AND

ENFORCEMENT OF AWARDS 45
Article 35. Recognition and enforcement
1060 Domestic awards

(1) Enforcement of the award takes place if it
has been declared enforceable. 46
(2) An application for a declaration of enforceability shall be refused and the award set
aside if one of the grounds for setting aside
under 1059 subs. 2 exists.47
(1) An arbitral award, irrespective of the

country in which it was made, shall be
recognized as binding and, upon application
in writing to the competent court, shall be en-
43 No suspension but remittal only after the award has been set aside.
44 (5) Setting aside the arbitral award shall, in the absence of any indication to the contrary, result in the
arbitration agreement becoming operative again in respect of the subject-matter of the dispute.
45 Different drafting approach as no uniform system for domestic and foreign awards.
46 Automatic recognition of domestic awards see above 1055.
47 The grounds to refuse enforcement in 1059 (2) and Art. V NYC are nearly identical to those of Article 36.
Annex I
forced subject to the provisions of this article

and of article 36.
(2) The party relying on an award or applying for its enforcement shall supply the duly
authenticated original award or a duly certified copy thereof, and the original arbitration
agreement referred to in article 7 or a duly
certified copy thereof. If the award or agreement is not made in an official language of
this State, the party shall supply a duly certified
translation thereof into such language.49
Article 36. Grounds for refusing
recognition or enforcement
(1) Recognition or enforcement of an arbitral
award, irrespective of the country in which it
was made, may be refused only:
(a) at the request of the party against whom
it is invoked, if that party furnishes to the
1103
()48 [Deviation of practical importance]

1061 Foreign awards
(1) Recognition and enforcement of foreign
arbitral awards shall be granted in accordance
with the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards of 10
June 1958 (Bundesgesetzblatt [BGBl.] 1961
Part II p. 121). The provisions of other treaties
on the recognition and enforcement of arbitral
awards shall remain unaffected.
(2) If the declaration of enforceability is to be refused, the court shall rule that the arbitral award
is not to be recognized in Germany.
(3) If the award is set aside abroad after having
been declared enforceable, application for setting
aside the declaration of enforceability may be
made.
1064 Particularities regarding the
enforcement of awards
(1) At the time of the application for a declaration of enforceability of an arbitral award the
award or a certified copy of the award shall be
supplied. The certification may also be made by
counsel authorised to represent the party in the
judicial proceedings.
(2) The order declaring the award enforceable
shall be declared provisionally enforceable.
(3) Unless otherwise provided in treaties, subsections 1 and 2 shall apply to foreign awards.
1060 Domestic awards
()
(2) An application for a declaration of enforceability shall be refused and the award set aside if
one of the grounds for setting aside under 1059
subs. 2 exists.
48 () Grounds for setting aside shall not be taken into account, if at the time when the application for a
declaration of enforceability is served, an application for setting aside based on such grounds has been
finally rejected. Grounds for setting aside under 1059 subs. 2, no. 1 shall also not be taken into account
if the time-limits set by 1059 subs. 3 have expired without the party opposing the application having
made an application for setting aside the award.
49 The conditions set forth in this paragraph are intended to set maximum standards. It would, thus, not be contrary
to the harmonization to be achieved by the model law if a State retained even less onerous conditions.
1104
competent court where recognition or enforcement is sought proof that:

(i) a party to the arbitration agreement referred to in article 7 was under some incapacity; or the said agreement is not valid under
the law to which the parties have subjected
it or, failing any indication thereon, under
the law of the country where the award was
made; or
(ii) the party against whom the award is
invoked was not given proper notice of the
appointment of an arbitrator or of the arbitral
proceedings or was otherwise unable to present his case; or
(iii) the award deals with a dispute not contemplated by or not falling within the terms
of the submission to arbitration, or it contains
decisions on matters beyond the scope of the
submission to arbitration, provided that, if
the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains
decisions on matters submitted to arbitration
may be recognized and enforced; or
(iv) the composition of the arbitral tribunal or
the arbitral procedure was not in accordance
with the agreement of the parties or, failing
such agreement, was not in accordance with
the law of the country where the arbitration
took place; or
(v) the award has not yet become binding on
the parties or has been set aside or suspended
by a court of the country in which, or under
the law of which, that award was made; or
(b) if the court finds that:
(i) the subject-matter of the dispute is not
capable of settlement by arbitration under the
(ii) the recognition or enforcement of the
award would be contrary to the public policy
of this State.
(2) If an application for setting aside or
suspension of an award has been made to a
court referred to in paragraph (1)(a)(v) of
1061 Foreign awards

(1) Recognition and enforcement of foreign
arbitral awards shall be granted in accordance
with the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards of 10
June 1958 (Bundesgesetzblatt [BGBl.] 1961
Part II p. 121). The provisions of other treaties
on the recognition and enforcement of arbitral
awards shall remain unaffected.
[]50
50 Art. VI NYC as applicable to Foreign Awards in Germany contains a comparable provision.
Annex I
1105
this article, the court where recognition or

enforcement is sought may, if it considers it
proper, adjourn its decision and may also, on
the application of the party claiming recognition or enforcement of the award, order the
other party to provide appropriate security.
CHAPTER IX. COURT PROCEEDINGS
[]51
1062 Competence
(1) The Higher Regional Court (Oberlandesgericht) designated in the arbitration agreement or, failing such designation, the Higher
Regional Court in whose district the place of
arbitration is situated, is competent for decisions on applications relating to
1. the appointment of an arbitrator ( 1034
and 1035), the challenge of an arbitrator
(1037) or the termination of an arbitrators
mandate ( 1038);
2. the determination of the admissibility or
inadmissibility of arbitration ( 1032) or the
decision of an arbitral tribunal confirming its
competence in a preliminary ruling ( 1040);
3. the enforcement of the declaration of enforceability ( 1061).
(2) If the place of arbitration in the cases referred to in subsection 1, no. 2, first alternative,
nos. 3 and 4 is not in Germany, competence
lies with the Higher Regional Court (Oberlandesgericht) where the party opposing the
application has his place of business or place
of habitual residence, or where assets of that
party or the property in dispute or affected by
the measure is located, failing which the Berlin Higher Regional Court (Kammergericht)
shall be competent.
(3) In the cases referred to in 1025 subs. 3,
the Higher Regional Court (Oberlandesgericht) in whose district the claimant or the
respondent has his place of business or place
of habitual residence is competent.
(4) For assistance in the taking of evidence
and other judicial acts ( 1050), the Local
51 No equivalent in the Model Law which left the regulation of the court proceedings largely to each state.
1106
Court (Amtsgericht), in whose district the

judicial act is to be carried out, is competent.
(5) Where there are several Higher Regional
Courts (Oberlandesgerichte) in one Land, the
Government of that Land may transfer by ordinance competence to one Higher Regional
Court, or, where existent, to the highest Regional Court (oberstes Landesgericht)6; the
Land Government may transfer such authority to the Department of Justice of the Land
concerned by ordinance. Several Lnder may
agree on cross-border competence of a single
Higher Regional Court.
[]52
1063 General provisions

(1) The court shall decide by means of an order.7 The party opposing the application shall
be given an opportunity to comment before a
decision is taken.
(2) The court shall order an oral hearing to
be held, if the setting aside of the award has
been requested or if, in an application for
recognition or declaration of enforceability of
the award, grounds for setting aside in terms
of 1059 subs. 2 are to be considered.
(3) The presiding judge of the civil court
senate (Zivilsenat) may issue, without prior
hearing of the party opposing the application,
an order to the effect that, until a decision on
the request has been reached, the applicant
may pursue enforcement of the award or enforce the interim measure of protection of the
arbitration court pursuant to 1041. In the
case of an award, enforcement of the award
may not go beyond measures of protection.
The party opposing the application may
prevent enforcement by providing as security
an amount corresponding to the amount that
may be enforced by the applicant.
(4) As long as no oral hearing is ordered,
applications and declarations may be put on
record at the court registry.
Annex I
1107
1064 Particularities regarding the

enforcement of awards
(1) At the time of the application for a declaration of enforceability of an arbitral award the
award or a certified copy of the award shall be
supplied. The certification may also be made
by counsel authorised to represent the party
in the judicial proceedings.
(2) The order declaring the award enforceable
shall be declared provisionally enforceable.
(3) Unless otherwise provided in treaties,
subsections 1 and 2 shall apply to foreign
awards.
[]53
1065 Legal remedies

(1) A complaint on a point of law to the
Federal Court of Justice (Bundesgerichtshof)
is available against the decisions mentioned
under 1062 subs. 1, nos. 2 and 4 if an appeal
on points of law would have been available
against them, had they been delivered as a
final judgment. No recourse against other
decisions in the proceedings specified in
1062 subs. 1 may be made.
(2) The Federal Court of Justice may only
examine whether the order is based on a violation of a treaty or of another statute. 546
subs. 1, sentence 3 and subs. 2, 549 subs. 2,
550 to 554 b, 556, 558, 559, 561, 563, 573
subs. 1, 575 and 707, 717 apply mutatis
mutandis.
CHAPTER X. ARBITRAL TRIBUNALS
NOT ESTABLISHED BY AGREEMENT
1066 Mutatis mutandis application of
the provisions of the Tenth Book
The provisions of this Book apply mutatis
mutandis to arbitral tribunals established lawfully by disposition on death or other dispositions not based on an agreement.
Annex II
GERMAN ARBITRATION LAW PRIOR TO 1 JANUARY 1998*
GERMAN CODE OF CIVIL PROCEDURE**
(Zivilprozeordnung)
Book X Arbitration Procedure
1025
(1) The agreement by which the settlement of a dispute is submitted to one or more arbitrators
is legally valid when the parties have the right to enter into a settlement on the subject matter
of the dispute.
(2) The arbitration agreement is not valid if one of the parties has used any superiority it possesses by virtue of economic or social position in order to constrain the other party to make
this agreement or to accept conditions therein, resulting in the one party having an advantage
over the other in the procedure, and more especially in regard to the nomination or the nonacceptance of the arbitrator.
1025 a
An agreement to arbitrate disputes on the existence of a contract referring to renting rooms is
null and void. This does not apply when reference is made to 556 a, Para. 8 of the German
Civil Code.
1026
An agreement to arbitrate future disputes is not valid in law, unless it refers to a definite legal
obligation and to disputes arising therefrom.
1027
(1) The arbitration agreement must be concluded expressly and in writing; the instrument
must not contain any agreements other than those referring to the arbitration procedure.
Admission to the arbitral discussions on the substance of the case overrides any faults in form.
This translation was originally published by Ottoarndt Glossner in Sanders/van den Berg (eds), International Handbook on Commercial Arbitration, Report-Germany, Annex I, Supplement 7, April 1987.
The editors are indebted to Ottoarndt Glossner and Kluwer Law International for the kind permission to
re-print the text.
** As a result of the Law Reform Act 1986 concerning International Private Law (Gesetz zur Neuregelung
des Internationalen Privatrechts), effective July 25, 1986, 1039, 1041, 1044 and 1045 of Book Ten,
Arbitration Procedure, of the Code of Civil Procedure (ZPO) had been amended. The amended text is
printed in italics.
1110
(2) The above provision does not apply, if the arbitration agreement is a business matter for the
two parties and if neither of the two parties belongs to the trading professions set out in 4 of
the Commercial Code.
(3) Insofar as, in accordance with Para. 2, the arbitration agreement does not have to be laid
down in writing, each party may require a written instrument concerning the agreement.
1027 a
If court proceedings are initiated in a case where the parties have concluded an arbitration
agreement, the court has to dismiss the action when one of the parties invokes the arbitration
agreement.
1028
If the arbitration agreement contains no provision for the appointment of arbitrators, each of
the parties shall appoint an arbitrator.
1029
(1) If both parties have the right to appoint arbitrators, the party who takes the initiative shall
make known to the other party in writing the arbitrator selected by him and shall call upon that
party to do the same within one week.
(2) If such time is allowed to lapse, the arbitrator shall be appointed by the competent court
upon the request of the party concerned.
1030
A party is bound by his appointment of an arbitrator in regard to the opposite party, as soon as
the latter receives notification of such appointment.
1031
If an arbitrator not appointed in the arbitration agreement dies or withdraws for some other
reason, or refuses to accept or carry out his duties as arbitrator, the party who appointed him
shall, at the request of the opposite party, appoint another arbitrator within one week. If such
time is allowed to lapse, the arbitrator shall be appointed by the competent court at the request
of the party concerned.
1032
(1) An arbitrator may be challenged on the same grounds and under the same conditions as a
judge.
(2) An arbitrator not appointed in the arbitration agreement may , also be challenged for undue
delay in the fulfilment of his duties.
(3) Minors, deaf and dumb persons and persons who have been deprived, by a judges ruling,
of the capacity to be invested with public office may be challenged.
1033
The arbitration agreement becomes invalid, unless provision is made for the eventually in question by agreement between the parties:
Annex II
1111
1) if certain persons are named as arbitrators in the arbitration agreement and one of them
dies or retires for some other reason, or refuses to accept the function of arbitrator, or
withdraws from the agreement concluded with him, or unduly delays in the fulfilment
of his duties;
2) if the arbitrators notify the parties that a tie-vote has resulted.
1034
(1) Before rendering their award, the arbitrators shall hear the parties and ascertain the facts at
the basis of the dispute, insofar as they consider such information necessary. Counsels, having
the right to plead, cannot be excluded; any agreements to the contrary are null and void. Persons excluded from oral hearings in the courts of law by virtue of 157 can be refused a hearing.
(2) Apart therefrom, and insofar as the parties have made no express agreement on the matter,
the procedure shall be determined by the arbitrators at their own discretion.
1035
Arbitrators may hear witnesses and experts who appear before them voluntarily. They are not
authorized to administer the oath to witnesses or experts or parties.
1036
(1) Judicial acts which the arbitrators may deem necessary but which they are not authorized to
perform shall be carried out by the competent court at the request of one of the parties, if such
request is considered admissible.
(2) The Court which orders a witness or expert to take an oath or give evidence likewise has the
jurisdiction required for decisions in the case of a refusal to give evidence or furnish an expert
opinion.
1037
The arbitrators may proceed with arbitration and render an award, even if it be claimed that
arbitration proceedings are inadmissible; in particular even if it be claimed that no valid agreement to arbitrate exists, that the arbitration agreement does not refer to the dispute submitted
or that an arbitrator is not qualified to act in that capacity.
1038
If the arbitral award is to be rendered by several arbitrators, an absolute majority of votes is
decisive, unless the arbitration agreement provides otherwise.
1039
(1) The arbitral award shall be signed by the arbitrators, under the date of its rendering. If the
arbitration tribunal consists of more than two arbitrators and the signature of one of the arbitrators
cannot be obtained, although he has participated in rendering the decision, the signature of the other
arbitrators is sufficient; the chairman has to note under the award that the signature could not be
obtained.
(2) The award is to be served upon the parties in one copy, unless they have agreed upon another form
of notification.
1112
(3) The award shall be filed with the clerk of the competent court; except in the case of an execution of
the award the parties can agree otherwise. To the award is to be annexed the document by which it was
served, or if another form of notification has been agreed by the parties, by a proof of making it known.
1040
The award has, between the parties, the effect of a final and binding judgment by a court.
1041
1. Action to set aside the award may be brought:
1) if the award does not arise out of a valid arbitration agreement or depends in some other
manner on an inadmissible procedure;
2) if the recognition of an award achieves a result obviously contrary to essential principles of German law, in particular if the recognition is incompatible with the Basic Law (Grundrechten);*
3) if the party was not represented in the proceedings according to provisions of law, unless he agreed either expressly or tacitly to the manner in which the proceedings were
conducted;
4) if the party was not granted a due hearing in the course of the proceedings;
5) if the grounds for the award are not stated;
6) if the conditions under which an action for judicial review (Restitutionsklage), in the
cases enumerated in 580, Paras. 1-6, may be brought are fulfilled.
2. An award shall not be set aside on the grounds given in No. 5, if the parties have agreed
otherwise.
1042
(1) An award shall be enforced only if it has been declared enforceable.
(2) An application for an order for enforcement shall be rejected, subject to the setting aside of
the award, if one of the reasons for setting aside the award mentioned in 1041 exists.
1042 a
(1) A decision on application for an award to be declared enforceable may be given by order
without preliminary oral hearing; but the defendant must be heard prior to the giving of the
decision. If an oral hearing takes place, the court will give its final decision.
(2) If grounds for setting aside the award are brought forward, an oral hearing shall be ordered
in such cases as an immediate refusal of the application does not appear to be justified.
1042 b
(1) The application must be accompanied by the requisite number of copies for notification to
the opponent.
(2) If an oral hearing is ordered, the date of the hearing shall be notified to the parties officially.
In proceedings before the Landgericht, the notification must contain a summons in accordance
with Sect. 215, ZPO.
*
The Basic Law is the temporary Constitution of the Federal Republic of Germany.
Annex II
1113
1042 c
(1) The order declaring the award enforceable must declare it enforceable provisionally.
(2) The order may be the subject of an objection. If objection is raised, the resolution declaring
the award enforceable shall be subject to judgement without appeal. 707 and 717 shall apply
accordingly.
(3) A decision rejecting an application for an order for enforcement may be made the subject
of an immediate appeal.
1042 d
(1) An objection shall be lodged by the production of a statement of opposition within a time
limit of two weeks commencing with the notification; 339, Para. 2 shall apply. The statement
of opposition must also contain whatever is necessary for the preparation of the oral hearing.
(2) The date of the oral hearing shall be officially notified to the parties. The statement of opposition must be notified officially to the opposing party at the same time as the notification.
The party shall produce the necessary number of copies with the statement.
1043
(1) If the award is declared to have force of law for enforcement, an order to set aside cannot be
applied for except on the grounds set forth in 1041, Para. 1, No. 6, and only if credible grounds
can be submitted that the party was unable, through no fault of its own, to invoke these grounds
during the course of the former procedure.
(2) The application shall be made within a time limit of one month. The time commences with
the day on which the party has received notification of the grounds of application for an order
to set aside but not before the decision on declaration of enforcement enters legally into force.
After ten years, commencing with the day on which the decision enters legally into force, an
application shall no longer be admitted.
(3) If the award is cancelled, the declaration of enforcement will have to be withdrawn.
1044
(1) A foreign award which has become final (verbindlich) in accordance with the law which is
applicable to it shall, except insofar as treaties entered into with States do not contain provisions to the contrary, be declared enforceable in accordance with the procedure prescribed for
domestic awards. 1039 shall not apply.
(2) An application for an order for enforcement shall be rejected:
1) If the arbitration award is not valid in law; for the validity in law of an award, and insofar
as treaties entered into with States do not contain provisions to the contrary, the law
regulating arbitration procedure shall apply;
2) If the recognition of an award achieves a result obviously contrary to essential principles of German law, in particular if the recognition is incompatible with the Basic Law (Grundrechten);
3) If the party was not duly represented, insofar as the party has not expressly or tacitly
accepted the continuation of the proceedings;
4) If the party has not obtained the legal right to be heard in the proceedings.
1114
(3) The setting aside of the award is replaced by a declaration that the award cannot be
recognized within the area of jurisdiction of the country.
(4) If, after having been declared enforceable, the award is set aside in a foreign country, an
action can be started for the setting aside of the order for enforcement. To such action the
provisions of 1043 2 and 3 apply by analogy, subject to the reservation that the time limit
commences on the day on which the party has knowledge of the fact that the setting aside of
the award had force of law.
1044 a
(1) If the debtor has agreed to the immediate enforcement of a settlement arrived at by the
arbitrators, this settlement shall be enforced if an order for enforcement is given. Such order
may be given only if the settlement is signed by the arbitrators and parties under the date of its
conclusion and filed with the registry of the competent court.
(2) An order for enforcement shall be rejected if the transaction is not valid in law or if the
recognition of such transaction would offend against morality or public policy.
(3) The provisions of 1042 a to 1042 d are applicable by analogy; an action for a declaration
of non validity in law of the transaction is assimilated to an action for a declaration of grounds
for the setting aside of an arbitration award.
1045
(1) Jurisdiction for legal decisions concerning the appointment or challenge of arbitrators or
the termination of an arbitration agreement or the execution of court measures deemed necessary by the arbitrators lies with the court (Amtsgericht or Landgericht)
1) which is indicated in the arbitration agreement, otherwise

2) which would have jurisdiction in the dispute had there been litigation, eventually
3) in the district of which the arbitration procedure takes place or has taken place.
(2) The decision may be taken without previous oral discussion. Before decision, the
opposing party must be heard. Appeal may be entered against the decision.
1046
The court mentioned in 1045, Para. 1, likewise has jurisdiction for orders for enforcement of
awards and of transactions before arbitrators as well as for applications for the inadmissibility of
arbitration procedure, the setting aside of an award or of an order for enforcement of an award,
or of the non-validity in law of a transaction before an arbitrator.
1047
If, under 1045 and 1046, several courts have jurisdiction, the court to which a party or the
court of arbitration ( 1039) first had recourse has and continues to have jurisdiction.
1048
The provisions of this book shall apply to arbitral tribunals established in accordance with the
law, by testamentary provision, or provision other than agreement.
Annex III
GERMAN MODEL TREATY ON THE ENCOURAGEMENT AND
RECIPROCAL PROTECTION OF INVESTMENTS (2005)
[Source: German Federal Ministry of Economics and Technology]
Treaty
between
the Federal Republic of Germany
and
...........................................................
concerning the Encouragement and Reciprocal Protection of Investments
Federal Ministry of Economics and Technology Berlin
The Federal Republic of Germany
and
...........................................................
desiring to intensify economic co-operation between both States,
intending to create favourable conditions for investments by investors of either State in the
territory of the other State,
recognizing that the encouragement and contractual protection of such investments are apt
to stimulate private business initiative and to increase the prosperity of both nations,
have agreed as follows:
Article 1
For the purposes of this Treaty
1. the term investments comprises every kind of asset, in particular:
(a) movable and immovable property as well as any other rights in rem, such as mortgages, liens and pledges;
(b) shares of companies and other kinds of interest in companies;
(c) claims to money which has been used to create an economic value or claims to any
performance having an economic value;
1116
(d) intellectual property rights, in particular copyrights, patents, utility-model patents,

industrial designs, trade-marks, trade-names, trade and business secrets, technical
processes, know-how, and good will;
(e) business concessions under public law, including concessions to search for, extract
and exploit natural resources;
any alteration of the form in which assets are invested shall not affect their classification
as investment;
2. the term returns means the amounts yielded by an investment for a definite period,
such as profit, dividends, interest, royalties or fees;
3. the term investor means
(a) in respect of the Federal Republic of Germany: Germans within the meaning of
the Basic Law of the Federal Republic of Germany, any juridical person as well as
any commercial or other company or association with or without legal personality
having its seat in the territory of the Federal Republic of Germany, irrespective of
whether or not its activities are directed at profit,
(b) in respect of: ...........................................................
Article 2
(1) Each Contracting State shall in its territory promote as far as possible investments by
investors of the other Contracting State and admit such investments in accordance with its
legislation.
(2) Each Contracting State shall in its territory in any case accord investments by investors
of the other Contracting State fair and equitable treatment as well as full protection under
the Treaty.
(3) Neither Contracting State shall in any way impair by arbitrary or discriminatory measures the management, maintenance, use, enjoyment or disposal of investments in its territory
of investors of the other Contracting State.
Article 3
(1) Neither Contracting State shall subject investments in its territory owned or controlled
by investors of the other Contracting State to treatment less favourable than it accords to
investments of its own investors or to investments of investors of any third State.
(2) Neither Contracting State shall subject investors of the other Contracting State, as regards
their activity in connection with investments in its territory, to treatment less favourable than
it accords to its own investors or to investors of any third State.
(3) Such treatment shall not relate to privileges which either Contracting State accords to
investors of third States on account of its membership of, or association with, a customs or
economic union, a common market or a free trade area.
(4) The treatment granted under this Article shall not relate to advantages which either Contracting State accords to investors of third States by virtue of a double taxation agreement or
other agreements regarding matters of taxation.
Annex III
1117
Article 4
(1) Investments by investors of either Contracting State shall enjoy full protection and security in the territory of the other Contracting State.
(2) Investments by investors of either Contracting State shall not directly or indirectly be
expropriated, nationalized or subjected to any other measure the effects of which would
be tantamount to expropriation or nationalization in the territory of the other Contracting
State except for the public benefit and against compensation. Such compensation shall be
equivalent to the value of the expropriated investment immediately before the date on which
the actual or threatened expropriation, nationalization or comparable measure has become
publicly known. The compensation shall be paid without delay and shall carry the usual
bank interest until the time of payment; it shall be effectively realizable and freely transferable. Provision shall have been made in an appropriate manner at or prior to the time of
expropriation, nationalization or comparable measure for the determination and payment
of such compensation. The legality of any such expropriation, nationalization or comparable
measure and the amount of compensation shall be subject to review by due process of law.
(3) Investors of either Contracting State whose investments suffer losses in the territory
of the other Contracting State owing to war or other armed conflict, revolution, a state of
national emergency, or revolt, shall be accorded treatment no less favourable by such other
Contracting State than that which the latter Contracting State accords to its own investors
as regards restitution, indemnification, compensation or other valuable consideration. Such
payments shall be freely transferable.
(4) Investors of either Contracting State shall enjoy most-favoured-nation treatment in the
territory of the other Contracting State in respect of the matters provided for in this Article.
Article 5
Each Contracting State shall guarantee to investors of the other Contracting State the free
transfer of payments in connection with an investment, in particular
(a) the principal and additional amounts to maintain or increase the investment;
(b) the returns;
(c) the repayment of loans;
(d) the proceeds from the liquidation or the sale of the whole or any part of the investment;
(e) the compensation provided for in Article 4.
Article 6
If either Contracting State makes a payment to any of its investors under a guarantee it has
assumed in respect of an investment in the territory of the other Contracting State, the latter
Contracting State shall, without prejudice to the rights of the former Contracting State under
Article 10, recognize the assignment, whether under a law or pursuant to a legal transaction,
of any right or claim of such investors to the former Contracting State. The latter Contracting
State shall also recognize the subrogation of the former Contracting State to any such right
or claim (assigned claims) which that Contracting State shall be entitled to assert to the same
1118
extent as its predecessor in title. As regards the transfer of payments made by virtue of such
assigned claims, Article 4 (2) and (3) as well as Article 5 shall apply mutatis mutandis.
Article 7
(1) Transfers under Article 4 (2) or (3), under Article 5 or Article 6 shall be made without
delay at the market rate of exchange applicable on the day of the transfer.
(2) Should there be no foreign exchange market the cross rate obtained from those rates
which would be applied by the International Monetary Fund on the date of payment for
conversions of the currencies concerned into Special Drawing Rights shall apply.
Article 8
(1) If the legislation of either Contracting State or obligations under international law existing at present or established hereafter between the Contracting States in addition to this
Treaty contain a regulation, whether general or specific, entitling investments by investors
of the other Contracting State to a treatment more favourable than is provided for by this
Treaty, such regulation shall to the extent that it is more favourable prevail over this Treaty.
(2) Each Contracting State shall observe any other obligation it has assumed with regard to
investments in its territory by investors of the other Contracting State.
Article 9
This Treaty shall also apply to investments made prior to its entry into force by investors of
either Contracting State in the territory of the other Contracting State consistent with the
latters legislation.
Article 10
(1) Disputes between the Contracting States concerning the interpretation or application
of this Treaty should as far as possible be settled by the governments of the two Contracting
States.
(2) If a dispute cannot thus be settled, it shall upon the request of either Contracting State be
submitted to an arbitration tribunal.
(3) Such arbitration tribunal shall be constituted ad hoc as follows: each Contracting State
shall appoint one member, and these two members shall agree upon a national of a third State
as their chairman to be appointed by the governments of the two Contracting States. Such
members shall be appointed within two months, and such chairman within three months
from the date on which either Contracting State has informed the other Contracting State
that it intends to submit the dispute to an arbitration tribunal.
(4) If the periods specified in paragraph 3 above have not been observed, either Contracting
State may, in the absence of any other arrangement, invite the President of the International
Court of Justice to make the necessary appointments. If the President is a national of either
Contracting State or if he is otherwise prevented from discharging the said function, the
Vice-President should make the necessary appointments. If the Vice-President is a national
of either Contracting State or if he, too, is prevented from discharging the said function,
the member of the Court next in seniority who is not a national of either Contracting State
should make the necessary appointments.
Annex III
1119
(5) The arbitration tribunal shall reach its decisions by a majority of votes. Such decisions
shall be binding. Each Contracting State shall bear the cost of its own member and of its
representatives in the arbitration proceedings; the cost of the chairman and the remaining
costs shall be borne in equal parts by the Contracting States. The arbitration tribunal may
make a different regulation concerning costs. In all other respects, the arbitration tribunal
shall determine its own procedure.
Model I (Membership of both Contracting States in ICSID)

Article 11
(1) Disputes concerning investments between a Contracting State and an investor of the
other Contracting State should as far as possible be settled amicably between the parties in
dispute.
(2) If the dispute cannot be settled within six months of the date when it has been raised by
one of the parties in dispute, it shall, at the request of the investor of the other Contracting
State, be submitted for arbitration. Unless the parties in dispute agree otherwise, the dispute
shall be submitted for arbitration under the Convention of 18 March 1965 on the Settlement
of Investment Disputes between States and Nationals of Other States.
(3) The award shall be binding and shall not be subject to any appeal or remedy other than
those provided for in the said Convention. The award shall be enforced in accordance with
domestic law.
(4) During arbitration proceedings or the enforcement of an award, the Contracting State
involved in the dispute shall not raise the objection that the investor of the other Contracting
State has received compensation under an insurance contract in respect of all or part of the
damage.
Model II (Membership of only one Contracting State in ICSID)

Article 11
(1) Disputes concerning investments between a Contracting State and an investor of the
other Contracting State shall as far as possible be settled amicably between the parties in
dispute.
(2) If the dispute cannot be settled within six months of the date when it has been raised
by one of the parties in dispute, it shall, at the request of the investor of the other Contracting State, be submitted for arbitration. Unless the parties in dispute have agreed otherwise,
the provisions of Article 10 (3) to (5) shall be applied mutatis mutandis on condition that
the appointment of the members of the arbitration tribunal in accordance with Article 10
(3) is effected by the parties in dispute and that, insofar as the periods specified in Article
10 (3) are not observed, either party in dispute may, in the absence of other arrangements,
invite the President of the Court of International Arbitration of the International Chamber
of Commerce in Paris to make the required appointments. The award shall be enforced in
accordance with domestic law.
1120
(3) During arbitration proceedings or the enforcement of an award, the Contracting State
involved in the dispute shall not raise the objection that the investor of the other Contracting
State has received compensation under an insurance contract in respect of all or part of the
damage.
(4) In the event of both Contracting States having become Contracting States of the Convention of 18 March 1965 on the Settlement of Investment Disputes between States and
Nationals of Other States, disputes under this Article between the parties in dispute shall
be submitted for arbitration under the aforementioned Convention, unless the parties in
dispute agree otherwise; each Contracting State herewith declares its acceptance of such a
procedure.
Article 12
This Treaty shall be in force irrespective of whether or not diplomatic or consular relations
exist between the Contracting States.
Article 13
The attached Protocol shall form an integral part of this Treaty.
Article 14
(1) This Treaty shall be subject to ratification; the instruments of ratification shall be exchanged as soon as possible.
(2) This Treaty shall enter into force one month after the date of exchange of the instruments
of ratification. It shall remain in force for a period of ten years and shall be extended thereafter
for an unlimited period unless denounced in writing through diplomatic channels by either
Contracting State twelve months before its expiration. After the expiry of the period of ten
years this Treaty may be denounced at any time by either Contracting State giving twelve
months notice.
(3) In respect of investments made prior to the date of termination of this Treaty, the provisions of the preceding Articles shall continue to be effective for a further period of twenty
years from the date of termination of this Treaty.
Done at ........................................................... on ........................................................... in duplicate in
the German and ........................................................... languages, both texts being equally authentic.
For the
For
Federal Republic of Germany
...........................................................
Annex III
1121
Protocol
to the Treaty
between
the Federal Republic of Germany
and
...........................................................
concerning the Encouragement and Reciprocal Protection of Investments
The Federal Republic of Germany and ........................................................... have agreed on the
following provisions to the Treaty of (date) concerning the Encouragement and Reciprocal
Protection of Investments:
1. Ad Article 1
(a) Returns from the investment and, in the event of their re-investment, the returns therefrom shall enjoy the same protection as the investment.
(b) Without prejudice to any other method of determining nationality, in particular any
person in possession of a national passport issued by the competent authorities of the Contracting State concerned shall be deemed to be a national of that Contracting State.
2. Ad Article 2
The Treaty shall also apply to the areas of the exclusive economic zone and the continental
shelf insofar as international law permits the Contracting State concerned to exercise sovereign rights or jurisdiction in these areas.
3. Ad Article 3
(a) The following shall more particularly, though not exclusively, be deemed activity within
the meaning of Article 3 (2): the management, maintenance, use, enjoyment and disposal
of an investment. The following shall, in particular, be deemed treatment less favourable
within the meaning of Article 3: unequal treatment in the case of restrictions on the purchase
of raw or auxiliary materials, of energy or fuel or of means of production or operation of any
kind, unequal treatment in the case of impeding the marketing of products inside or outside
the country, as well as any other measures having similar effects. Measures that have to be
taken for reasons of public security and order, public health or morality shall not be deemed
treatment less favourable within the meaning of Article 3.
(b) The provisions of Article 3 do not oblige a Contracting State to extend to investors
resident in the territory of the other Contracting State tax privileges, tax exemptions and
tax reductions which according to its tax laws are granted only to investors resident in its
territory.
(c) The Contracting States shall within the framework of their national legislation give
sympathetic consideration to applications for the entry and sojourn of persons of either Contracting State who wish to enter the territory of the other Contracting State in connection
with an investment; the same shall apply to employed persons of either Contracting State
1122
who in connection with an investment wish to enter the territory of the other Contracting
State and sojourn there to take up employment. Applications for work permits shall also be
given sympathetic consideration.
4. Ad Article 7
A transfer shall be deemed to have been made without delay within the meaning of Article
7 (1) if effected within such period as is normally required for the completion of transfer
formalities. The said period shall commence on the day on which the relevant request has
been submitted and may on no account exceed two months.
5. Whenever goods or persons connected with an investment are to be transported, each
Contracting State shall neither exclude nor hinder transport enterprises of the other Contracting State and shall issue permits as required to carry out such transport. This shall
include the transport of
(a) goods directly intended for an investment within the meaning of the Treaty or acquired in
the territory of either Contracting State or of any third State by or on behalf of an enterprise
in which assets within the meaning of the Treaty are invested;
(b) persons travelling in connection with an investment.
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Internationale Handelsschiedsgerichtsbarkeit, 2nd edn,

Mnchen 2003, cited: Aden (2003), p. para.
Ahrens, Jan-Michael
Die subjektive Reichweite internationaler Schiedsvereinbarungen und ihre Erstreckung in der Unternehmensgruppe,
Frankfurt am Main 2001, cited: Ahrens (2001), p.
Alvarez de Pfeifle, Mara

Elena
Der ordre-public-Vorbehalt als Versagungsgrund der

Annerkennung und Vollstreckbarerklrung internationaler
Schiedssprche unter Bercksichtigung des deutschen,
schweizerischen, franzsischen und englischen Rechts sowie
des UNCITRAL-Modellgesetzes, 2009, cited: Alvarez de Pfeifle
(2009), p.
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1134
Smit, Robert H.
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Index
acta jure gestionis, 1044

acta jure imperii, 1044
action for retrial
as part of public policy, 415
as a ground for setting aside, 396397
as an exception from finality of award,
357
action upon the award, 441
ad hoc arbitration, 14, 729
allocation of costs, 742
applicable laws, 730, 742
arbitration clause, 899
arbitration rules for, 744
commencement, 737
conduct, 736
constitution of tribunal, 732
contract with arbitrator, 745
costs, 742
enforcement of awards, 742
German arbitration law, 730
importance of () in Germany, 729
institutional arbitration, 12
international arbitration rules, 744
investment arbitration, 1033
judicial assistance, 740
language of proceedings, 735
making of awards, 741
place of arbitration, 736
recourse against awards, 742
remuneration of arbitrator, 745
setting aside of awards, 742
UNCLOS, 850
under GMAA rules, 787
under Hamburger freundschaftliche
Arbitrage Rules, 803
witness proceedings, 739
ad hoc arbitration in Germany, 14, 729
arbitrators fees, 744
conduct, 732
German statutory law, 743
party autonomy, 14
additional award
for omitted issues, 380
in ICC proceedings, 777
on costs, 375
ADIC, 7
administrative contracts, 1026
admissibility of court proceedings, 509
for the recognition and enforcement of
foreign awards, 477
domestic awards, 431
for the setting aside of awards, 504
admissibility of arbitration
proceedings to determine the (),
126, 761
ADR, 54, 55
advance on costs
entitlement to an (), 31, 152, 372
for counterclaim, 276, 623
for tribunal under DIS Rules, 672
in ad-hoc proceedings, 748
in ICC proceedings, 767
advantages of arbitration
in construction disputes, 831
AIDA Reinsurance and Insurance
Arbitration Society (ARIAS), 897
allocation of costs
ad hoc arbitration, 742
amendment of claim, 274
amiable compositeur, 314
amicable settlement
promotion of (), 20
promotion of () under DIS Rules,
690
amount in dispute
determination of () as judgment in
own cause, 367, 493
determination by tribunal under DIS
Rules, 714
1138
in court proceedings, 247

in recognition and enforcement
proceedings, 435, 503
in setting aside proceedings, 420
anational award, 63
annulment
of declaration of enforceability, 500
of award, see: setting aside of award
appeal
against an award, 259, 385, 801
applicable law
for mediation, 58
in corporate law disputes, 960
intellectual property disputes, 919
reinsurance, 902
to ad hoc proceedings, 729, 742
to arbitral procedure, 62, 239
to arbitration agreement, 22, 82, 402
to determine capacity of a party, 402,
463
to determine incorrect procedure, 483
to intellectual property rights, 920
to merits, 39, 303
to merits under DIS Rules, 659
to court proceedings, 40, 508
to expert determination, 60
to subjective arbitrability, 97, 402
application
for appointment of an arbitrator, 190
for challenge of an arbitrator, 1031
for interim relief, 142
for recognition and enforcement of a
foreign award, 452
for enforcement of a domestic award,
435
for setting aside of an award, 393
appointment of arbitrators, 27, 147, 165
agreement on procedure, 166
agreements with arbitrators, 170
appointment by a third party, 167
appointment of civil servants, 168
appointment of experts, 292, 296
appointment of judges, 28, 168
appointment of substitute arbitrator,

209, 212
binding nature of appointment, 170
by courts, 161, 171
challenge of arbitrators, 29
court appointed arbitrator, 173
court assistance in appointment, 172,
174
grounds for terminating appointment,
205
in ad hoc arbitrations, 733
in commodity arbitrations, 807, 810,
812
in intellectual property disputes, 920
in multiparty arbitrations, 48, 175, 629
insurance disputes, 901
lack of party agreement, 171
multi-party arbitration, 175
nomination of arbitrators, 166, 171
party autonomy, 27, 168
requirements, 168
selection of arbitrators, 168
time limit, 173
tribunal appointed experts, 293
two arbitrators, 172
under DIS Rules, 625, 631
under GMAA Rules, 789
under ICC Rules, 764
unequal influence, 27
arbitrability, 16, 94, 731
and exclusive jurisdiction of state
entities, 915
antitrust disputes and merger controls,
101
applicable provisions in ZPO, 95
between foreign private investors and
German public entities, 1026
claims involving an economic interest,
98
claims not involving an economic
interest, 99
comparison with UNCITRAL model
law, 96
corporate disputes, 100
corporate law disputes, 933
Index
disputes arising after state court

decisions, 102
effects on the arbitration agreement,
122
family law disputes, 102
financial service disputes, 101
insolvency proceedings, 103
lack of () as a defence against
recognition and enforcement, 486
lack of () as a ground for setting
aside, 411
not involving economic interest, 933
objective arbitrability, 97
of company law disputes, 100, 579, 930
of disputes as to shareholders
resolution (AG), 939
of disputes as to shareholders
resolutions (GmbH), 933
of disputes in a Societas Europea, 944
of disputes in EEIG, 943
of disputes relating to wills, 559
of disputes within an AG, 933
of disputes within a GmbH, 931
of financial service disputes, 101, 883
of intellectual property related disputes,
99, 912
of investment disputes, 1026
of insolvency disputes, 103
of partnership disputes, 941
residential lease agreements, 103
review by courts at pre-award stage, 121
shareholder disputes, 931, 934, 935
shareholders resolutions, 934
stock corporation, 933
subjective arbitrability, 97
succession, 102
arbitral award, 696; see also: award
identification of parties, 697
signature of arbitrators, 697
arbitral proceedings, 31, 239
amendment of claim, 274
appellate proceedings, 259
applicable rules, 239, 668, 730, 743, 771
closing of () under DIS Rules, 688
commencement, 32, 264, 611
1139
commencement and conduct, 32

communications, 76, 606
counterclaims, 256, 275, 620
decision on costs, 40
default proceedings, 35, 284, 686
default rules, 32
delay of a party, 274
discretion of tribunal, 17, 32, 251, 736
documents-only proceedings, 279, 682
effect of parallel court proceedings, 123,
131
establishing facts, 252, 679, 738
evidence, 33, 253
general principles, 31
hearing of witnesses, 34, 282, 739
incorrect () as a defence against
incorrect () as ground for setting
aside, 408
insolvency of a party, 50, 258
interim relief, 35, 133, 226, 654
intervention of third parties, 256
joinder of parties, 255, 841
language of, 32, 268, 661
law applicable to the decision on the
merits, 39
legal aid, 256
legal representation, 35, 249
limited to one instance, 20
location of hearings, 262, 658
mandatory rules, 244, 648
multi-party proceedings, 49, 255
Mndlichkeitsgrundsatz, 279
oral hearing, 32, 279, 682, 738
party autonomy, 17, 32, 241, 250, 664
preclusion of submissions, 273
prevention of delay, 19
principle of equal treatment, 244, 675
promotion of amicable settlement, 20,
690
record of oral hearing, 35
reinsurance, 903
representation and legal assistance, 35
request for arbitration, 267
right to be heard, 244, 675
role of chairman of tribunal, 251
security for costs, 33, 256
1140
settlement discussions, 253, 598

statement of claim, 272, 610
statement of defence, 272
stay of proceedings, 257
suspension, 257
termination, 361, 710
under DIS Rules, 585
withdrawal of claim, 272
written proceedings, 279
arbitral tribunals, 27, 147, 732
appointment of arbitrators, 70
appointment of arbitrators by state
court, 161
appointment of experts, 34, 293
arbitrators contract, 151
association with larger associations, 57
authority to decide, 323
awards, 694
challenge of arbitrator, 29, 179, 647
compelling witnesses, 34
competence-competence, 19, 124, 216,
401, 463
composition, 154
constitution of (), 147, 732, 959
constitution under DIS Rules, 599
decision making, 319
decision of court, 162
derogation from composition
provisions, 155
determination of jurisdiction, 18, 123
discretion, 17, 251, 320
duties of arbitrators, 150
duties of parties, 149
effective testamentary directive, 554
equal influence on composition of the
(), 27, 161, 492
established by disposition of death
(mortis causa), 551
established in statutes of entities, 564
established mortis causa, 552
established under company law, 564,
929
established under succession law, 553
excess of authority, 406, 476
exclusion of reliance on lack of
jurisdiction of, 403
executor as arbitrator, 562

final decision on jurisdiction, 19
impartiality, 634
incorrect assumption of jurisdiction,
401
incorrect composition as ground for
setting aside, 407
incorrect composition as a defence
against recognition and enforcement,
478
incorrect denial of jurisdiction, 404
interim measures, 228, 654
joint will, 557
jurisdiction, 18, 221, 222, 352
Kompetenz-Kompetenz, 19, 216, 220
liability of arbitrator, 152
majority principle, 319
number of arbitrators, 156
objection to jurisdiction, 217
party autonomy, 148
preponderance, 157
procedure of deliberations, 320
procedure of voting, 320
refusal of arbitrator to participate, 322
reliance on own knowledge, 472
restrictions on individual procedural
questions, 324
right to fair hearing, 34
role in settlement discussions, 253
settlement, 690
taking of evidence, 253
testamentary contract, 557
testamentary direction, 558
time limit to object to jurisdiction, 218
arbitration
distinctive features, 56, 85, 564
in commodity trade, 796
in corporate law, 564, 929
in disputes concerning wills and
succession, 552
of banking and finance disputes, 876
of construction disputes, 830
of insurance disputes, 889
of intellectual property disputes, 908
of investment disputes, 1013
of maritime disputes, 787
Index
arbitration agreement, 21, 79, 730

and interim relief, 125, 133
and summary proceedings, 25, 125
and transfer of membership, 575
applicable law, 82, 664, 977
arbitrability, 83
as a defence in court proceedings, 116
broad interpretation, 26
burden of proof for the existence of an
(), 120, 458
capacity, 83
comparison with old law, 81
law, 80
conclusion of the arbitration agreement,
83
content requirements, 84
contractual defences, 90
DIS Model Clause, 593
effect of arbitration agreement, 92
effects of an (), 25, 92, 122
extension to corporate law principles,
92
extension to former parties, 91
extension to non signatory parties, 24,
91, 468, 950
form, 731
form requirements, 22, 83, 105, 465
form requirements for arbitrations
abroad, 23
for ad hoc proceedings, 730
for construction disputes, 838
for corporate law disputes, 945, 952
for intellectual property disputes, 918
for maritime disputes, 788
for re-insurance disputes, 896, 899
general terms and conditions, 159
group of companies doctrine, 951
in articles of association, 566, 954
in BITs, 1026
in commodity trade, 804
in investment contracts, 1025
in partnership agreements, 566
in standard terms and conditions, 402
in statutes of commercial and legal
entities, 565, 953
1141
in statutes of stock exchanges, 878

in stock exchange rules, 878
in wills, 552
incapable of being performed, 120
inconsistent agreements, 21
insolvency of a party, 992
intention of the parties, 26
interpretation, 15, 26, 86, 89
lack of a valid () as a defence against
lack of valid () as ground for setting
aside, 400, 401
law applicable to the, 82, 402
legal nature, 21
minimum content, 21, 84, 577, 731
minimum requirements, 21, 81
multi-tier arbitration clauses, 8
non-signatory parties, 24
optional content, 86
parties to the agreement, 24, 91
pathological clauses, 81, 87, 88, 468
piercing the corporate veil, 952
provisions for a separate arbitration
agreement, 88
requirements, 73
review by ICC court, 759
scope of (), 89, 578
review by courts at pre-award stage, 118,
173, 228, 299
separability, 22, 82, 217
termination, 93
terminology, 82
time limit for raising, 118
validity of, 119, 402
arbitration award, see: award
arbitration clause
at time of formation of company, 566
in articles of association, 567
in partnership agreements, 567
material rights of investors, 1028
arbitration defence in court proceedings
inadmissibility, 119
standard of review, 118
1142
Arbitration Documentation and

Information Center
publications, 7
SchiedsVZ, 7
arbitration in Germany
ad hoc arbitration, 14, 727
historical developments, 4
information about , 7
infrastructure, 12
legal framework, 8
present practice, 5
arbitration proceedings, see: arbitral
proceedings
arbitrator
acceptance of mandate under DIS
Rules, 638
appointment, see: appointment of ()
arbitrators contract, 30, 745
challenge of arbitrators, 29, 30
contract with the parties, 151, 744
confirmation of () under DIS Rules,
644
conflicts of interest, 183
dismissal, 30
duty to disclose, 30, 182
IBA Guidelines on Conflicts of Interest,
183
impartiality/independence, 29, 186,
634, 647
judges as arbitrators, 28
state court judge as (), 121, 168, 598
liability of the (), 152, 724, 750, 782
qualifications required, 27, 191, 598,
899
remuneration, 149, 367, 745
taxation, 623, 749, 784
termination of mandate, 203, 364, 659
the executer of a will as (), 562
arbitrator fees, 744, 749
arbitrators contract, 30, 151, 745, 750, 783
ARGE Baurecht des Deutschen
Anwaltvereins, 836
Association of Graintraders of the
Hamburg Exchange, 804
associations
and arbitration, 537
attachment order for claims and rights,
1071
attorney fees
in arbitral proceedings, 371
in arbitration related court proceedings
520
for recognition and enforcement of
foreign awards, 503
award, 693
action upon the (), 441
additional awards, 40
against insolvent party, 1008
anational (), 63
annulment, see: setting aside
appeal against an (), 259, 801
arbitral tribunals, 694
as a prerequisite for recognition and
enforcement proceedings, 431, 448
as a title for enforcement proceeding,
1067
as requirement for setting aside
proceedings, 388
binding effect of subject matter, 354
binding effect restricted to parties, 354
changing the legal situation, 431
content of awards, 1006
correction and interpretation, 40
correction of an (), 40, 396, 706
correction of award, 706, 777
decisions on jurisdiction, 352
declaration of enforceability, 424, 441,
1050
delivery, 347, 704
denial of recognition and enforcement
of (), 440, 498
denying jurisdiction, 222
domestic awards, 46
effect of awards, 5, 349, 354, 356
effect on enforcement proceedings, 357
effects of an (), 348, 708
Index
effects of setting aside of foreign (),

485
enforcement in Germany, 6
enforcement under international
instruments, 47
ex aequo et bono, 484
final awards, 351
finality, 450, 484
foreign awards, 47, 358
form and delivery, 38
form requirement of the , 38, 339,
696
ICSID awards, 1041
infra petita, 407
insolvency, 1005
insolvency creditor, 1007
interim awards, 352
interlocutory (), 352, 389
interpretation of the (), 40, 380, 706,
777
limited publications, 6
making of an (), 37, 318, 696, 741,
774
making of the award, 38
nationality of award, 46
no registration requirements, 38
number of copies, 705
obligation to give reasons, 342, 409,
475, 495
partial (), 351, 449
procedural res judicata, 350
pseudo (), 390
publication of, 721
recognition and enforcement of, 46, 421
recognition and enforcement of foreign
(), 443
recognition of domestic (), 425
recourse against the (), 43, 383, 419,
742
replacing a declaration of will, 431
requirements, 38, 339
res judicata effect, 350, 424
scrutiny in ICC proceedings, 775
setting aside of awards, 43, 46
1143
setting aside proceedings against, 43,

383
substantive res judicata, 350
time limit, 694, 771
time limit for rendering an (), 772
time limit to set aside, 46
translation of, 270, 435, 452
types of awards, 37, 350
ultra petita, 407, 477
award on agreed terms, 330
concept and content, 331
declaration of enforceability by public
notary, 335
effect, 335
form and content, 331, 332
in DIS-arbitration, 686
in lieu of notarial certification, 335
notaries declaring enforceability, 335
procedure of rendering award on agreed
terms, 333
request by parties, 333
setting aside, 338, 388
recognition and enforcement, 432, 448
tribunals right to refuse, 334
award, on costs, 365, 742
in DIS-arbitration, 699
in ICC-arbitration, 778
procedural public policy, 493
underlying principles, 40
B2B transactions, 876
international B2B transactions, 877
B2C disputes
energy, 870
B2C transactions, 882
BaFin Bundesanstalt fr Finanzdienstleistungsaufsicht, 890
BAGO, 747
banking and finance
B2B transactions, 876
interim measures, 885
securities investment services, 883
Betriebshaftpflichtversicherung, 891
1144
bilateral commerce and friendship treaties

relevance in German Law, 12
bilateral investment protection treaties, 12
German Model Treaty, 1022
protecting German investment abroad,
1019
the German BIT program, 1027
bilateral treaties, 12
binding nature
of court decision on admissibility of
arbitration, 128
of the courts decision on jurisdiction,
121
breach of confidentiality
legal remedies, 974
Bremen Cotton Exchange, 813
Bremer Baumwollbrse, 813
Brussels I Regulation, 141
burden of pleading
proceedings, 458
burden of proof
for the existence of an arbitration
agreement, 458
business secrets
and right to be heard, 472
protecting (), 923
capacity, 510
foreign business entity, 510
certificate of enforceability, 1067
chairman of the tribunal
appointment, 164, 626627
determination of place of arbitration,
261
required qualification under DIS Rules,
598
role in conduct of proceedings, 251
challenge
of an award, see: setting aside
of an expert, 181, 199, 295

of jurisdiction of arbitral tribunal, 403
of preliminary ruling on jurisdiction,
221
challenge of arbitral award, 737
challenge of an arbitrator, 29, 179, 180, 734
challenge procedure, 197
financial connections to a party, 188
grounds for (), 185186, 647
ground for challenge as ground for
setting aside, 192
impartiality, 647
impartiality and lack of independence,
186
in absence of qualifications, 191
in ad hoc proceedings, 734
independence, 647
personal connection to a party, 187
prejudice in relation to subject matter,
189
procedure, 194, 648
under GMAA Rules, 790
replacement, 649
challenge procedure, 194
as agreed by parties, 195
court decision, 198
decision of the arbitral tribunal, 197
preclusion, 196
review of challenge decisions by courts,
201
statutory challenge procedure, 196
time limit, 196
value in dispute, 201
challenges
arbitral tribunal jurisdiction, 737
choice of place of arbitration, 62
clearing house EEG, 866
arbitration rules, 868
closest connection test, 312
closing of proceedings
time limit, 688
closing of proceedings under DIS Rules,
688
Index
CISG, 808
commencement of arbitral proceedings,
32, 264
content of request for arbitration, 267
form of request of arbitration, 267
legal effects, 265, 611
lis alibi pendens, 264
procedural effects, 264
procedural law relevance, 264
substantive law effects, 265
under Hamburg Chamber of
Commerce Rules, 801802
under ICC-Rules, 759
under the DIS Rules, 610
under the rules of the Getreideverein,
807
commercial representation, 818
arbitrability, 822
authorised dealers, 820
commercial agents, 820
commercial brokers, 821
commission agents, 821
commission merchants, 821
franchisees, 821
types, 820
commodity arbitration, 796
arbitration agreement, 799
arbitration rules for (), 799
string arbitration, 801
commodity trade associations, 804
company law
significance of arbitration, 929
tribunals established under (), 567,
929
competence of arbitral tribunal, 216
to grant interim relief, 227
to rule an own jurisdiction, 216
competence-competence, 19, 130, 216,
403, 463
composition of the arbitral tribunal, 154
equal influence on the (), 27, 157
incorrect () as a defence against
1145
incorrect () as a ground for setting

aside, 407
number of arbitrators, 154
under Hamburger freundschaftliche
Arbitrage Rules, 803
conciliation, 837
conciliation and mediation, 57
2012 mediation act, 58
choice of law, 58
expert determination, 59
German mediation act, 57
premature claims, 59
procedural safeguards, 60
confidentiality, 741, 923, 964
arbitrators, 966, 978
breach of confidentiality, 974, 975
conflicts of law, 977
duty of confidentiality, 967
evidence, 923
obligations, 966
parties, 970, 978
privacy of arbitral hearings, 965
secrecy of deliberations, 968
third parties, 973
conflicts of jurisdiction, 117
court determination of arbitrability, 126
decision of the court, 121
defence before state courts, 118
objection not inadmissible, 119
parallel arbitral proceedings, 123
timely objection, 118
constitution of tribunal, see: appointment
of arbitrators
construction arbitration, 830
applicable law, 844
multinational projects, 834
preservation of evidence, 842
taking of evidence, 842
construction disputes, 830
consumer arbitration
1146
and EU Unfair Terms Directive, 74

form requirements, 111
in banking transactions, 882
in direct insurance, 890
in securities transactions, 883
EU-Directive 99/12, 882
consumer protection, 112, 310
signing of separate agreement, 112
company law
significance of arbitration, 929
tribunals established under (), 566
corporate law, 929
arbitrability, 930
right to information, 932
shareholder disputes, 931
correction of award, 40, 378, 379
and time limit for setting aside
proceedings, 396
time limit, 707
corruption
public policy, 487488
costs of the arbitration
advance on (), see: advance on costs
allocation, 373
decision on (), 40, 365
in cases of default of party, 289
recognition and enforcement of award
on (), 450
security for (), see: security for costs
witness costs, 284
costs of court proceedings, 520, 547
for the appointment of arbitrators, 178
for the challenge of arbitrators, 201
for the enforcement of interim relief,
236
domestic awards, 437, 442
foreign awards, 502
for setting aside of awards, 420

for enforcement proceedings, 1080
counsel
right to be represented by () in
arbitral proceedings, 249
representation by () in court
proceedings, 511
representation by () in recognition
and enforcement proceedings, 436
counterclaims, 275
admissibility, 621
advance on costs, 276
costs for () under DIS Rules, 623
fees, 623
in construction arbitration, 843
requirements, 620
tribunal discretion, 620
court assistance, 506, 507
court control, 508
formal requirements, 536
jurisdiction of state courts, 509
mandatory oral hearing, 534
no review of merits, 508
reasons for court assistance, 508
request for oral hearing, 535
court fees
court intervention
extension of scope of, 67
general principles, 17, 41, 67, 507
Court of Arbitration of the Hamburg
Chamber of Commerce arbitration, 801
court orders declaring awards enforceable,
1062
action against enforcement, 1079
certificate of enforceability, 1068
enforceable title, 1067
enforcement against movables, 1069
enforcement by the Gerichtsvollzieher,
1070
enforcement costs, 1080
general sources of information, 1065
legal remedies, 1078
Index
limitation period for enforcement, 1068

objections, 1078
seizure, 1070
service, 1068
stay of enforcement, 1080
third party action against enforcement,
1079
court proceedings, 505
admissibility, 509
applicable rules, 40, 509, 533
autonomous procedure for taking
evidence, 42, 131, 842
confidentiality, 979
costs, see: costs of court proceedings
default proceedings, 534
for appointment of arbitrator, 172
for assistance in taking of evidence, 297
for challenge of an arbitrator, 194
for challenge of a preliminary ruling on
jurisdiction, 220
for determination of admissibility of
arbitration, 18, 126
for enforcement of interim relief, 232
for interim relief, 133, 886
for recognition and enforcement of
awards, 428, 445, 538
for setting aside of awards, 383
form of decisions, 536
influence on parallel arbitration
proceedings, 123, 200, 223
jurisdiction, 509, 525
legal representation, 511, 535
legitimate legal interest, 127, 392, 430,
433, 512, 535
oral hearing, 518, 539
procedure, 518, 539
remedies in (), 519, 543
security for costs, 437, 455, 535
stay in favour of parallel arbitration
proceedings, 123
termination of (), 536
where place of arbitration is not yet
fixed, 65
courts
extension of powers, 68
general approach to arbitration, 14
1147
power of the () in relation to

arbitration, 67, 507
supervisory function, 41, 508
supportive function, 41, 507
criminal offence
public policy, 488
damage claim
under 826 BGB as recourse against
award, 417, 419
DAS Deutscher Ausschuss fr
Schiedsgerichtswesen, 585
death of testator, 554
decision on costs, 366, 778; see also: award
on costs
arbitrators right to advances, 368
cost of arbitration, 366
cost of institution, 369
cost of tribunal/arbitration institution,
367
decision on allocation of costs pursuant,
373
discretion of the arbitral tribunal, 374
form, 703
general expenses, 369
lawyers fees, 370
legal consequences, 375
recourse against cost, 376
statutory amount of lawyers fee, 371
decision on the merits, 29
declaration of enforceability, 424, 426, 440
as title in enforcement proceedings,
1069
awards, 1050
content, 440
defences, 1009, 1010
function, 424, 426, 430
insolvency, 1009
legitimate legal interest, 450
of domestic award, 430
of foreign award, 498
remedies against, 441, 498
and res judicata effect, 431
legitimate legal interest in (), 430
1148
of parts of an award, 440

provisional enforceability, 440
annulment of (), 500
declaration of validity of the award, 442
declaration of will
replacement by award, 431
declaratory award
default of a party, 35, 287, 686
agreement of the parties, 287
costs, 289
failure to appear, 289
failure to produce documentary
evidence, 289
failure to submit statement of claim, 288
failure to submit statement of defence,
288
justification of, 290
to appear at oral hearing, 289
to produce documentary evidence, 289
default of an arbitrator
grounds, 651
defences against recognition and
enforcement of domestic awards, 45, 437
detailed analysis , see: grounds for
setting aside an award
material defences against the claim, 438
statutory preclusion of (), 437
enforcement of foreign awards, 45, 455
additional (), 495
burden of pleading and proof, 458
material defences against claim, 495
preclusion, 459
requirement of causal nexus, 485
to be considered ex officio, 485
to be pleaded by a party, 462
delay
in challenging the jurisdiction of the
arbitral tribunal, 218
prevention of () in arbitral
delay of a party
submission of claims, 274
delivery
of award, 347
of award under DIS Rules, 693
of written communications, 76
of written communications under DIS
Rules, 606
determination of facts by arbitral tribunal
binding force for the court, 401, 459
general principles, 253, 679, 738
rvision au fond, 401
Deutsche Gesellschaft fr Baurecht, 840
Deutsches Richtergesetz, see DRiG
Deutsches Seeschiedsgericht, 792
diplomatic immunity, 1044
diplomatic protection, 1020
DIS
adress, 593
appointing authority for UNCITRAL,
13
arbitration-related services, 13, 593
DIS40, 13
dispute resolution services, 586
fee schedule, 747
history, 585
locations, 658
Model Clause, 593
number of cases, 6
statistics, 586
structure of institution, 585, 586
DIS Appointing Committee
function, 593
nomination of arbitrators, 638
DIS Arbitration Rules, 587, 588
acceptance of mandate as arbitrator, 638
administrative fee, 615, 715
advance on costs of tribunal, 615, 672
allocation of costs, 702, 714
amount in dispute, 714
applicability, 13
applicable law, 664
appointing committee, 627, 645
appointment of arbitrators in multiparty
arbitrations, 629
Index
arbitral award, 696

arbitral tribunals, 634
arbitrators disclosure, 639
arbitrators fees, 615, 624, 673, 715
arbitrators mandate, 638, 652
arbitrators costs, 700
award on agreed terms, 686
challenge of an arbitrator, 29, 647
closing of proceedings, 688
co-arbitrator, 625
commencement of proceedings, 593,
610, 611
composition of arbitral tribunal, 630
confirmation of arbitrators, 644
constitution of tribunal, 593
correction of award, 706
cost examples, 718
costs, 623, 711
costs of arbitral tribunal, 713
cost upon commencement of
proceedings, 614
costs for counterclaim, 623
costs of the arbitral proceedings, 713
costs of the DIS, 715
counterclaim, 620
default of a party, 686
default of an arbitrator, 651
delivery of award, 704
delivery of statement of claim, 616
delivery of written communications,
606, 607, 608
determination of place of arbitration,
657
DIS administrative fees, 700, 717
DIS secretariat, 632, 641
due process in arbitral proceedings, 675
duty to disclose contacts with parties,
634, 642
effect of award, 708
equal treatment, 675
errors in award, 706
establishing facts, 679
exclusion of liability, 724
expenses of arbitral tribunal, 717
failure to object, 719
1149
fee calculator, 673

impartiality and independence, 634, 647
inclusion into arbitration agreement,
594
increase of arbitrators fee, 715, 716
interim relief, 36, 654
interpretation of award, 706
language of proceedings, 661
languages, 663
law applicable to merits, 664
law applicable to proceedings, 668
lawyers fees, 711
loss of right to object, 719
multiple parties, 629
ne ultra petita, 694
nomination of chairperson, 626
non cooperative arbitrator, 695
number of arbitrators, 601, 625
oral hearing, 682
other costs, 701
parties costs, 700
prima facie review of jurisdiction, 595
provisional advance on arbitrators fees,
615
publication of award, 721
publications, 723
qualified statement of acceptance, 645
records of oral hearing, 684
record of oral proceedings, 684
reduction of fees, 714
rendering the award, 693
replacement of challenged arbitrator,
649
requisite copies of written pleadings,
604
right to be heard, 675
right to object, 719
rules of procedure, 668
schedule of costs, 715
scope of application, 593
selection of arbitrators, 598
service of written communications, 606
settlement, 690
sole arbitrator, 632
special procedural rules, 669
statement of claim, 610
1150
statement of defence, 618

statement of independence, 641
termination of arbitral proceedings, 710
termination of arbitrators mandate,
651, 652
three-member tribunal, 625
transcripts of proceedings, 702
unclear designation of arbitral
institution, 594
unqualified statement of acceptance,
644
validity of arbitration agreement under
(), 595
VAT on fees, 615
written submissions, 669
DIS Schedule of Costs
disclosure obligation of the arbitrator
IBA Guidelines, 187
violation as a ground for challenge, 185
discovery of documents, 284
discretion of the arbitral tribunal
in organizing proceedings, 251, 668
in taking evidence, 285, 474, 679
discretion of the court
proceeding, 457
dispute resolution boards, 56, 833
disputes
authorized parties, 56
increased arbitrability, 6
minimum requirements to qualify as
arbitration, 56
documentary evidence
discretion of tribunal in taking (),
284, 679
IBA Guidelines on Taking of Evidence,
285
privilege, 285, 739
refusal of party to cooperate, 285
rules in court proceedings, 283
documents
disclosure, 284, 739
pre-trial discovery, 284
admissibility of applications for
enforceability, 431
application for admissibility, 435
basic principles, 428
concept, 45, 426
costs of proceeding, 442
decisions on enforceability, 439
enforcement of an (), 428
existence of a domestic award, 431
legal remedies against enforceability,
441
material defences, 438
merits of application for admissibility,
437
need for declaration of enforceability,
430
negative decisions, 439
positive decisions, 440
preclusion of defences, 437
preliminary rulings not awards, 432
recognition of an (), 425
requirements for admissibility, 435
statement of claim, 616
validity of arbitration agreement, 730
double exequatur, 501
duty of confidentiality
arbitrators, 978
exemptions, 969
jurisdiction, 975
parties, 978
duty to disclose
sanctions for non-disclosure, 184
DRiG
40 as an obstacle to appointment, 169
40 as an obstacle to arbitration, 121
40 in setting aside proceedings, 408
EFET European Federation of Energy
Traders, 858
effects of the award
Index

effects on the award
as prerequisite for setting aside, 406,
408
as prerequisite for refusal of recognition
and enforcement, 476
energy, 848
B2B disputes, 855
B2C disputes, 864, 870
Energy Charter Treaty, 851
gas price formula, 860
IBA Guidelines on Conflicts of Interest,
851
IBA Rules on the Taking of Evidence,
863
OTC contracts, 859
OTC trading, 857
renewable energy sources act, 865
Energy Charter Treaty, 11, 851
arbitration clauses, 1027
article 26, 1030
dispute settlement under the (), 853,
1030
investment protection, 852
enforcement of awards, 1069
certified copy of award, 539
court decision, 540
declaration of enforceability in the
interim, 540
foreign arbitral awards, 541
procedure, 539
enforcement of awards for payment of
money, 1069
against claims and rights, 1071
against immovables, 1074
against movables, 1069
enforcement of non-money awards, 1075
for a declaration of intent, 1077
for abstention, 1077
for non-personal undertakings, 1076
1151
for personal undertakings, 1076

for recovery or delivery of thing, 1077
enforcement of titles in Germany, 427
enforcement proceedings in Germany
competent entities, 1069
cost of, 1080
identification of debtors assets, 1065
prerequisites for, 1067
remedies against, 1078
equal treatment
in the constitution of the tribunal.., 156,
492
establishing facts, 738
EU Unfair Terms Directive
and the loss of the right to object to
procedural defects, 74
Euler Hermes-Guarantees, 1057
European Convention on International
Commercial Arbitration, 10, 501
European Council Convention on State
Immunity, 1044
European Economic Interest Grouping
arbitrability of disputes in, 943
European Energy Exchange, 857
evidence
and right to be heard, 33, 474, 482
banking and finance, 886, 887
discretion of arbitral tribunal in taking
of (), 33, 253, 474
documents, 284, 739
evaluation by tribunal, 255
experts, 292, 680, 740
party witness, 255
refusal to take () as defence against
recognition and enforcement, 474,
482
reliance on own knowledge, 34, 472
taking of (), 253
translation of, 270
witnesses, 281
1152
evidentiary hearing
record of (), 280
ex aequo et bono
authorization to decide (), 314
unauthorized decision, 483
ex officio
enforcement to be considered (.),
485
grounds for setting aside to be
considered (), 398, 410
ex parte proceedings
for interim relief by courts, 142
for provisional enforcement, 535
excess of authority
and preclusion of defence, 478
and time limit for rendering an award,
477
as a ground to refuse recognition and
enforcement, 476
execution of awards, see: enforcement of
awards exequatur proceedings
and setting aside proceedings, 392
exequatur proceedings, 24, 54
insolvency, 1006
expenses of arbitral tribunal
as part of the cost of arbitration, 367
expert, 293, 740
appointment, 294
challenge, 180, 199, 295
claim for remuneration, 295
independence and impartiality, 294
liability, 296
participation in oral hearing, 294
party appointed, 296
tribunal appointed expert, 293, 680, 740
types of ()s, 292
expert determination, 59, 60
applicable rules, 60, 85
distinction from arbitration, 59
in insurance disputes, 893

legal nature of decision, 59
procedural safeguards, 60
procedural issues,294
facts determined by arbitral tribunal
binding force for the court, 401, 459
Kompetenz-Kompetenz, 401
rvision au fond, 401
factual basis
for recognition and enforcement, 459
for setting aside proceedings, 400
failure to object in time, 219
fair and equitable treatment principle, 1028
fee calculator, 673
fee schedule, 747
FIAC Frankfurt International Arbitration
Centre
finality of award
as a prerequisite for recognition and
enforcement, 450, 484
financial service contracts, 880
foreign arbitral proceedings
applicable German Arbitration Law, 64
enforcement of interim relief, 232
form requirements for arbitration
agreement, 23
interim relief in support of (), 141
taking of evidence in support of (),
298
foreign award, 445
foreign, 449
admissibility, 447
burden of proof, 458
concept of (), 46, 66, 448, 449
effects of setting aside of (), 484
enforcement under international
instruments, 47, 502
existence, 448
existence of a foreign award, 448
failure to object, 460
finality, 450
Index
form of application for enforceability,

452
grounds that must be pleaded, 462
grounds to refuse enforcement, 462
lack of a valid arbitration agreement, 462
legal representation in proceedings for
enforceability, 455
need for recognition and enforcement,
447
New York Convention, 445, 456
obligation to give reasons and violation
of public policy, 494
old law, 446
oral hearings for enforceability, 454
proceedings for enforceability, 454
recognition and enforcement of (),
47, 443
recourse against (), 392
requirement of party to proceedings,
453
security for costs, 455
foreign direct investment, 1022
foreign intellectual property rights, 916
foreign investment in Germany, 1018, 1021
foreign investor, 1023
form requirements, 22, 83, 105, 109
comparison with old law, 107
law, 106
cure of form defects, 114
cure of lack of any arbitration
agreement, 115
electronic form, 113
for arbitration agreements, 22, 105, 466
for arbitration agreements in articles of
associations in statutes, 578
for awards, 339
for awards under DIS Rules, 697
incorporation of the arbitration
agreement, 111
notarized agreements, 113
of document containing arbitration
clause, 110
of the referencing document, 110
1153
requirements of main contract, 108

silence as consent, 110
standard terms and conditions, 111, 113
written record, 109
form requirements of award
date of award, 344
delivery of award, 347
facts of the case, 342
lack of signature, 345
must state reasons, 342
procedural history, 341
signature of arbitrators, 345
summarization of tribunal decisions,
343
written requirements, 341
forum selection clause
determination of place of arbitration as
an implied (), 141
in banking and finance, 876
influence on jurisdiction of the courts
for supportive actions, 525
Frankfurt gap, 669
Frankfurt International Arbitration Centre
(FIAC), 1032
Frankfurt Stock Exchange, 878
fraud
procedural () as a defence against
procedural () as a ground for setting
aside, 415
fulfilment of the award
as a defences against recognition and
enforcement, 438, 496
fundamental principles of law
as part of public policy, 413
gas contracts, 859
gas grid, 864
GAFTA, 800
German arbitration law
adoption of the ML, 4
and foreign arbitral proceedings, 54, 64
1154
applicability, 54
arbitrability, 16
characteristic features, 16
choice of law, 54
choice of place of arbitration, 62
codification, 4
conduct of proceedings, 17
conflict of laws rules, 39
default character of rules, 63
deviations from the ML, 8, 424
directive on consumer ADR, 55
form requirements, 21
international conventions, 9
interplay with ICC-Rules, 757
limitations of arbitrability, 17
mandatory rules, 118, 126, 2123
modernization, 5
non mandatory rules, 135, 228
place of arbitration not yet fixed, 64, 65
place of arbitration outside of Germany,
64
place of arbitration within Germany, 63
primary characteristics, 16
promotion of amicable solutions, 20
provisions outside the 10th book, 9
qualifications for arbitrators, 28
role of party autonomy, 16
scope of application, 8, 16, 54
territoriality principle, 16, 61
transitional provisions, 9
UNCITRAL model law, 4
German bits
German Chinese BIT, 1023
German civil code (ZPO)
applicability, 9
German coffee association, 811
German Indonesian BIT, 1024
German Institution of Arbitration, see: DIS
German law
mandatory rules of law, 309
waiver of immunity, 1052
German Law on Judges, see DRiG

GMAA, 787
applicable law, 789
costs, 791
GMAA rules, 788
multiparty, 790
settlement, 791
German maritime law reform 2013, 793
German Model BIT, 1027
definitions of key concepts, 1022
German provisions, 424
German state courts
appointment of arbitrators, 161, 173
decision of the court, 129
ex parte proceedings, 143
in challenge proceedings, 199
interim measures, 135, 142, 144
jurisdiction in arbitral proceedings, 18,
41, 222
jurisdiction of German courts, 140
jurisdiction under Brussels I regulation,
141
limited court intervention, 18, 41
parallel proceedings, 130
party agreements, 68
powers of courts, 67
pro-arbitration attitude, 15
state court review of arbitral tribunal
jurisdiction, 222
supervisory functions, 15, 41
support functions, 15, 18, 35, 42, 67, 126
time limit, 127
good faith
as a bar to objection to tribunals
jurisdiction, 218
as a bar to the arbitration defence, 119
Grofor, 815
grounds for setting aside an award
additional (), 397
general principles, 43, 401
Index
pleading requirements, 394

public policy, 411
relationship between various grounds,
398
requirement of a causal nexus, 408
to be considered ex officio, 398, 410
waiver, 387
grounds to refuse recognition and
enforcement, see: defences against
recognition and enforcement
group of companies doctrine, 25, 468, 951
Hamburg Chamber of Commerce, 13, 801
Hamburger freundschaftliche Arbitrage, 14,
803
IBA Guidelines on Conflict of Interest
arbitrators disclosure, 639
energy, 863
role as guideline, 183, 735
settlement discussions, 253
IBA Guidelines on Taking of Evidence, 285
IBA Rules of Ethics for International
Arbitrators, 677
IBA rules on the taking of evidence, 669
energy, 864
ICC arbitration
2012 ICC rules, 754
arbitral proceedings, 759
arbitrators fees, 781, 783
correction of award, 777
Court, 756
interpretation of award, 777
multiparty, 763
nomination of arbitrators, 764
procedural timetable, 770
Secretariat, 757
statistics, 756
terms of reference, 768
1155
ICC Rules
arbitrators remuneration, 781
commencement, 759
correction and interpretation of award,
777
exclusion of liability, 782
making an award, 775
provisional timetable, 769
review of arbitration agreement, 759
time limit for award, 771
waiver of right to recourse, 387
ICSID awards
enforcement in Germany, 1041
enforcement proceedings, 1042
recognition and enforcement in
Germany, 1041
ICSID Convention, 11
ICSID Rules
impartiality
concept, 186
lack of () as a ground for setting
aside, 407, 415
violation of disclosure obligation, 182
of experts, 294
incapacity of a party
as a defence against recognition and
enforcement, 463
as ground for setting aside, 401
incorrect composition of arbitral tribunal
enforcement, 478
obligation to object to, 410
preclusion of reliance on (), 479
incorrect denial of jurisdiction, 404
1156
incorrect procedure
and applicable law to determine (),
483
and award ex aequo et bono, 483
and refusal to take evidence, 482
enforcement, 478
exceeding a time limit for rendering an
award as an (), 484
obligation to object, 410
preclusion of reliance of (), 479
independence
as a ground for setting aside, 407, 415
concept, 186
of experts, 294
infra petita
award, 407
insolvency of a party, 982
administration of insolvency
proceedings, 991
and arbitration, 49
and recognition and enforcement
arbitrability, 102, 988, 989
arbitrators contract, 1003
at the post-award stage, 1005
awards, 1005
basic principles, 983
claims, 995
claims by creditors, 985
composition of arbitral tribunal, 1002
content of awards, 1008
EC Regulation no. 1346/2000, 986
effect on arbitration agreement, 91
effect on arbitration proceedings, 257
enforcement of claims, 985
foreign proceedings, 985, 987, 999,
1004
German insolvency proceedings, 983
impecuniosity of a party, 995
insolvency administrator as a party,
1000
insolvency disputes, 988
insolvency of the award debtor, 1011

insolvency related disputes, 989
interruption of proceedings, 1001
management of insolvency estate, 984
of award creditor, 1006
public policy, 1010
registration of claim, 1000
right of separation, 996
right to contest detrimental
transactions, 997
right to decide on the fulfilment of
executory contracts, 998
right to enforce claims assigned as
security, 999
rights of separate satisfaction for
security rights, 996
insolvency creditor
awards, 1007
insolvency of party, 50
after award, 50
as a bar to execution, 50
enforceability of an award, 50
insolvency proceedings
arbitrability, 103
instalments
declaration of enforceability of award
ordering payment in (), 440
institutional arbitration
arbitration of insurance disputes, 889
DAS, 12
DIS, 12, 585
existing institutions, 12
GMAA, 14
Gruppe Deutsche Brse, 14
leading institutions, 12
Schiedsgericht der Handelskammer
Hamburg, 13
Schlichtungs- und Schiedsgerichtshof
Deutscher Notare, 14
under SGO Bau, 834
under SO Bau, 836
under the ICC Rules, 755
Index
under the rules of the Bremer

Baumwollbrse, 813
under the rules of the Getreideverein,
808
under the rules of the Warenverein,
809
under the rules of the Hamburg
Chamber of Commerce, 801
under the rules of the Kaffeeverband,
811
Waren-Verein der Hamburger Brse e.V.,
13
arbitration clause, 891, 899
arbitration rules, 897
direct insurance, 890
insurance ombudsman, 893
reinsurance, 896
insurance ombudsman, 893
intellectual property, 908
arbitrability, 912, 917
concept in Germany, 909
constitution of the arbitral tribunal, 920
disputes, 908
experts, 924
German statutory law, 909, 912
issues, 909
non-arbitrability, 918
other law, 916
territoriality, 910
types of rights, 910
intellectual property disputes
arbitrability, 99, 912
interim relief, 921
interim award, see: interlocutory award
court and attorney fees, 145
liability for unjustified interim
measures, 144
pre-judgment attachment, 137
preliminary injunction, 138
1157
preservation of evidence, 139, 144, 922

interim measures of protection, 227, 353
emergency arbitrators, 236
ex parte orders, 230
leave of court to enforce arbitral interim
measure, 232
no limitation to German-style interim
measures, 231
procedure for obtaining arbitral interim
relief, 230
requirement of relation to subject
matter, 229
scope of courts review of arbitral
interim measure, 233
tribunals power to order interim
measures, 228
interim relief by the arbitral tribunal, 36,
222
and arbitration agreement, 125
application for (), 142
concurrent jurisdiction, 134
enforcement, 232
prerequisites, 228
441, 456
security for, 232
types of, 231
interim relief by courts, 35, 133
and arbitration agreement, 125
application for (), 142
concurrent jurisdiction, 134
during setting aside proceedings, 418
during enforcement proceedings, 500
evidence requirements, 886
in connection with bank guarantees,
885
in favour of foreign arbitration
proceedings, 136
in maritime disputes, 791
jurisdiction of the courts, 140, 887
1158
liability for unjustified, 37, 144, 235

opting out of (), 135
standard and means of proof, 144
to preserve evidence, 144
types of (), 134
interlocutory award
concept, 37, 352
setting aside proceedings against, 389
time limit for setting aside proceedings
396
international arbitration conventions
Germany as a party, 9
international arbitration rules
international conventions
bilateral commerce and friendship
treaties, 12
bilateral investment protection treaties,
12, 1028
Energy Charter Treaty, 11, 1031
European Convention, 10, 502
ICSID Convention, 11, 1043
New York Convention, 10, 423, 445,
457
international public policy, 311, 412, 486
International Underwriting Association
(IUA), 897
interpretation
of arbitration agreement, 26, 86
of award, 40, 380
of award under DIS Rules, 706
of award under ICC Rules, 777
intervention of third parties, 256
investment agreement, 1025
investment arbitration, 1011, 1013
arbitrability, 1026
arbitration in Germany, 10119
awards, 1050
choice between commercial arbitration
and (), 1057
diplomatic protection, 1020
enforcement of awards in Germany,

1040
EU law, 1034, 1039
foreign investment, 1021, 1022
foreign investment in Germany, 10118
foreign investor, 1021
foreign investors, 1023
German BIT programme, 1027
German investment abroad, 10119
Germany as a place for (), 1019,
1032
historical development, 1021
ICSID Convention, 1025
immunity and execution of ICSID
awards, 1049
immunity from execution, 1047
institutions, 1031
investment disputes, 1025
investment risk insurance, 1054
lack of jurisdiction, 1037
limited immunity, 1044, 1046
state immunity, 1043
state parties, 1021, 1024
treaty claims and contract claims, 1057
umbrella clauses, 1058
under ICC-Rules, 1033
under PCA-Rules, 1033
under SCC-Rules, 1033
under the DIS-Rules, 1033
under UNCITRAL Rules, 1034
investment disputes
between foreign private investors and
German public entities, 1025
investment guarantees, 1054
joinder of parties, 255, 841
joint will
judicial assistance
competent court, 298
form of decision, 299
in the taking of evidence, 297
review of the arbitration agreement, 298
Index
jurisdiction, 525
for court assistance, 530, 533
of higher regional court, 530
of state courts, 525, 529
when seat has not been determined,
530
when seat of arbitration is outside
Germany, 528
jurisdiction of the arbitral tribunal, 18, 214
award on, 219
binding nature of determination by the
court, 222
competence-competence, 216
excess of authority, 406, 476
exclusion of reliance on lack of, 459
incorrect denial of () as ground for
setting aside, 403, 404
lack of () as ground for setting aside,
401
objection to, 217
preliminary ruling on, 217
prima facie review in DIS arbitration,
595
scope of challenge, 403
jurisdiction of the courts, 525
effects of the arbitration agreement on
the (), 117, 121
for setting aside proceedings, 388
forum selection clause, 525
in connection with foreign arbitration
proceedings, 527
Kompetenz-Kompetenz, see: competencecompetence
lack of arbitrability
as defence against recognition and
enforcement, 486
lack of impartiality/independence
enforcement, 481
as ground for challenge of an arbitrator,
186, 647
1159
as ground for setting aside, 408, 415

lack of valid arbitration agreement
enforcement, 462
exclusion of reliance on, 403
language of proceedings, 661, 663
determination by arbitral tribunals, 269
determination by parties, 268
translation of documentary evidence,
270
language of the arbitration proceedings,
33, 268
and right to be heard, 269, 473
determination by the parties, 268
determination by tribunal, 269
multilingual proceedings, 269
translation costs, 268
translation of documents, 270
law applicable, see: applicable law
LCIA Reinsurance Arbitration Rules, 898
legal aid, 256
legal costs insurance, 891
legal remedies
appealable decisions, 543
appeal on a point of law, 545
prerequisites for an appeal, 545
standard of review, 546
time limit for appeal, 545
legal representation
in arbitration proceedings, 35, 249
legal successor
extension of arbitration agreement to
(), 25, 91
recognition and enforcement
proceedings against (), 453
application for recognition and
enforcement, 515
application for setting aside, 515
1160
as a prerequisite for the admissibility of

a claim, 513
as prerequisite for court proceedings,
512, 536
challenge of an arbitrator, 517
German procedural law, 513
in declaration of validity of the award,
441
in proceedings to determine the
admissibility of arbitration, 127
proceedings, 430, 433, 450
in setting aside proceedings, 392, 536,
533
lex mercatoria, 308
liability
for unjustified interim relief, 144, 235
of experts, 296
of the DIS, 724
of the ICC, 784
liability of arbitrators, 31, 150, 152
limitation of liability, 782
limited liability companies
arbitrability of disputes, 931
Logistics Court of Arbitration at the
Hamburg Chamber of Commerce, 804
loss of right to object
consumer disputes, 74
failure to object in time, 73
knowledge of the aggrieved party, 73
procedural errors, 72
requirements, 71
to jurisdiction of the arbitral tribunal,
219
to procedural defects, 71
mandatory provisions
as part of public policy, 413, 488
of arbitral procedure, 239

maritime arbitration, 787
maritime disputes, 787
MedArb, 58
mediation
applicable rules, 58
distinction from arbitration, 57
in the banking sector, 884
in the construction industry, 833
in the insurance industry, 893
mediation in the banking sector, 884
mediation services
banking and finance, 884
Merchandise Association of the Hamburg
Exchange, 809
ML
as the model for the German
Arbitration Law, 5
deviations from (), 8, 424, 446
Model Law on International Commercial
Arbitration, see: ML
more favourable provision
recognition and enforcement, 445, 502
mortis causa, 551
most favoured nation treatment, 1028
multilateral treaties, 12
multiparty arbitrations, 175
appointment of arbitrators, 49, 175, 733
appointment of arbitrators under DIS
Rules, 629
arbitrator selection, 175
choice of arbitrators, 49
in corporate law, 934
in reinsurance disputes, 900
multiple claimants, 176
organization of proceedings, 49, 255
public policy, 49
under DIS rules, 49
multiple parties, 630, 733
admissibility, 631
Index
multi-tier dispute resolution clause, 903

mutatis mutandis, 551
national treatment principle, 1028
negative decision on jurisdiction
setting aside of, 389
New York Convention, see: NYC
nomination of arbitrator, 625
time extension, 626
time limit, 625
NYC, 10
and preclusion of defences, 445, 459
enforcement of German awards, 47
form requirements for the arbitration
agreement, 23
German reservations, 10
harmonizing effects, 422
reciprocity, 10
obligation to object
against incorrect composition arbitral
tribunal, 410
against incorrect procedure, 71, 410
obstructive behaviour
default proceedings, 35, 287
means to counter (), 19
obstructive behaviour of parties, 19
old arbitration law
transitional provisions, 9
validity, 9
oral hearing, 682
in arbitration proceedings, 287, 482
proceedings, 454
record of (), 35, 280, 684
to hear an expert, 294
oral hearings or written proceedings
decision, 279
notice of hearings, 281
records of hearings, 280
submission of documents, 281, 284
1161
ordre public, see: public policy

OTC contracts, 859
OTC trading, 857
parallel arbitration proceedings, 123, 130,
131
partial award
concept of (), 37, 351
recognition and enforcement (), 449
parties
as witnesses, 255
to recognition and enforcement
to setting aside proceedings, 395
to the arbitration agreement, 24, 91
partnerships
and arbitration, 566, 572
claims against individual partners, 950
party appointed experts, 296
and arbitral tribunals established by
wills, 554
and court intervention, 68
and the principle of territoriality, 62
choice of law, 306
in arbitration proceedings, 239, 250,
668
in determining the language of the
arbitration proceedings, 268, 661,
735
in selecting the law applicable to the
arbitration, 62
in selecting the place of arbitration, 62,
261
in the determination of the applicable
law, 306
restrictions, 309
role of () in German Arbitration Law,
16
patent
arbitrability of revocation of a (), 913
pathological arbitration agreement
at enforcement stage, 468
1162
interpretation, 88
piercing the corporate veil, 92, 951
place of arbitration, 62, 260, 657, 736
as a basis for jurisdiction of courts, 530
determination by arbitral tribunals, 261
determination by parties, 261
determination under DIS Rules, 657
distinction from place of hearing, 262
location of hearings, 262
under GMMA rules, 788
pleading
burden of () in recognition and
burden of () in setting aside
proceedings, 399
() requirements for grounds for
setting aside, 394
portfolio investment, 1022
preclusion
of lack of arbitrability, 218
of objections to courts jurisdiction, 118
of reliance on incorrect procedure, 480
of reliance on incorrect composition,
480
of tribunal, 480
of the defence of a violation of
of the objections to the tribunals
preclusion of defences
proceedings for foreign awards, 459,
478, 479, 495
statutory () in recognition and
enforcement proceedings of
preclusion of submissions, 275
preliminary ruling
432
assuming jurisdiction, 221, 124
preservation of evidence
proceedings for the, 139, 842
principle of separability, 217

principle of territoriality, 61
principles of law
fundamental () and public policy,
413
privileges, 285, 740
privity of contract
rejection of action as inadmissible, 122
procedural defects
exclusion of reliance in setting aside
proceedings, 397
in relation to mandatory rules, 72
time for objection, 73
procedural fraud, 415416, 492
procedural order
procedural public policy
and award on costs, 367, 493
obligation to give reasons, 495
preclusion, 495
relationship to other grounds, 398
right to be heard, 405, 491
violation of res judicata, 494
production of documents, 284
proof
burden of () in recognition and
burden of () in setting aside
proceedings, 399
proper notification of arbitration
proceeding, 471
prospective waiver doctrine, 823
protective measures, 441; see also: interim
relief
provisional enforcement, 440, 536
pseudo award
public policy, 411, 486
action for retrial, 415
and 826 BGB, 417
and consumer protection, 489
Index

enforcement, 486
fundamental principles of law, 413, 490
international vs. national, 412
mandatory provisions, 413, 487
narrow interpretation, 49
procedural (), see: procedural public
policy
substantive (), 412, 487
waiver, 387
quality arbitration, 797
reasons for award
obligation to give (), 342, 696
recognition
concept, 424
of domestic award, 349, 425
recognition and enforcement of awards,
46, 422
admissibility, 447
application, 452
as part of the adjudication proceedings,
423, 427
deviations from the Model Law, 424
different regimes for the, 46, 426
documents to be provided for () 452,
539
foreign arbitral awards, 66
grounds to refuse, 48
in investment arbitration, 1040
legislative function, 445
New York convention, 445
parties requirement, 453
preliminary enforcement, 441, 535
relationship between recognition and
enforcement, 423
relationship to enforcement (execution)
proceedings, 423
state immunity, 1041
recognition and enforcement of domestic
awards, 45, 422
1163
admissibility of proceedings for (),

431
alternative and concurring remedies,
441
application for, 435
costs, 442
decision, 439
defences against, see: defences against
recognition and enforcement of
domestic awards
domestic award as a prerequisite for
proceedings, 431
effects, 430
function, 422
legitimate legal interest for (), 433
() on agreed terms, 432
parties to proceedings for (), 436
procedure, 436
relation to setting aside proceedings,
435
relationship to 760 ZPO, 438 (AU:
Found as 767 ZPO)
remedies against, 441
statutory preclusion of defences, 437
recognition and enforcement of foreign
awards, 46, 445
admissibility of proceedings for (),
447
against insolvent party, 454
against legal successor, 453
alternative remedies, 500
applicable provisions, 46, 66, 424, 452,
502
application for, 452
costs of proceedings for (), 503
decision on (), 498
defences against (), see: defences
against recognition and enforcement
of foreign awards
deviations from the ML, 446
discretion of court, 457
1164
documents to be provided for (),

452, 539
double exequatur, 501
factual basis for, 459
foreign award as a prerequisite for ()
proceedings, 448
function, 445
legal representation, 455
legitimate legal interest for (), 450
more favourable provisions, 502
() on agreed terms, 448
() on costs, 448
parties to proceedings for (), 453
preclusion of defences, 459
procedure, 454
relationship with other proceedings,
451
() set aside in the country of origin
, 485
translation of award, 452
under international instruments, 47,
502
under the national regime, 47
waiver of defences, 457
recognition and enforcement of ICSID
awards
recognition of awards, 424
recourse against award, see also: setting
aside
admissibility of setting aside
proceedings, 387
against termination orders, 389
application for setting aside, 393
burden of proof, 399
conflict with public policy, 411, 412,
413
damage claim pursuant to 826
BGB, 46, 417, 419
declaration of enforceability, 424
defects in reasoning of award, 409
determination of costs, 420
excess of authority, 406
flaws in arbitral procedure, 407
flaws in composition of arbitral tribunal,

407
form, 381
form and content of application for
setting aside, 394
general principles, 43, 46, 392, 419
grounds that must be considered ex
officio, 410
grounds that must be pleaded by
parties, 401
incapacity of a party, 402
interlocutory awards, 389
invalidity of arbitration agreement, 402
legal and factual basis, 400
limitation to domestic awards, 392
merits, 397
non-arbitrability, 411
obvious mistakes, 379
procedural fraud, 416
procedural remedies, 419
proceedings, 397
protective measures, 418
pseudo-awards, 390
revision au fond, 398
setting aside of awards, 418
time limit to set aside interlocutory
awards, 396
violations of right to be heard, 405
void awards, 390
waiver in ICC arbitration, 781
waiver of right to recourse, 387
registered trademark, 914
reinsurance
arbitration clause, 896
common usage, 902
Reinsurance Association of America
(RAA), 897
re-insurance disputes
arbitration of, 889, 895
remedies
against declaration of enforceability,
441, 499, 500
remuneration of arbitrator, 149, 367, 745
Index

taxation, 749, 784
renewable energy sources act, 865
representation, see: legal representation
request for arbitration
content, 267
effect on statute of limitation, 265
form, 267
res judicata effect, 740
and procedural public policy, 494
of awards, 350
of awards in corporate law, 938
effect of decision on setting aside, 418
rvision au fond
and facts determined by tribunal, 401
in setting aside proceedings, 386,
397398
revocation of patent, 913
right to be duly informed, 245
right to be heard, 214, 244, 405, 469, 675
139 ZPO, 732
and business secrets, 472
and insolvency of a party, 475
and language of arbitral proceedings,
473
and rejection of offer to produce
evidence, 474
and substituted service, 471
and the protection of trade secrets, 924
changes in legal view by arbitral
tribunal, 473
consequences of violation, 249
curing of defects, 249
DIS rules, 675
evaluation of evidence, 248
insolvency, 1010
limitations of the (), 248
mandatory character, 244
1165
notification of hearings, 281

obligation of tribunal to inform parties,
248
opportunity to comment, 246
procedural public policy, 405, 491
reasons for award, 475
right to be duly informed, 245
submission of documents and
information, 281
taking into account party arguments,
247
violation of () as defence against
recognition and enforcement, 469,
491
violation of () as ground to set aside,
405
waiver, 244, 249
right to information
right to presents ones case, 470
rules of law, 308
rules of procedure
discretion of the arbitral tribunal, 252
for insolvency, 258
general rules, 242
legal aid and security for costs, 256
suspension and stay of proceedings, 257
taking of evidence, 253, 254, 255
RVG, 520, 746
Schiedsgericht der Handelskammer Hamburg
801
Schiedsgericht des Deutschen Kaffeeverbandes
e.V., 811
Schiedsgericht des Vereins der Getreidehndler
der Hamburger Brse e.V., 804
Schiedsgericht des Vereins der Getreidehndler
der Hamburger Brse e.V. Getreideverein,
797
Schiedsgericht des Warenvereins der
Hamburger Brse e.V., 809
Schiedsgericht des Warenvereins der
Hamburger Brse e.V. Warenverein, 809
1166
Schiedsgutachter, 833
SchiedsVZ, 721
scope of application of German Arbitration
Law
deviations from ML, 54
to foreign arbitral proceedings, 54, 64
where place has not yet been fixed, 64
Securities Trading Act 37 WpHG, 101,
883
security for
interim relief, 232
provisional enforcement, 537
security for costs
in arbitral proceedings, 33, 256
Selbstndiges Beweisverfahren, 139, 842
separability of arbitration agreement, 22,
217
service of documents, see: delivery
set aside (under foreign award)
formal reasons, 465
incapacity of a party, 463
invalidity of arbitration agreement, 464
set off, 276, 843
enforcement of awards, 438, 495
construction arbitration, 843
setting aside
relation to recognition and enforcement
setting aside of awards
grounds for setting aside, 44
misapplication of law, 44
procedure, 45
violations of public policy, 44
setting aside proceedings, 43, 385, 742
admissibility, 387
application, 393
change in pleading, 395
costs, 420
decisions in (), 417

discretion of the courts, 398
effect, 386, 418, 450
factual basis, 400
function, 385
grounds for (), see: grounds for
setting aside
interim relief during, 418
parties to, 395
procedure, 45, 397
review on the merits, 397
standard of proof, 400
suitable objects of, 388
third party intervener, 395
time limit for, 45, 395, 396
settlement, 326
award on agreed terms, 20, 330, 686
between parties, 328
means of termination, 327
old law, 327
promotion of (), 20, 690, 791
433
termination of proceedings, 329
settlement discussion
and impartiality, 30
IBA Guidelines on Conflict of Interest,
253
role of tribunal, 253
SGO Bau, 834
shareholder disputes
joinder, 936
limited liability companies, 934
shareholders resolution (AG), 939
shareholders resolution (GmbH), 933
SL Bau, 834
SO Bau, 833, 834, 836
sole arbitrator
appointment, 171
appointment under DIS Rules, 632
sovereign immunity
and execution of ICSID Awards, 1049
concept of (), 1044
diplomatic immunity, 1047
eligible entities, 1054
Index
from jurisdiction, 1045

from execution, 1047
waiver of immunity, 1052
specific request for relief, 512
state courts, see: courts
state parties, 1024, 1043
statement of claim
amending and supplementing claim,
274
amendment, 274
content, 272
core elements, 272
default, 288
delivery, 616
party autonomy, 276
submission of documents, 273
submission of evidence, 273
time limit, 616
statement of defence
content, 272
deadline, 273
default, 288
receipt, 618
submission of evidence, 273
time limit, 618
statute of limitation
suspension by commencement of
arbitration proceedings, 265
statutory arbitration clause
scope of application, 957
subsequent introduction, 957
stay of arbitration proceedings, 257
stock corporation
and arbitration, 566, 573
stock exchange transactions, 878
string arbitration, 801
subjective arbitrability
concept of (), 402
lack of () as ground for setting aside
402
1167
law applicable to, 402

substantive public policy, 412, 487488
substitute service
in case of unknown whereabouts, 77,
606
summary proceedings
effects of an arbitration agreement on
(), 25, 125
for recovery of debt, 26
taking evidence, 33, 253, 738
administration of oath, 283
applicable procedural rules, 254
application to state court, 298
assistance by German courts, 18
autonomous procedure, 42, 842
conduct, 254, 283
court assistance, 297
discretion of arbitral tribunal in (),
254, 474
documents, 284, 739
evaluation of evidence, 255, 300
examination of witnesses, 282
experts, 292, 740
judicial assistance, 297, 530
limitation to powers of tribunal, 254
oral hearing, 280
party witness, 255
powers of tribunal, 253
procedure before state court, 298
tribunal discretion, 34
under the GMMA rules, 791 (AU:
Found as GMAA rules)
written witness statements, 282
termination of proceedings, 360
by agreement, 363
order for termination, 361
termination by final award, 361
testamentary contract, 557
third party
1168
insurer as a, 894
participation of, 25, 840, 951
third party intervener
as party to setting aside proceedings, 395
time limit
for an appeal a point of law, 546
for challenge of arbitrators, 196, 199
for nomination of arbitrators, 173, 626
for proceedings to determine the
admissibility of arbitration, 127
for raising the arbitration defence, 119
for rendering award in recognition and
enforcement proceeding, 467
for setting aside proceedings, 395, 396
time limit for rendering an award
and excess of authority, 478
and incorrect procedure, 484
trade arbitration, 796
two-tiered arbitration, 801
trade names, 914
trade practices, 317
translation
of award for recognition and
enforcement, 435
of documents, 268
transnational rules, 308
tribunal, see: arbitral tribunal
two-tier-arbitration, 801
ultra petita
award, 407, 477
umbrella clause, 1029
UNCITRAL Model Law
adoption, 5
UNCLOS, 849
UN Convention on the Immunity of States
and their Assets, 1045
UN Model Law on International
Commercial Arbitration, see: MLunfair
calling of bank guarantees, 885
unknown whereabouts of a party

communications, 76
VAT, 749, 784
on administrative fee, 615
on arbitrators fees, 784
VCLT
lack of jurisdiction, 1038
void award
432
waiver, 781
of defences in recognition and
enforcement proceeding, 457
of right to recourse against an award,
387, 781782
public policy defence, 387
wills
withdrawal of arbitrator, 207, 211
revocation of arbitrators mandate, 212
witness proceedings
witnesses, 281
conduct of taking witness evidence,
283, 739740
costs, 284
discretion by tribunal, 282
lack of power to order appearance of
(), 281
no power to order witness to appear,
281
oath, 283
obligation to appear before court, 300
party as (), 281
party autonomy, 281
taking of witness evidence, 282
witness conferencing, 283
Index
written communications
requirements, 77
where party whereabouts are unknown,
76
written proceedings, 738
written submissions
exclusion of (), 279280
requisite copies under DIS Rules, 604
unsolicited (), 280
1169

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Arbitration in Germany

The Model Law in Practice

Printed on acid-free paper.

Foreword to the First Edition

Foreword to the Second Edition

Purpose and Structure of the Commentary

Summary Table of Contents

Foreword to the First Edition

Foreword to the Second Edition

PART I: GERMANY AS A PLACE FOR INTERNATIONAL AND

PART II : COMMENTARY ON THE GERMAN ARBITRATION LAW

PART III: COMMENTARY ON THE ARBITRATION RULES OF THE

PART IV: SELECTED AREAS AND ISSUES OF

Foreword to the First Edition

Foreword to the Second Edition

PART I: GERMANY AS A PLACE FOR INTERNATIONAL AND

PART II : COMMENTARY ON THE GERMAN ARBITRATION LAW

1025 Scope of Application

1026 Extent of Court Intervention

1027 Loss of Right to Object

1028 Receipt of Written Communications in Case of Unknown Whereabouts

1031 Form of Arbitration Agreement

1032 Arbitration Agreement and Substantive Claim Before Court

1033 Arbitration Agreement and Interim Measures by Court

Introduction to 10341039 ZPO*

1034 Composition of Arbitral Tribunal

1035 Appointment of Arbitrators

1036 Challenge of an Arbitrator

1037 Challenge Procedure

1038 Failure or Impossibility to Act

1039 Appointment of Substitute Arbitrator

1040 Competence of Arbitral Tribunal to Rule on its Jurisdiction

1041 Interim Measures of Protection

Introduction to 10421050 ZPO

1042 General Rules of Procedure

1043 Place of Arbitration

1044 Commencement of Arbitral Proceedings

1045 Language of Proceedings

1046 Statements of Claim and Defence

1047 Oral Hearings and Written Proceedings

1048 Default of a Party

1049 Experts Appointed by Arbitral Tribunal

1050 Court Assistance in Taking Evidence and Other Judicial Acts

1051 Rules Applicable to Substance of Dispute

1052 Decision Making by Panel of Arbitrators

1054 Form and Contents of Award

1055 Effect of Arbitral Award

1056 Termination of Proceedings

1057 Decision on Costs

1058 Correction and Interpretation of Award; Additional Award

Introduction to 1060, 1061 ZPO

1060 Domestic Awards

1061 Foreign Awards

Introduction to 10621065 ZPO

1063 General Provisions

1064 Particularities Regarding the Enforcement of Awards

1065 Legal Remedies

Section 1 Scope of Application

Section 2 Selection of Arbitrators

Section 3 Number of Arbitrators

Section 4 Requisite Copies of Written Pleadings and Attachments

Section 5 Delivery of Written Communications

Section 6 Commencement of Arbitral Proceedings

Section 7 Costs upon Commencement of Proceedings