03 November 2005

Felix T. Rödiger, Matthias Meyer

1. Overview

German court procedure is generally fast, reliable and cost effective. Although the claimant determines the subject matter of the proceedings, the timetable is at the court’s discretion. The judgment is mainly based on written submissions and court hearings are generally short, covering only the essential topics of the dispute.

Matters can be settled at any stage of the procedure. However, the number of settlements is less than in other countries as proceedings are comparatively cheaper. As a result, claimants often decide to initiate court proceedings in Germany and to use the German judgment as the basis for pan-European settlements.

2. Emergency Relief

In urgent cases, the courts may grant a preliminary injunction or an attachment order to preserve a status quo even before an action on the merits is filed. In appropriate cases, such emergency relief may be obtained in ex-parte proceedings within hours. Emergency relief is generally granted within a very short period of time, the precise period being dictated by the degree of urgency and the complexity of the subject matter.

  • Preliminary Injunction (einstweilige Verfügung)

An injunction requiring a party to refrain immediately from acting in a certain way is the most common and practical relief. It is a very effective measure in trade related matters and in IP matters such as patent, trade mark and copyright infringement cases to stop the infringer at short notice.

  • Attachment Order (Arrest)

A creditor with a monetary claim can file a request for an attachment order. Through granting an attachment order, the civil court can freeze bank accounts or other assets of the debtor. This is an inexpensive and usually rather effective way of securing a subsequent enforcement of monetary claims against a debtor. Prosecution authorities have even more effective investigative and freezing powers which can be particularly useful in cases of product piracy.

3. Process

  • Timing

The German court structure and procedural rules provide for fast and cost-effective proceedings with specialised judges for various fields of law. A recent reform of the Code of Civil Procedure (Zivilprozessordnung) further enhanced the efficiency of court proceedings.

A first instance judgment in main proceedings (Hauptsacheverfahren) may be obtained within a relatively short period of time, depending on the subject-matter. In trade mark or patent infringement proceedings, a judgment is usually obtained within 3 to 6 months or 6 to 12 months respectively. A default judgment is regularly handed down within a matter of weeks if not days. An appellate decision may be obtained within 9 to 15 months. Decisions on further appeals take about 3 years.

Generally main proceedings are initiated by filing a complaint, and consist of up to three parts: in the first part, the parties submit their written statements in preparation for the oral hearing. The oral hearing is the second part of the proceedings. An oral hearing rarely takes more than a few hours because it is thoroughly prepared in writing and because the court strongly focuses on the essential elements of each case. If necessary, evidence is then taken before the court as the third step. Courts will take evidence only if (1) a party disputes a fact submitted by the other party and if (2) the court considers the disputed fact to be relevant for its final decision.

  • Courts

Virtually all commercial proceedings start before a regional court (Landgericht). For example, a small number of regional courts have the exclusive local jurisdiction over IP matters (there are 16 regional courts with exclusive local jurisdiction over trade mark actions, 12 for patent infringement actions and 14 for actions on the basis of a registered design). Among these specialist courts there are courts with an especially high reputation handling several hundred cases a year. For example, the Regional Court in Düsseldorf has a long-standing tradition in IP-related matters, in particular in patent matters and is widely renowned for its efficiency and expertise in this area. In international and national disputes, the parties may agree to confer jurisdiction upon any regional court. The official language in court proceedings is German, but the courts are accustomed to dealing with cases of high international relevance.

  • Interim measures

Please see section 2 above (Emergency Relief) for more detailed information. In addition to the forms of relief already mentioned a party can also obtain an order preserving evidence (selbständiges Beweisverfahren) if there is a reasonable concern that the evidence will be lost or its use will be hampered, for example as a result of time lapse. It is possible to obtain such an order before the action has been filed. Evidence obtained in this way can then be used later in the main proceedings.

  • Case management

German courts play an active role in managing the case timetable. The court may fine-tune the timeframe and the procedural set-up of each case according to its complexity and the parties’ conduct. However, it is the parties who determine the subject matter of each case.

The recently reformed German procedural rules promote the amicable settlement of disputes. The rules now make provision for a conciliation hearing, which, if unsuccessful, is normally immediately followed by a regular oral hearing. The courts have no power whatsoever to penalise a party who is unwilling to settle a dispute.

  • Appeals

First instance judgments of the Regional Courts can be appealed to the Higher Regional Courts (Oberlandesgerichte) either in their entirety or as to particular issues only. New facts may be introduced into second instance proceedings only to a limited extent. It is therefore vital to ensure that submissions during first instance proceedings are comprehensive and detailed. Due to the concentration of IP related actions at the Regional Court in Düsseldorf, the Higher Regional Appellate Court in Düsseldorf is one of the few appellate courts in Germany with a specialised IP senate (patent, trade-mark and design law), the decisions of which are widely recognised as authoritative.

Further appeal to the Federal Court of Justice (Bundesgerichtshof) lies against appellate judgments in proceedings on points of law only, provided that the subject matter is of fundamental legal significance.

4. Disclosure

Under German law, parties generally do not have any obligation to disclose documents which are relevant to the case. Therefore, parties will usually not disclose documents or information which could adversely affect their own case.

In German proceedings the Claimant does not have to provide evidence of all the facts constituting his claim but only of those facts which are contested by the Defendant. Accordingly, in cases where the Claimant requires an injunction and where the Defendant is unable to contest the facts constituting the claim, the court may grant an injunction without hearing evidence.

German law does, however, make some provision for disclosure. According to sections 142, 144 Code of Civil Procedure the court may order disclosure of documents referred to by a party. Such an order may be made against another party to the proceedings or against a third person not involved in the proceedings. The grant of a disclosure order requires that the plantiff shows the likelihood of infringement and that the lacking information could only be obtained with the courts intervention. Accordingly, we have recently been able to obtain a corresponding order of the Regional Court (Düsseldorf) in a biotech case obligating the defendant to disclose the source code of the attacked devices. Disclosure of information may also be requested on the basis of the recent Fax-Karte decision of the Federal Court of Justice under essentially the same requirements. Such disclosure orders are particularly relevant in cases of patent, trade mark and copyright infringement.

5. Privilege

Communications between a lawyer and his client are confidential. Lawyers are therefore not obliged to disclose confidential documents under a disclosure order. Communications between lawyers of opposing parties are, however, not generally privileged and can therefore be used as evidence in court.

In general, evidence can be used in proceedings even if it has been produced illegally or derives from otherwise inadmissible evidence (no "fruit-of-the-poisonous-tree" doctrine). The only exception may be if the evidence was obtained in a manner that violated the party’s constitutional rights (e.g. secret recording of a telephone conversation).

6. Enforcement of Judgments

Judgments capable of appeal can be enforced on a preliminary basis if the enforcing party provides security to the other party, for example by posting a bond. Non-appealable judgments can immediately be enforced without providing a security.

Foreign judgments can be enforced in Germany. Judgments of courts of EU Member States may be enforced after formal recognition proceedings. Judgments of the courts of non-EU Member States may only be enforced after a more substantial recognition proceeding, during which the Court considers, inter alia, the international competence of the country of jurisdiction, proper service of the complaint and compliance of the judgment with the "ordre public".

7. Costs

The cost of litigating in Germany essentially comprises court costs and attorneys’ fees. Under German Civil Procedure Law the unsuccessful party is obliged to bear the court costs and the attorneys’ fees of the other party. These remunerable costs are regulated by law and depend on the value of the dispute. The value of the dispute is determined by the court to reflect the claimant’s interest in the subject-matter of the proceedings. By way of example, the court costs for a proceeding with a value under dispute of €100,000 amount to €2,568.The remunerable fees of an attorney in a German court proceedings may be less than the actual fees incurred on an hourly fee basis. This is also because the level of remunerable attorney fees is regulated by law in proportion to the value of dispute.

8. Arbitration and ADR

Arbitration (Schiedsgerichtsverfahren)

If the parties agree on arbitration in Germany, the framework of the arbitration is ruled by the German Civil Procedure Code. The parties can agree to arbitrate either before or after a dispute has arisen. Once the parties have agreed on arbitration, the matter is exclusively delegated to the arbitration panel and the state courts have no jurisdiction. Arbitration awards have the same legal force as court judgments, once approved by the Court. Such an approval is generally granted and can only be refused on very limited grounds such as the breach of a party’s right to be heard.

ADR (Alternative Dispute Resolution)

For specific cases under German law (such as low value claims or libel matters) it is a pre-condition before commencing legal proceedings that some form of ADR has been conducted unsuccessfully. Also ADR on a voluntary basis is becoming increasingly successful in Germany as mediators become more experienced and the parties become accustomed to the process.

Written by Felix Rödiger and Matthias Meyer in our Düsseldorf office.