COVID-19: Consequences for dispute resolution in Germany

By Dr. Philipp Egler, Dr. Fabian Niemann, Dr. Jiri Jaeger

04-2020

The novel coronavirus (COVID-19) pandemic has far-reaching consequences for the accessibility of justice and alternative forms of dispute resolution in Germany. In this article, we will provide you with an update on the measures that have been implemented so far and what the consequences are for both current and new cases in German courts. Please note that everything is in flux right now and the practical implications may change every day. 

1) How does the coronavirus affect pending litigation in German courts?

So far, the German civil court system is operational and has not become subject to a general lockdown. The courts are still working but with very stretched resources and reduced availability. In practice, most courts have already cancelled all oral hearings for the months of March and April. In the event of continuation of oral hearings in and April, either party may request the cancellation of the oral hearing, which is likely to be approved by the courts. Cancellation requests may be based on § 227 German Code of Civil Procedure (“CCP”) as increased health risks occur because of travelling and physical presence in court due to the spread of the coronavirus. We expect that only urgent court hearings will be held. 

According to § 128a CCP German procedural law, oral hearings could theoretically also be conducted via video conference as an alternative to physical presence in court. Due to the lack of technical equipment and experience with video conferences of most courts, it is expected that the courts will prefer to not use this option. Judges will likely reduce the court hearings to urgent cases and conduct only necessary personal meetings. The decision lies solely with the respective judges. In order to not delay the proceedings, the parties are free to mutually request a decision of the Court of First Instance by written procedure. 

In case an oral hearing takes place, this should not justify the exclusion of the public. Indeed, § 172 no. 1a of the German Courts Constitution Act provides for such an exemption, if there is a risk to life and limb of one of the parties attending. However, in almost all cases the postponement of the date will be the milder remedy.

2) How are ongoing court deadlines dealt with?

Furthermore, as a general principle, all deadlines for submissions set by the courts are still valid if the court is operational and not in lockdown. Courts have organised an emergency stand-by service, so that the administration of justice – even if to a very limited extent – is carried out and there is no standstill in the administration of justice according to of § 245 CCP.  In general, the courts will not proactively postpone court-set deadlines but will wait for the party involved to formally issue such a request. This applies, above all, in the event of illness of the parties or their representatives as well as in the event of school closures. Our experience shows that if such a request is issued by the affected party, the courts are quite generous in granting the extensions, even without consulting with the opposing party. Therefore, in case the drafting of submissions in time is not possible, the party’s representatives should formally request such an extension as soon as possible. 

Please note, that some courts have made special provisions regarding potential suspensions of deadlines in the Corona crisis (e.g. the Regional Court of Hanover). These can be looked up on the respective court's homepage or enquired by telephone.

However, please also note that the statutory deadlines cannot be extended by the courts, regardless of the Corona crisis. This includes the period for notifying the readiness to defend (§ 276 par. 1 CCP), the period for objection against judgements by default (§ 339 par. 1 CCP) or the period for appeal (§ 517 CCP). Only if such deadlines are missed through no fault of one's own, a reinstatement into the previous status is possible. But we strongly advise not to rely on this possibility.

Legal developments in Austria:

On 20 March 2020, the Austrian Parliament passed a federal law ("2nd COVID Act"), which also contains rules on the suspension of deadlines. The law entered into force on 22 March 2020. It will expire at the end of 31 December 2020. It states that in civil court proceedings all procedural deadlines falling within the period from 22 March 2020 to the end of 30 April 2020 are interrupted. The respective deadline begins to run anew on 1 May 2020. No such law has been enacted in Germany so far.

3) What is the effect on Statutes of Limitation?

A possible inhibition of the limitation period due to force majeure according to § 206 German Civil Code comes into consideration. However, the provision has quite high requirements. There must be circumstances which make it impossible to manage one's own affairs and which could not have been foreseen and averted even with the utmost care. In principle, this would be conceivable if business and/or court operations came to a complete standstill due to the coronavirus and despite appropriate precautionary and preventive measures through no fault of the claimant. However, at this point it is not advisable to rely on the effect of a possible force majeure inhibition, but rather to choose other means of suspending the period of limitation.

4) What about the initiation of new court proceedings?

As new lawsuits can be filed via the German electronic court communication system (beA), initiating a new lawsuit should not cause much trouble in practice. It is important to meet the respective deadlines under the statute of limitations (in accordance with § 204 par. 1 No. 1 BGB) by uploading the statement of claim in time to the electronic system.  If courts choose in the future to temporarily suspend their activities and therefore a claim cannot be served on the opposing party before the expiry of the limitation period, the action might still have an effect which prevents the expiry of the limitation period. If the court resumes its activities at a later date, service effected at that time shall have retroactive effect on the date of receipt of the statement of claim by the court, if the requirements of § 167 CCP are fulfilled. 

5) Are urgent relief and interim measures still available?

The enforcement of interim applications requires that the competent court is at least able to function with an emergency staffing. This should currently be guaranteed in all German jurisdictions.  If urgent relief or interim measures are required, this should still be possible. As of today, all German states have declared that they intend to secure the functioning of their courts, especially regarding interim measures. However, we have experienced that court processes can take significantly more time than before the coronavirus breakout. This is due to the fact that court’s clerks as well as at least a significant part of the judges work remotely. In these times, it can be quite difficult to reach the judge or the clerk on the phone as this is usually the preferred method to track the status of urgent submissions. This should be considered when filing for interim measures. 

According to §§ 922 (1) sentence 1, § 936 CCP, the court in interim legal protection always has the possibility to decide without an oral hearing. So far, this applies particularly to cases where there is a risk that the defendant might frustrate the enforcement of the interim decision. 

6) What about Arbitration?

The same operational principles apply to the German arbitration bodies. Important arbitration hearings and conferences are postponed or cancelled, but remote service is still possible. Parties and their attorneys may be prevented from participating in oral hearings by state-imposed measures, such as the recently announced travel bans. Many arbitration rules also explicitly provide for the possibility of holding an oral hearing via video conference. Compared to state court proceedings, arbitration proceedings offer the parties greater flexibility in times of crisis. It would be possible, for example, without further ado for the parties to agree to move the venue of the hearing to a region less affected by coronavirus (provided that it is possible to travel there).