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Germany is in principle a very attractive venue for commercial litigation: it has a well-established and reputable court system with independent judges and (at least in relation to other jurisdictions) not overly long court proceedings and low costs. In addition, many of the disadvantages of court litigation that have driven parties to choose arbitration proceedings are not relevant in Germany: Germany does not have a system of pre-trial or trial discovery and while court proceedings are in principle public, in practice this only means that anyone can attend the oral hearing, but court filings, court orders and other pleadings are not publicly available either at the court or online.

However, there is one major reason why German court proceedings lack attractiveness to some and that is the fact that litigation is conducted purely in the German language, a language that many international litigants do not read, let alone speak.

Over the last few years, therefore, the German legislator and the German judiciary have identified a growing need to strengthen the attractiveness of Germany as a venue for international commercial litigation and have started to address the language barrier.

Establishment of special English speaking chambers for civil and commercial matters at a few courts

In a few but important German courts (such as Frankfurt, Hamburg and Cologne), the use of the English language in court has been allowed over recent years in special chambers for civil and commercial matters with the consent of both parties. However, this only applies to the oral proceedings; all court correspondence (pleadings, orders, judgments, etc.) is nevertheless conducted purely in German.

Efforts of the Federal State Baden-Württemberg

The current efforts made in the Federal State of Baden-Wuerttemberg are going much further. With the establishment of the first Commercial Courts in November 2020 at the Regional Courts in Mannheim and Stuttgart, the state is taking an important step toward strengthening its judicial standing and international appeal. The Commercial Courts in Mannheim and Stuttgart are specialized in commercial litigation and also hear cases in English. Those special first instance courts are accompanied by Commercial Courts of Appeal at the Higher Regional Courts.

Draft bill to strengthen the attractiveness of the German courts in commercial litigation

The above efforts are, however, restricted to certain courts or Federal States but do not provide for an overall court system that facilitates and conducts international litigation in the English language. This prompted the Federal Council (Bundesrat), on the initiative of certain Federal States, to put forward a bill in March 2021, which had, however, not been presented to the Federal Government (Bundesregierung) prior to the election in September 2021. This bill is aimed at strengthening the attractiveness of German courts in commercial litigation and provides that commercial litigation with an international (or, in case of significant commercial litigation, a national) dimension may be heard by special senates at the Higher Regional Courts, if the value in dispute exceeds EUR 2 million.

This would be an important step towards promoting the role of the German courts in international commercial litigation. The senates of the Higher Regional Courts (which are the appeal courts in regular proceedings) specified as “Commercial Court” can be chosen as the court of first instance. Here, the trial may be conducted entirely or partially in English. The senates are to be staffed with particularly experienced judges who have profound knowledge of commercial law. Furthermore, at the request of the parties, the courts shall permit verbatim records to be taken of evidence and oral proceedings, which is a typical feature of English court proceedings and international arbitration proceedings, but not provided for in the German procedural rules. Further, information can be classified as confidential so that, in terms of confidentiality and secrecy, this would put the proceedings on an equal footing with arbitration proceedings and may appeal greatly to international litigating parties for whom publicity and sensitivity are decisive concerns.

At this stage, it remains to be seen whether the bill will be re-initiated and will come into the German parliament for discussion and vote, in particular in light of the fact that Germany’s government is going to change following the election. Also, there are concerns about several of the proposals set out in the bill, including in particular the fact that the senates at the appeal courts may act as court of first instance. Nevertheless, one way or another it is expected that Germany will introduce certain international litigation rules into its judicial system, which, combined with the general points of attractiveness summarised at the beginning of this article, would increasingly make Germany an attractive venue for international litigation.