INTERNATIONAL COMMERCIAL COURTS 'MADE IN GERMANY': ATTRACTIVE ALTERNATIVE FOR BIG BUSINESS?

Abstract

Over the past two decades, jurisdictions in the Gulf Region, Asia and Europe have established special judicial bodies to settle international commercial disputes. Commonly referred to as “international commercial courts” these bodies are distinct from other (local) courts in that they display innovative features with regards to their institutional and procedural design which are geared towards greater internationalization. However, not all of these courts have turned out to be a resounding success. A case in point are the international commercial courts – or, more precisely: the international (commercial) chambers – that have been established at regional courts (Landgerichte) in Germany during the past 15 years: They have not managed to attract a large number of cases, most likely because they did not offer enough benefits to induce parties to change their dispute resolution habits. In fact, since the overall legislative framework remained unchanged, they were bound by the general rules and regulations of German law, notably the Courts Constitution Act (Gerichtsverfassungsgesetz – GVG) and the Code of Civil Procedure (Zivilprozessordnung – ZPO). The newly founded chambers could, therefore, only make use of the leeway that was granted by these rules and regulations. And the leeway was certainly limited. The use of English as court language, for example, was confined to the oral hearing and the submission of English-language evidence whereas all party briefs as well as all court orders, the records of the proceedings as well as all judgments had to be made in German. Moreover, there was no certain prospect for an English-language second and third instance.

However, a new Law adopted by the German Federal Legislature in late 2024 gives hope that things are about to change. Called “Law on the Strengthening of Germany as a Place to Settle Disputes” (Justizstandort-Stärkungsgesetz) the new Law amends both the Courts Constitution Act and the Code of Civil Procedure with the aim of making German courts more attractive places to settle international commercial disputes and in the hope of improving Germany’s position vis-à-vis recognized litigation and arbitration venues, notably London, Amsterdam, Paris and Singapore. Specifically, it allows (certain) courts to conduct proceedings completely in English.  And it allows the German federal states (Bundesländer) to establish specialized “commercial courts” that may hear certain high-volume (international) commercial disputes in an arbitration-style fashion.

In the article we explore whether the new Law will make German courts an attractive alternative for “big business” – and a serious competitor for foreign courts and international commercial arbitration. To this end, we contextualize the new German Law by giving an overview of the German civil justice system, the current German dispute resolution landscape and the global trend to establish specialized courts for international commercial disputes (part II.). We move then on to discuss the details of the new German Law (part III.) before we offer some thoughts on its likely impact on the dispute resolution landscape in Germany and beyond (part IV.). All in all, we show that the new Law introduces welcome innovations that will actually improve the framework conditions for the settlement of international commercial disputes in Germany. However, we also demonstrate that shortcomings remain that will prevent German courts from becoming serious competitors for leading international commercial courts as well as international commercial arbitration.