Commercial Courts in Germany

Germany offers a strong, independent judicial system with high constitutional standards – this is well known. But with the introduction of the new commercial courts, German civil procedural law is taking a decisive step towards meeting the needs of internationally active companies. Anyone who wants to – or has to – file a lawsuit in Germany will now find even more attractive framework conditions.

Why Germany is attractive for international dispute resolutions

Legal disputes – including the judicial settlement of disputes – are particularly attractive for internationally active companies in Germany. There are many reasons for dispute resolution before state courts:

Efficiency and reliability: the German court system is known for its fast, cost-efficient and predictable conduct of proceedings. The risk of litigation costs is manageable, as there are no punitive damages, and the loser regularly bears the costs.

The state court system in Germany is characterized by independence and high quality. The courts are independent, the judges are highly qualified, and there is a functioning system of appeals up to the Federal Supreme Court. Furthermore, German court judgments can be easily enforced in many countries – an advantage that should not be underestimated in cross-border cases.

Introduction of Commercial courts in Germany

The introduction of the Commercial Court in Germany is a real game changer. Germany is deliberately positioning itself as a serious alternative to international arbitration tribunals and foreign courts such as the London Commercial Court or courts in Singapore.

What's new? New are proceedings in English: Companies can now negotiate in English before German courts – a novelty in the state court system. The Commercial Courts will provide specialized senates. The Commercial Courts have specialized chambers, for example, two senates at the Hanseatic Higher Regional Court for commercial disputes with an amount in dispute of €500,000 or more – with a focus on corporate law, post-M&A, banking and insurance law, transport and shipping, among others. Proceedings can be conducted in camera, with increased discretion and verbatim transcripts – as with many arbitration proceedings, but under state control.

Who is this interesting for?

The Commercial Court is aimed specifically at internationally operating companies that want to resolve complex disputes efficiently and in accordance with the rule of law. If these companies have international contractual partners who prefer English-language proceedings and attach importance to effective control by the Federal Supreme Court when resolving disputes, the Commercial Courts introduced in Germany represent a major advantage.

But German SMEs with international operations also benefit. Those who wish to consciously avoid arbitration proceedings but do not want to forego internationality and discretion will find an attractive new option in the commercial courts.

ROSE & PARTNER's recommendation for companies

Companies should reconsider their contract design and litigation strategy. Check whether a jurisdiction agreement in favour of a commercial court in Germany makes sense – especially for B2B contracts with high amounts in dispute and an international dimension. Consider whether the choice of a national, but English-speaking forum does not offer more security than expensive arbitration without access to a court of law.

Litigation in Germany has become even more attractive with the introduction of Commercial Courts. Companies benefit from efficiency, internationality and legal certainty – without having to accept the disadvantages of private arbitration proceedings. Germany is thus demonstrating that it can and wants to be a central location for resolving international commercial disputes.