Key issues paper on the modernisation of German arbitration law

On 18 April 2023, the German Federal Ministry of Justice [Bundesministerium der Justiz, BMJ] published the key issues paper on the modernisation of German arbitration law. The planned reform aims to adapt arbitration law to current needs and thereby strengthen the attractiveness of Germany as an arbitration location. To implement this goal, the BMJ proposes twelve concrete reform projects.

In a series of articles on LinkedIn, we have examined these twelve key issues individually and investigated the extent to which the proposed reform can contribute as planned to strengthening Germany as an arbitration location. Many of the planned changes do indeed promise to facilitate matters in practice. The added value of other proposed reforms remains to be seen.

The following planned changes are particularly welcome: the BMJ places a special focus on strengthening the English language as the "lingua franca" of international arbitration law by restricting the requirement of (certified) translations of foreign-language documents, which currently exists (albeit only as a rule of evidence) (key issue no. 6). In addition, the new commercial courts to be established as special adjudication chambers are to be responsible for annulment and declaration of enforceability proceedings in arbitration matters (key issue no. 7). It should then also be possible to conduct proceedings in these courts entirely in English, which will also contribute to the internationalisation of the arbitration location. And finally, the planned introduction of rules on the (substitute) appointment of arbitrators in multi-party proceedings should simplify matters in practice.

The purpose of some proposed reforms is to legally clarify regulatory gaps that usually have no effect in practice. This is the case, for example, with key issue no. 4, according to which arbitral hearings may expressly be conducted in the form of video conferences. Since the beginning of the corona pandemic at the latest, arbitration hearings by means of cost and resource-saving video conferences have become common practice, without this being expressly permitted by law. Another example is key issue no. 5, according to which the publication of arbitral awards is to be allowed with the consent of the parties. In practice, this also already takes place on a regular basis with the consent of all parties. The possibility of referring a case back to the arbitral tribunal after the state court has rejected the enforceability of an arbitral award, as envisaged in key issue no. 11, has not yet been regulated by law, but legal literature and case law predominantly assume that the existing referral provisions are to be applied by analogy.

In the case of further proposed reforms, the question even arises as to how they fit in with the systematics of the existing regulations in the German Code of Civil Procedure [Zivilprozessordnung, ZPO]. With key issue no. 3, the BMJ wishes to make so-called negative interim decisions, by which an arbitral tribunal has rejected its jurisdiction, subject to judicial review in a separate procedure. However, this idea had already been rejected by the legislature in 1996 as being alien to the system. The desired objective could possibly be achieved more sensibly by extending the catalogue of grounds for reversal. Key issue no. 12, with which the special powers of the state court for interim legal relief are to be limited to orders in urgent cases - e.g. the order that the respondent may execute the interim or protective measure of the arbitral tribunal – is also not in line with the system for urgent measures of the state courts. This is because, in the case of such urgent state measures, no binding decision on the dispute as yet exists.

It remains to be seen which of the proposed reforms will ultimately survive the legislative process. In all events, the current discussion on the key issues paper is a positive signal for Germany as an arbitration location.

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