律所要闻 / 重要主題
Achieve your goal faster with arbitration
Settle legal disputes bindingly and confidentially
Germany is currently suffering massively from excessive bureaucracy. The judiciary is not spared from this either, and indeed is particularly affected. The duration of court proceedings – which has always been a nuisance for creditors – has increased further, despite the slow introduction of digitalisation in the judiciary, particularly in German courts located in large cities. In extreme cases, even relatively simple proceedings to enforce supplier rights in the first instance can drag on for several years. One possible solution: arbitration proceedings.
Brevity is the soul of wit
In contrast to civil proceedings before state courts, such proceedings usually reach their conclusion within a few months. Not only does the court of arbitration deliver a decision within this period, but this decision is also normally final, as there is no provision for appeal or revision.
In international legal disputes – where arbitration has long been a common practice – there is the added advantage that arbitration awards are easier to enforce internationally than judgments handed down by ordinary national courts.
The path to arbitration is open if the parties have effectively agreed in the contract that, in the event of a dispute, the matter will be referred to an arbitral tribunal. The relevant clause should contain clear provisions on the number of arbitrators, the language of the proceedings, the applicable law (if applicable) and the place of the proceedings.
DIS: The leading German Arbitration Organisation
German companies are advised to use the model clauses provided on the website of the German Arbitration Institution (DIS).
This Hamburg-based institution, founded in 1992, organises between 160 and 180 proceedings per year with a volume of around 4 billion Euros; around % of these are conducted by PASCHEN. Its arbitration rules can be found on the DIS website
Arbitration proceedings are usually conducted by three arbitrators. Sole arbitrators are rather rare. A new arbitral tribunal is formed for each arbitration proceeding. Each party to the dispute appoints one arbitrator, and these two then agree on the third arbitrator, who presides over the proceedings. Unlike judges in state courts, arbitral tribunals do not have to be composed of fully qualified lawyers, although this is of course the rule. In disputes involving complex technical issues, engineers, for example, may also be appointed as arbitrators.
For procedural issues not covered by the DIS Rules of Arbitration, the national law of the agreed place of arbitration applies. In disputes between German parties, this is usually in Germany, so that the German Code of Civil Procedure applies in addition.
In proceedings administered by the DIS, the DIS monitors the independence and impartiality of the arbitrators selected by the parties and may also reject them if they are ‘biased’. This may apply, for example, to solicitors who have represented one of the disputing parties in the past. The DIS also reviews the draft awards of the arbitral tribunals for possible formal errors. Otherwise, however, the arbitrators are free to make their own decisions.
If the claim is successful, the costs are borne by the debtor
The costs of arbitration proceedings before the DIS are regulated in Annex 2 to its Rules of Arbitration. For example, for a claim value of EUR 100,000, the DIS itself charges a processing fee of EUR 1,500. In addition, there are the fees for the arbitrators, in this case EUR 3,800 for the assessors and EUR 5,000 for the chairperson. The DIS website provides a cost calculator for this purpose.
At the beginning of the proceedings, the parties must deposit a security for the anticipated costs with the DIS.
The arbitral award also includes a decision on costs. The losing party must reimburse the other party for its costs. The obligation to reimburse costs also applies to the higher solicitors’ fees that are regularly incurred in these proceedings due to the considerable effort and expertise required compared to court proceedings. The upper limit here is the question of appropriateness, which is hardly ever reached if the fee agreement customary in these proceedings is reasonably moderate.
Promptness
The Arbitration Rules also contain an explicit provision on the maximum duration of proceedings. Appendix 4 to the Arbitration Rules expressly states: ‘The final award shall be rendered no later than six months after the conclusion of the procedural conference pursuant to Article 27.2 of the Arbitration Rules.’
Any deviations from this time limit require a written justification by the arbitral tribunal.
Summary
Thus, there are many good reasons to submit the resolution of any conflicts with your contractual partner to arbitration in appropriate cases.
Our PASCHEN Trade & Services team will be happy to assist you in effectively incorporating the relevant agreements into your contract and, if necessary, provide you with our expertise in implementing the relevant procedure.