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Cornerstone paper on modernisation of arbitration law presented

On 18 April 2023, the Federal Ministry of Justice (BMJ) presented a key points paper on the modernisation of arbitration law. The arbitration law, which is regulated in the tenth book of the Code of Civil Procedure and was last comprehensively reformed in 1997, is to be modernised. The aim is to adapt it to the needs of today. At the same time, Germany's attractiveness as an arbitration location is to be strengthened.

In drafting a corresponding bill, the Federal Ministry of Justice intends to take twelve key points as a basis, of which we consider the following to be the most relevant and interesting:

  • In commercial transactions, the conclusion of form-free arbitration agreements is to be made possible. This should eliminate doubts about concluding arbitration agreements electronically.
  • For arbitral proceedings in which more than two parties participate, a statutory regulation for the appointment of arbitrators is to be introduced.
  • If an arbitral tribunal finds that it has no jurisdiction by way of an interlocutory decision, this shall in future be subject to review by the Higher Regional Court and, if necessary, the corresponding decision may be set aside by the courts.
  • Oral hearings before arbitral tribunals should be able to be conducted by video conference. It should also be permissible to record these video conferences. The conduct of arbitral hearings by means of video conferencing has become established in recent years and is therefore nothing new in itself. Such a provision would therefore primarily have a clarifying character, but would give the arbitrators security in case the parties do not agree.
  • It should be permissible that in applications for a declaration of enforceability or setting aside of arbitral awards, both the award itself and the accompanying documents can be submitted in English.
  • If federal states introduce so-called commercial courts (special panels for economically significant disputes at the Higher Regional Courts), it should be possible for these to be declared competent for applications for a declaration of enforceability or setting aside of arbitral awards. It should also be permissible to conduct the proceedings before these commercial courts in English with the consent of the parties.
  • An extraordinary remedy shall be introduced for the removal of already valid domestic arbitral awards which suffer from very substantial defects (e.g. in the case of their being obtained by bribery or perversion of justice).
  • If, in connection with ongoing arbitration proceedings, an application is made to the Higher Regional Court for a declaratory decision on the admissibility or inadmissibility of arbitration proceedings, the Higher Regional Court should also be able to decide on the existence or validity of the arbitration agreement.

In addition to these key points, the BMJ's paper addresses several points that are to be discussed in an open-ended manner and, depending on the outcome of the discussion, are to become part of the law.

  • It is to be examined whether an emergency arbitrator, as already known in some institutional arbitration rules, should also be anchored in the Code of Civil Procedure.
  • Furthermore, it should be examined whether a legal provision on the admissibility of dissenting opinions should be included in the Code of Civil Procedure. Such dissenting opinions are not uncommon in international arbitration. However, in particular due to a recent decision of the Higher Regional Court of Frankfurt, it is questionable whether they are admissible under German civil procedure law or whether they may even constitute grounds for setting aside.
  • Questions of jurisdiction are also to be put to the test: Thus, it is to be discussed whether joint panels of Higher Regional Courts of several federal states should be established, which are responsible for arbitration matters. Furthermore, it is to be reviewed whether certain competences that have been assigned to district courts up to now should be transferred to Higher Regional Courts instead.