Intellectual Property Law

Law and Jurisdiction for International Litigation in Germany

By IBLS Editor

Although international law and litigation is long-established conceptually, its practice gained relevance with the use of the Internet.  Transactions and interaction among e-businesses and people across boundaries have become frequent activities that generate litigation in foreign forums.  For this reason, understanding domestic laws on international litigation is becoming an increasingly popular topic.  Civil law systems, rather than common law systems, may offer more standardized rules on litigation involving international transactions and parties. In civil law systems, civil procedure codes are the legal source containing procedural rules for multinational party litigation. This article informs on Germany's rules on international litigation.

The two main sources of procedural rules for international litigation in Germany are the Code of Civil Procedure -Zivilprozessordnung - ZPO- and the Courts' Constitution Act -Gerichtsverfassungsgesetz - GVG.  In addition, multilateral and bilateral treaties to which Germany is signatory regulate international litigation.  For instance, Germany, as member of the European Union (EU), abides by the EU regulations on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (European Regulation No. 44/2001- REJ).   This EU regulation entered into force on March 1, 2002 and superseded the 1968 European Convention on the recognition of civil and commercial judgments.   Hence, some provisions of the 1968 European Convention are still applicable. Another example of a multilateral agreement signed by Germany regarding foreign judgments is the Lugano Agreement.  The Lugano Agreement regulates jurisdiction, recognition and enforcement of judgments in civil and commercial matters among European members of the free trade agreement (EFTA).  These countries are Iceland, Liechtenstein, Norway and Switzerland. The foreign parties involved in litigation in German territory should look for any specific agreement that Germany might have signed on the litigation of the issue at hand, i.e., German has signed agreements regarding transportation of goods via railways, road, or air.  Any litigation involving these issues should follow procedural rules established in these agreements.

The general rule is that Germany courts apply domestic procedural law to any international litigation case, even if other substantive law is being applied, unless a specific treaty mandates otherwise.  The principle of reciprocity established in §§110 and 328 of ZPO is another general rule applied to international litigation. This means, if the foreign country recognizes Germany's judgments, German courts will recognize those foreign judgments.   

Jurisdiction and venue rules are found in §§ 12 to 40 of ZPO.  For instance, the general venue for legal proceedings against natural persons or legal entities is the place of domicile or registered seat.  There are some special venues applicable to specific matters listed in these sections. ZPO § 24 allows In Rem jurisdiction. According to ZPO § 38(1), parties to an agreement may select the venue for their disputes. In addition to general and specific venue rules, court jurisdiction depends on the amount in dispute. Lower courts - Amtsgerichte- have jurisdiction over cases disputing amounts not exceeding ?5,000; District Court of first instance -Landgerichte- undertake cases regarding disputed amounts exceeding ?5,000.  Most Internet-related disputes relate to consumer protection claims.  In consumer protection disputes, jurisdiction lies with the courts of the consumer's domicile or residence (ZPO § 29(c)).  Thus, if a German consumer disputes its rights on goods bought over the Internet from a foreign merchant, it may sue that merchant in Germany (other provisions such as service of process apply).

Therefore, an international litigant may choose between obtaining a civil or commercial judgment abroad and having it enforced in Germany, or filing its legal claim in Germany courts.  This decision depends on the facts of the case, the costs involved, and the domicile of the parties.  The relevancy of this information is that in commercial matters, foreign merchants must be aware of the German jurisdictional rule for consumer protection claims; merchants may be hauled by German courts unless a specific contractual provision is agreed upon.

Full post as published by IBLS Internet Law Blog on February 16, 2009 (boomark / email).