Commercial Arbitration in Germany

In a globalised world, international contracts are part of the daily business of many companies. Inevitably, those businesses are exposed to the intricacies of legal systems and laws which they are unfamiliar with. In case of a dispute one may be forced to litigate in an alien setting and subject to rules and procedures that differ considerably from one’s own jurisdiction. This can be a daunting and unsettling undertaking which can be avoided by arbitration.

Commercial arbitration is a dispute resolution mechanism that allows businesses to reduce the risk of having to litigate before foreign national courts of law. Instead, disputes are settled before an independent arbitrator or arbitral tribunal, subject to rules and procedures that best reflect the interests of the parties. The arbitration will result in a legally binding award that is not only widely recognised but also enforceable in many jurisdictions.

Commonly, the parties include an arbitration clause into their contract by which they commit in advance to refer a dispute to arbitration. Alternatively, they may submit to arbitration once a dispute has arisen. The parties may choose the seat of the arbitration, the most favourable procedural rules and the substantive law which they wish to apply to their dispute.

This offers the parties peace of mind as they control in advance which rules and which procedures will govern their dispute.

Ad-hoc vs. institutional arbitrations

Arbitrations are either conducted on an ad-hoc basis or as institutional arbitrations.

In an ad-hoc arbitration the parties themselves have to administer the arbitration and set out the procedural rules. In contrast, in an institutional arbitration the parties will choose an institution that will provide the necessary administrative framework and procedural rules that will govern the arbitration, such as the German Institution of Arbitration (DIS), the International Court of Arbitration of the International Chamber of Commerce, the London Court of International Arbitration (LCIA), the Vienna International Arbitral Centre (VIAC) and the International Commercial Arbitration Court at the Russian Federation Chamber of Commerce and Industry.

• Arbitration is inherently more flexible than proceedings before national courts of law. The parties may tailor the arbitration proceedings to reflect the particularities of their dispute and to suit their needs.
• Arbitration awards are widely recognised and enforceable in jurisdictions around the world. The same does not hold true for decisions of national courts.
• Arbitrations tend to be less costly than national proceedings. Choosing a language for the proceedings that the parties and the arbitrators have sufficient command of will avoid the need for hiring translators.
• Lawyers’ fees may be reduced by adopting procedural rules that both sides are familiar with.
• Arbitral awards are final and not subject to costly appeals.
• Arbitrations are impartial and trusted by parties around the world.
• Unlike court proceedings, arbitrations are not open to the public. This is particularly important where the issues in dispute are highly sensitive. This reduces the risk of exposure of trade secrets. 

• The German Institution of Arbitration (DIS) is an internationally recognised arbitration institution with more than 1,400 members in Germany and abroad. Parties can draw on that wealth of experience and appoint seasoned arbitrators that are experts in their field such as aviation, construction or engineering. This ensures that the award reflects the particularities of the parties’ industry sector.
• DIS arbitrations benefit from arbitration rules that have proven to be competitive in hundreds of arbitrations and an institution which is capable of administrating complex arbitrations.
• Arbitrations that are governed by the DIS-Arbitration Rules are confidential. This reduces the risk of exposure of trade secrets.
• Awards made on the basis of the German Arbitration Law will meet the standard set by the international community for the recognition and enforcement of awards. The award will be readily recognised and enforceable in other jurisdictions.
• German national courts support arbitrations. They will grant and enforce interim relief and assist, where necessary, in the taking of evidence.
• Germany is also a signatory to the New York Convention on the recognition and enforcement of foreign arbitral awards. National courts recognise and enforce awards that comply with the international standard. 

We will accompany you throughout the whole process of arbitration, whether you are facing an arbitration in Germany or wish to include an arbitration clause into your contracts. Our experts will advise you on whether arbitration is a suitable dispute resolution mechanism for you. We will draft arbitration clauses tailored to your needs and choose the most suitable arbitration institution and rules. 

In case of a dispute, our experts will, if it seems appropriate, initiate arbitral proceedings and accompany you throughout the whole process. As members of the International Society of Primerus Law Firms, we can, if necessary, refer you to our trusted partners in other jurisdictions to initiate proceedings or have your award enforced.

Our experts will advise you on the following arbitration rules and institutional arbitrations

• DIS-Arbitration Rules (German Institution of Arbitration): www.disarb.org/en/
• ICC Rules of Arbitration (International Chamber of Commerce):www.iccwbo.org/dispute-resolution-services/arbitration/
• LCIA Arbitration Rules (London Court of International Arbitration): www.lcia.org/
• ICAC Rules (International Commercial Arbitration Court at the Russian Federation Chamber of Commerce and Industry): www.mkas.tpprf.ru/en/
• Rules of Arbitration and Conciliation of VIAC (Vienna International Arbitral Centre): www.viac.eu/en/