Enforcement of arbitral awards in Germany: overview

A Q&A guide to enforcement of arbitral awards law in Germany.

The Q&A gives a structured overview of the key practical issues concerning enforcement of arbitral awards in this jurisdiction, including definitions and preliminary proceedings; applicable conventions; enforcing awards; public policy, enforcement proceedings; formalities; actual enforcement; and any reform proposals.

For more information on enforcement of judgments in Germany visit Enforcement of judgments in Germany.

This Q&A is part of the Enforcement of Judgments and Arbitral Awards in Commercial Matters Global Guide.

Dr Mohammad Reza Ranjbar, Buse Heberer Fromm
Contents

Enforcement of arbitral awards

Definitions and preliminary proceedings

1. What is the definition of an arbitral award in your jurisdiction for the purpose of enforcement proceedings?

The arbitral award must be in writing and signed by the arbitrators or the arbitrator. The award must also set out the date on which it was delivered and the venue of the arbitration proceedings. The reasons for the arbitral award are to be provided unless the parties to the dispute have agreed that no reasons need to be provided, or unless the parties have agreed on the wording of the arbitral award (section 1054, Code of Civil Procedure (Zivilprozessordnung)( ZPO)).

 
2. Are decisions in preliminary/provisional proceedings recognised and enforceable?

Unless the parties to the dispute have agreed otherwise, the arbitral tribunal can order, upon a party having filed a corresponding application, provisional measures or measures serving to provide security as it deems fit, with a view to the subject matter of the litigation. The arbitral tribunal can order a provisional measure for a limited period of time after the decision, until the enforcement of the decision had been made.

Upon a party having filed a corresponding application, the court can allow the enforcement of a measure unless a corresponding measure of temporary relief has already been applied for (section 1041(2), Code of Civil Procedure (ZPO)).

 

Applicable conventions

3. What conventions is your jurisdiction a contracting party to?

Germany is a contracting party to the following conventions:

  • UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention).

  • European Convention on International Commercial Arbitration of 1961 (Geneva Convention).

  • Treaty of Friendship, Commerce and Navigation between the United States of America and the Federal Republic of Germany of 29 October 1954.

  • Convention on General Questions of Trade and Navigation and the Consular Agreement between the Federal Republic of Germany and the Union of Soviet Socialist Republics of 25 April 1958 (with continued application for Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tadzhikistan, Ukraine, Uzbekistan, Belarus).

  • Geneva Protocol on Arbitration Clauses of 24 September 1923 (as far as it is not invalid due to the New York Convention).

 

Enforcing awards

4. What is the applicable statutory framework for enforcement of awards?

The Code of Civil Procedure (ZPO) regulates the recognition and enforcement of foreign arbitral awards by referring to the Convention on the recognition and enforcement of foreign arbitral awards (UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention)) (section 1061(1), ZPO). This applies regardless of regulations in other international treaties on the recognition and enforcement of arbitral awards.

The provisions of the New York Convention will not affect the validity of multilateral or bilateral agreements concerning the recognition and enforcement of arbitral awards entered into by the contracting states. Neither will it deprive any interested party of any right he has to avail himself of an arbitral award. The most favoured clause is overriding (Article VII, New York Convention).

 
5. What are the grounds for refusing enforcement?

Domestic awards

The application for a declaration of enforceability of the arbitral award will be refused if:

  • One of the parties was not capable of signing an arbitration agreement under the laws that are relevant to such a party personally. The same applies if the arbitration agreement is invalid under the laws to which the parties to the dispute have subjected it, or, if the parties have not determined the applicable law, it is invalid under German law.

  • A party has not been properly notified of the appointment of an arbitrator or of the arbitral proceedings, or the party has not been able to assert the means of challenge or defence available to him for other reasons.

  • The arbitral award concerns a dispute not mentioned in the arbitration agreement or a dispute not subject to the provisions of the arbitration clause or that it contains decisions that exceed the scope of the arbitration agreement.

  • The formation of the arbitral tribunal or the arbitral proceedings do not comply with the provisions of the Code of Civil Procedure or with a lawful agreement between the parties, and that it is to be assumed that this has had an effect on the arbitral award.

The arbitral award will not be declared enforceable if the court finds that:

  • The subject matter of the legal dispute is not arbitrable under German law.

  • The recognition and enforcement of the arbitral award will lead to a result contrary to public policy (ordre public) (section 1059 (2), No. 1, 2 Code of Civil Procedure (ZPO)).

International awards

The grounds for refusing a declaration of enforceability of a foreign arbitral award correspond to the grounds for refusing the declaration of enforceability of a domestic arbitral award (section 1061(1) ZPO; Article V, UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention)).

The foreign arbitral award can be declared unenforceable if the arbitral award has not yet become binding on the parties, or has been set aside or has been suspended by a competent authority of the country in which, or under the law of which, that award was made (Article V(1)(e), New York Convention).

 
6. Is the enforcing court required to examine the refusal grounds during the enforcement proceedings ex officio?

The applicant must assert the refusal grounds in the enforcement proceedings. Simply determining the violated provision or referring to the arbitration files is not sufficient. The applicant must address the refusal ground and the correspondent facts as well as substantiate his claim.

The court will only examine the two grounds for refusal discussed in Question 5, ex officio (section 1059(2), No. 2 Code of Civil Procedure (ZPO)).

 
7. What is the effect of pending challenge proceedings in the foreign state where the decision is granted?

The court can suspend the decision on the enforcement of the award and can also order the other party to give suitable security if, in the country where the award has been enacted, an application on suspension of the arbitral award has been made (section 1061 (1), No. 1 Code of Civil Procedure (ZPO), Article VI, UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention)). The order to give suitable security requires an application from the party claiming enforcement of the award.

 
8. What types of arbitral awards are enforceable?

The following arbitral awards are enforceable:

  • Awards regarding private law or public law pecuniary claims.

  • Awards regarding all other proprietary claims, regardless of their comparableness or the exclusive jurisdiction of state courts; for example, injunctive reliefs or retraction claims when related to economic issues, compensation claims of distribution agents or compensation claims of a corporation against its managing partner (sections 43(2), Code of Companies with limited liability ( GmbHG)).

  • Awards relating to declaratory actions in regard to the decisions on costs.

  • Awards relating to the use of names and firms; claims on revocation or counterstatements relating to personal rights.

 
9. Can parties seek to enforce only part of the award?

The suspension of the arbitral award can be limited to a separate part if the arbitral award relates to a dispute that is not mentioned in the arbitration agreement. The same applies if the award contains a decision that exceeds the scope of the arbitration agreement. The arbitral award remains apart from that and can be declared provisionally enforceable.

If the arbitral award exceeds the scope of the arbitration agreement in parts and this part can be separated from the part concerning points at issue, only the latter part of the arbitral award remains and can be recognised and provisionally enforced (section 1059(2) No. 1(c) Code of Civil Procedure (ZPO); Article V (1)(c), UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention)).

 
10. Are any class of awards excluded from recognition and enforcement? If so, what types of awards?

The following types of awards are excluded from recognition and enforcement:

  • Arbitral awards that are partial awards on procedural subject matters or on individual legal aspects (for example, applicable conflict-of-law rules or the declaration of relevant aspects to the arbitral tribunal).

  • Arbitral awards regarding non-pecuniary claims and claims that are not capable of being settled, such as claims regarding a tenancy relationship (section 1030(2), sentence 2, Code of Civil Procedure (ZPO)).

  • Arbitral awards in subject matters that are contrary to arbitration according to provisions of German corporate law (for example, actions for annulment of a decision of a shareholders' meeting).

  • Arbitral awards in labour and employment law cases.

  • Arbitral awards in subject matters relating to the annulment of a patent or the withdrawal of a patent.

  • Decisions of the arbitral tribunal in regard to provisional measures cannot be declared enforceable, but the court can permit the enforcement upon a party having filed a corresponding application (section 1041(2), sentence 1, ZPO).

 
11. Will service that does not conform to the requirements of international treaties/regulations in force automatically result in a denial of the enforcement of an award?

The arbitral award will not be recognised or declared as provisionally enforceable if the applicant asserts, and provides reasons for his assertion, that he has not been properly served with the appointment of an arbitrator, or of the arbitration proceedings, or that he was unable to assert the means of challenge or defence available to him for other reasons (section 1059(2), No. (1)(b) Code of Civil Procedure (ZPO); Article V( 1)(b), UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention)).

 
12. What methods of service are not acceptable against defendants domiciled in the state where enforcement is sought?

The arbitral proceedings regarding a domestic or foreign arbitral award do not provide for a specific method of service (subject to agreements between the parties).

Therefore, the arbitral tribunal can decide on the method of service at its own discretion. The service against receipt of the party, for example, by registered mail/advice of delivery, is useful in order to prevent the risk of a suspension of the award.

 

Public policy

13. Which country's public policy applies? Does the court approach the issue differently depending on whether the award is a domestic or international award?

Domestic awards

If an arbitral award is contrary to the domestic German public policy, the award will neither be recognised nor declared enforceable (Federal Supreme Court of Germany (Bundesgerichtshof) (BGH), decision of 30 October 2008, III ZB 17/08).

International awards

Those requirements are not as strict in regard to foreign arbitral awards. There are controversial discussions taking place about whether or not the appointment of arbitrators of the country of origin of one party only violates foreign public policy.

 
14. In which cases and against which awards has the principle of public policy generally been applied?

Arbitral awards have been considered as irreconcilable with public policy in the following cases:

  • Participation of an excluded arbitrator.

  • The arbitral award is based on bribery, fraud or a violation of good morals (section 826, German Civil Code (Bürgerliches Gesetzbuch) (BGB)).

  • An arbitral award included uninvolved third parties.

  • Violation of mandatory provisions of anti-trust law.

  • A party to the arbitration is not duly represented.

  • Violation of principles of a right to a fair trial.

  • Violation of constitutional fundamental principles.

  • Violation of international mandatory provisions of European Common Law.

  • Incomprehensibility or absurdity of the award, which cannot be explained by its grounds.

  • Decision of the arbitral tribunal by equity instead of law and statutes without the explicit authorisation of the parties.

  • Violation of immunity. However, a violation of immunity regarding enforcement can only be claimed by filing a reminder in enforcement proceedings.

 

Enforcement proceedings

Procedure

15. What is the procedure for enforcing arbitral awards?

Domestic awards

Ex parte or on notice. On application, the arbitral award is to be declared provisionally enforceable against a provision of security, or without a provision of security, according to the subject matter of the decision in the main proceedings (sections 1064 (2), 708 No. 11, 709 (1), Code of Civil Procedure (ZPO)).

The application for a declaration of enforceability of the arbitral award can be submitted by each party of the arbitration, their successors and each joint heir.

Applicable court. The higher regional court (Oberlandesgericht) (OLG) designated in the arbitration agreement or, if no such designation was made, the higher regional court in the district of which the venue of the arbitration proceedings is located, is competent for applications regarding the declaration of enforceability (section 1062(1), ZPO).

Limitation period. Unless the parties to the dispute agree otherwise, the application for a declaration of enforceability must be filed with the court within a period of three months. The period begins on the day on which the applicant has been served with the arbitral award (section 1059(3), sentence 1 and 2, ZPO).

Timing. The duration of the proceedings regarding the declaration of enforceability cannot be estimated reliably. It depends on the potential order of an oral hearing, possible defences of the opponent (section 1063(1), ZPO), issues to be examined ex officio by the court, as well as on a potential appeal against the decision of the higher regional court.

Court fees. Court fees are determined by the Code on Court Costs (Gerichtskostengesetz) (GKG) and its fee table. The fee mainly depends on the value at stake.

The fee table provides for the following court fees:

  • 2.0 fee according to a fee twice the value of the value at stake in the proceedings regarding the suspension or the declaration of enforceability of an arbitral award or the suspension of an enforcement declaration.

  • 1.0 fee according to the fee of the same value at stake when proceedings are terminated due to withdrawal of the application (no. 1620, 1627 Annex 1 Schedule of values of section 3(2), GKG).

  • Lawyer's fees: regular fee according to value at stake (VV 3100 ff).

Recourse. An appeal to the Federal Supreme Court is an available remedy against the decision of the higher regional court on the declaration of enforceability of the arbitral award if the higher regional court has allowed such an appeal in its decision. The same applies in regard to the refusal of the declaration of enforceability (sections 1065(1), sentence 1, 574(1) No. 2, ZPO).

International awards

Ex parte or on notice. The UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention), subject to bilateral agreements, applies in regard to the recognition and enforcement of foreign arbitral awards. The grounds for refusal of a foreign arbitral award or for the refusal of the declaration of enforceability of Article V of the New York Convention are equivalent to the provisions of section 1059(1) No. 1 and 2 of the ZPO. However, this applies with the exception of Article V(1)(e) of the New York Convention which stipulates the ground for refusal when the award has not yet become binding on the parties or has been set aside or suspended by a competent authority of the country, in which, or under the law of which, that award was made.

Applicable court. The foreign arbitral award will be declared as enforceable by the higher regional court of the district of the defendant's seat or his habitual residence or the location of his assets. Alternatively, if there is no German arbitration venue, the Higher Regional Court of Berlin (Kammergericht Berlin) is competent (section 1062(2), ZPO).

In the proceedings regarding the declaration of enforceability before the higher regional court the lex fori is applicable. Therefore, the proceedings regarding the declaration of enforceability of domestic arbitral awards are also applicable in regard to the declaration of enforceability of foreign arbitral awards. However, a refused foreign arbitral award will not be revoked by the higher regional court. The court simply declares the non-recognition of the foreign arbitral award.

 
16. Can the enforcing court review the foreign award if all formalities were complied with and if the award meets all requirements?

The application for a declaration of enforceability of the foreign arbitral award can only be refused when one of the grounds stipulated in Article V(1) and (2) of the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) has been proven. The list of grounds in Article V of the New York Convention is final and definite so that the arbitral award cannot be reviewed in regard to its substance.

 

Formalities

17. What are the documentary requirements for enforcement?

Documentary requirements

The arbitral award, or a certified copy of the same, must be added to the application for a declaration of enforceability of an arbitral award. The certification can also be performed by the attorney retained and authorised for the court proceedings (section 1064(1), Code of Civil Procedure (ZPO)).

Due to the application of lex fori, the attorney has to submit his power of attorney to the court records in written form (section 80, ZPO).

Authentication

The submission of a duly authenticated original of the foreign arbitral award and the duly authenticated original of the arbitration agreement as well as a translation of the foreign arbitral award into the German language (Article IV(1) and (2), UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention)) are not required for proceedings before the higher regional court (Article VII(1), New York Convention). The court can order the submission of the arbitration agreement and its translation as well as a translation of the arbitral award. Germany has not signed any international treaties that differ from those provisions.

 
18. Is it required to translate the award into the language of the state where enforcement is requested?
 
19. What is the format of the application for a declaration of enforceability?

There is no specific format of the application for a declaration of enforceability. For practical reasons, the application must contain the applicable court, the parties of the proceedings, their attorneys of record as well as the request of the applicant.

 
20. What information must be included in the application regarding the award, the claim as awarded in the award, the facts and legal grounds of the case, and that the judgment is no longer appealable?

Award

The arbitral award has to be added to the application for a declaration of enforceability.

Claim as awarded

Further information on the arbitral award or the awarded claim is not required.

Facts and legal grounds

The arbitral award has the effect of a legally binding judgment between the parties. Hence, the application does not depend on further information in regard to matters of fact or legal grounds of the case. The proceedings have to be described only if an action is brought against the arbitral award for procedural reasons.

Appeals

There is no right of appeal against the arbitral award. However it is possible to apply for the annulment of the arbitral award by a court (section 1059(1), Code of Civil Procedure (ZPO)).

 
21. Is it possible to request the enforcing court for provisional measures pending the enforcement proceedings?

The presiding judge of the division for civil matters of the higher regional court can order, without a prior hearing of the opponent, that the applicant can enforce the arbitral award in regard to, and limited to, security measures until the decision on the application for a declaration of enforceability is made. The applicant must state special circumstances for such an enforcement of security measures. The opponent, who will not be heard prior to this measure being taken, can file a precautionary caveat at the court.

 
22. Is it required to convert the value of the award into the local currency?

It is not required to convert the value of the award into the local currency in Germany.

 
23. Can the enforcing court stay the enforcement proceedings pending the outcome of proceedings to set aside the award at the seat of arbitration? If so, will the court order the party seeking the stay to provide security?

The higher regional court, where the proceedings regarding the recognition of the foreign arbitral award are pending, must refuse the declaration of enforceability if it is proven that the arbitral award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country of origin (Article V( 1)(e), UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention)). An arbitral award is considered as binding when the arbitral tribunal cannot modify the award anymore. It does not require that the arbitral award has been declared enforceable in the country of origin.

If an application for the setting aside or suspension of the award has been made to a competent authority in the country of origin, the higher regional court can suspend the decision on the enforcement and can also, on the application of the party claiming enforcement of the award, order the applicant to provide suitable security (Article VI, New York Convention).

In case the arbitral award is revoked abroad after having been declared enforceable, an application on the annulment of the declaration of enforceability can be filed (section 1061(3), Code of Civil Procedure (ZPO)).

 

Actual enforcement

24. What is the enforcement procedure when a declaration of enforceability is granted?

The decision declaring the arbitral award as enforceable contains the necessary content for enforcement.

The copy of the decision containing the enforcement clause must be served to the award debtor.

On the application from the award creditor, the enforcement procedure will be executed just like the enforcement procedure of a domestic judgment by the competent enforcement authorities.

If the domestic enforcement authority is the court of proceedings, the higher regional court which declared the arbitral award as enforceable is competent.

 
25. Can defendants oppose the actual enforcement procedure, and if so, on what grounds/defences?

The defendant cannot oppose the awarded claim itself during the enforcement procedure. He can only bring actions against the recognition of the awarded claim, according to sections 1059(2) No. 1 and 2 of the Code of Civil Procedure (ZPO) and Article V of the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention). Such grounds for annulment must not be taken into account (to the extent that an application for annulment based on these grounds has been denied), in a final and binding judgment, at the time the application for declaration of enforceability is received (section 1060(2), sentence 2, ZPO).

Defences that have risen after the issuing of the arbitral award, but prior to the completion of the proceedings regarding the declaration of enforceability, can be brought in the proceedings regarding the declaration of enforceability. However, they cannot be claimed if the arbitral tribunal is competent in regard to these defences.

During the proceedings regarding the declaration of enforceability of a foreign arbitral award, the defendant can claim that the award has not yet become binding or has been set aside or suspended by a competent authority (Article V( 1)(e), New York Convention). The defendant can apply for the suspension of the proceedings at the higher regional court, if the application on annulment has been filed, but has not yet been decided (Article VI, New York Convention).

The presiding judge of the division for civil matters (Zivilsenat) can order, without prior hearing of the defendant, that the applicant can pursue enforcement under the arbitral award until a decision has been delivered regarding the application. The enforcement is limited to measures serving to provide security. The defendant is authorised to prevent the enforcement by providing security himself (section 1063(3), ZPO).

 

Proposals for reform

26. Are any changes to the law currently under consideration or being proposed?

There are no changes to the law under consideration or being proposed at this point of time.

 

Online resources

Federal Ministry of Justice and Consumer Protection

W www.gesetze-im-internet.de

Description. The website is maintained by German Federal Ministry of Justice and Consumer Protection. English translations of the German Civil Procedure Code are available there, but are intended solely as a convenience to the non-German-reading public (www.gesetze-im-internet.de/Teilliste_translations.html).



Contributor profile

Reza Ranjbar, Partner

Buse Heberer Fromm

T +49 40 41999-0
F +49 40 41999-329
E reza.ranjbar@buse.de
W www.buse.de

Professional qualifications. Germany, Rechtsanwalt; England and Wales, Solicitor

Areas of practice. Dispute resolution and banking.


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