German Arbitration Law

Book 10 of the Code of Civil Procedure

German arbitration law is governed by Book 10 of the Code of Civil Procedure (Zivilprozessordnung, ZPO), §§ 1025–1066, enacted in the 1998 reform that implemented the UNCITRAL Model Law on International Commercial Arbitration. The reform replaced the earlier provisions of the ZPO that had been in force since 1877, modernising German arbitration law and aligning it with international standards. Section 1025 defines the scope of application: the provisions apply to domestic and international arbitrations seated in Germany, with supplementary application to arbitrations seated outside Germany for certain procedural matters, including the recognition and enforcement of awards. The German approach closely follows the Model Law’s structure and terminology, making German arbitration law accessible to international practitioners and predictable in its application.

The Arbitration Agreement

Sections 1029 through 1033 govern the arbitration agreement. Section 1029 defines the arbitration agreement as an agreement by the parties to submit to arbitration all or certain disputes arising between them. The agreement must be in writing or in a form that meets the requirements of the relevant trade usage. Section 1040 codifies the separability doctrine: the arbitration agreement is treated as independent from the main contract, and the tribunal’s finding that the main contract is null and void does not automatically invalidate the arbitration agreement. The same section establishes the competence-competence principle, empowering the arbitral tribunal to rule on its own jurisdiction, including objections to the existence or validity of the arbitration agreement.

Composition and Jurisdiction of the Tribunal

Sections 1034 through 1039 govern the composition of the arbitral tribunal. The parties are free to determine the number of arbitrators; failing agreement, the default is three arbitrators under § 1034. The appointment procedure is flexible, with the parties free to agree on the method of appointment. Section 1036 establishes the grounds for challenging an arbitrator: circumstances that give rise to justifiable doubts as to the arbitrator’s independence or impartiality, or where the arbitrator does not possess the qualifications agreed by the parties. Section 1040 provides that the tribunal may rule on its own jurisdiction, either as a preliminary question or in the award on the merits. A plea that the tribunal lacks jurisdiction must be raised no later than the submission of the statement of defence.

Conduct of Proceedings and the Award

Sections 1042 through 1050 govern the conduct of arbitral proceedings. The tribunal must ensure the equal treatment of the parties and the right to be heard. Subject to the mandatory requirements of due process, the parties may agree on the procedure, and the tribunal determines the procedure in the absence of such agreement. The tribunal has powers to take evidence, including the power to seek judicial assistance from the state courts for the taking of evidence or the performance of other judicial acts that the tribunal is not empowered to perform. Sections 1054 through 1058 govern the award, which must be in writing, signed by the arbitrators, and state the reasons for the decision. The award has the effect of res judicata between the parties and may be corrected or interpreted by the tribunal.

Recourse and Enforcement

The exclusive remedy against an arbitral award is the application for setting aside under § 1059, which mirrors Article 34 of the Model Law. The grounds for setting aside are exhaustive: the invalidity of the arbitration agreement under the law applicable to it; the lack of proper notice of the appointment of an arbitrator or of the proceedings, or the inability to present a party’s case; the award deals with a dispute not within the terms of the arbitration agreement; the composition of the tribunal or the conduct of the proceedings did not conform to the parties’ agreement or to mandatory provisions of German law; or the recognition and enforcement of the award would lead to a result contrary to German public policy. The application must be made within three months of receipt of the award. The recognition and enforcement of foreign arbitral awards is governed by the New York Convention and §§ 1061–1065, which implement the Convention in German law and ensure that Germany fulfils its treaty obligations to recognise and enforce foreign awards on the same grounds as apply to domestic awards, subject to the Convention’s more favourable treatment provisions.