German Arbitration Procedure

Book 10 of the ZPO

German arbitration law is codified in Book 10 of the Code of Civil Procedure (Zivilprozessordnung, ZPO), Sections 1025-1066, enacted in 1998 based on the UNCITRAL Model Law on International Commercial Arbitration. The German legislature adopted the Model Law with minimal modifications, making Germany a Model Law jurisdiction. Book 10 applies to both domestic and international arbitrations seated in Germany, with Sections 1025(2) and (3) extending certain provisions — arbitration agreement, court assistance, recognition and enforcement — to arbitrations seated outside Germany.

Arbitration Agreement

The arbitration agreement (Schiedsvereinbarung) is the foundation of arbitration jurisdiction. Section 1029 ZPO defines the arbitration agreement as an agreement by the parties to submit to arbitration all or certain disputes arising between them in respect of a defined legal relationship, whether contractual or not. The agreement may be in the form of an arbitration clause in a contract or a separate submission agreement.

Formal requirements under Section 1031 ZPO are strict: the arbitration agreement must be in writing contained in a document signed by the parties or exchanged by communication that provides a record of the agreement. Electronic communications satisfying the requirements of the German Electronic Transactions Act suffice. Consumer arbitration agreements require a separate, signed document containing only the arbitration agreement (Section 1031(5) ZPO), a strict requirement designed to protect consumers from inadvertent waiver of access to courts.

Arbitrability (Schiedsfahigkeit) is governed by Section 1030 ZPO. Any claim involving an economic interest (vermogensrechtlicher Anspruch) is arbitrable. Claims not involving an economic interest are arbitrable only to the extent that the parties are entitled to conclude a settlement on the dispute. Exclusion for non-arbitrable disputes — such as certain family law matters, residential tenancy disputes (Germany-wide), and criminal matters — are narrowly construed. The arbitral tribunal’s ruling on its own jurisdiction (Kompetenz-Kompetenz) is recognised in Section 1040 ZPO, enabling the tribunal to decide on its own jurisdiction, including objections as to the existence or validity of the arbitration agreement.

Composition of the Arbitral Tribunal

The parties are free to determine the number of arbitrators (Section 1034 ZPO). Failing agreement, three arbitrators are appointed. The appointment procedure is governed by Sections 1035-1039 ZPO. Each party appoints one arbitrator in a three-member tribunal; the two party-appointed arbitrators appoint the presiding arbitrator. If a party fails to appoint an arbitrator within 30 days of a request, or if the two arbitrators cannot agree on the presiding arbitrator within 30 days of their appointment, the appointment is made by the Higher Regional Court (Oberlandesgericht, OLG) upon application.

Challenge of arbitrators (Ablehnung eines Schiedsrichters) is governed by Sections 1036-1037 ZPO, reflecting the IBA Guidelines on Conflicts of Interest. An arbitrator may be challenged only if circumstances give rise to justifiable doubts as to their impartiality or independence or if they do not possess qualifications agreed by the parties. The challenge procedure requires the challenging party to submit a written statement of reasons within two weeks of becoming aware of the constitution of the tribunal or the grounds for challenge. If the challenged arbitrator does not withdraw, the tribunal decides the challenge; a subsequent application to the OLG is available.

Jurisdiction of the Tribunal

The arbitral tribunal may rule on its own jurisdiction, including objections to the existence or validity of the arbitration agreement (Section 1040 ZPO). A plea that the tribunal lacks jurisdiction must be raised no later than the statement of defence. A party is not precluded from raising such a plea by having appointed an arbitrator. The tribunal may rule on the plea as a preliminary question or in an award on the merits. If the tribunal rules on jurisdiction as a preliminary question, any party may request a court decision within 30 days of receipt of the ruling.

The interim measures power of the tribunal under Section 1041 ZPO allows the tribunal to grant interim measures on application of a party, including orders to preserve the status quo, prevent harm, or preserve assets. The tribunal may require appropriate security. Interim measures ordered by the tribunal are enforceable in German courts upon application; the court may re-exercise its discretion. The court may also grant interim measures in support of arbitration under Section 1033 ZPO.

Conduct of Proceedings

German arbitration law grants the parties broad party autonomy (Parteiautonomie) in determining procedural rules. The parties may agree on the procedure, including the place of arbitration, language, rules of evidence, and time limits (Section 1042 ZPO). Failing agreement, the tribunal conducts the arbitration as it considers appropriate, subject to mandatory requirements of equal treatment and the right to be heard.

The principle of equal treatment (rechtliches Gehor) is a mandatory requirement. Each party must be given a full opportunity to present its case and to reply to the other party’s submissions. The tribunal may not rely on facts or legal arguments not discussed with the parties without providing them an opportunity to comment. Hearings are held if a party requests them or the tribunal decides; the tribunal may conduct proceedings on documents only if the parties have not agreed otherwise.

Evidence in German arbitration follows the principle of free evaluation of evidence. The tribunal determines admissibility, relevance, and weight of evidence. The tribunal may examine witnesses, experts, and documents. Party-appointed experts are common, but the tribunal may also appoint independent experts. The tribunal may request judicial assistance from state courts for taking evidence or other procedural acts; the court applies its own procedural rules.

The Award

The arbitral award (Schiedsspruch) is governed by Sections 1054-1058 ZPO. Awards are made by majority vote or, failing a majority, by the presiding arbitrator alone. The award must be in writing, signed by the arbitrator(s), state the reasons upon which it is based (unless the parties agree otherwise or it is a consent award), state the date and place of arbitration, and be delivered to each party.

Awards may be:

• Final awards (Endschiedsspruche): determining all issues submitted to arbitration
• Partial awards (Teilschiedsspruche): determining some but not all issues
• Awards on agreed terms (Schiedsspruche mit vereinbarter Wortlaut or consent awards): incorporating a settlement (Section 1053 ZPO)
• Interim awards (Zwischenschiedsspruche): determining preliminary issues such as jurisdiction or applicable law

The award has the effect of a final and binding court judgment between the parties (Section 1055 ZPO). No appeal on the merits is available; the only remedy is an application to set aside the award.

Setting Aside of the Award

An award may be set aside (Aufhebung) by the OLG only on grounds exhaustively listed in Section 1059 ZPO, mirroring Article 34 of the Model Law. These grounds are:

1. Incapacity of a party or invalidity of the arbitration agreement
2. Lack of proper notice of appointment, arbitrator, or proceedings, or inability to present the case
3. The award deals with a dispute not contemplated by or falling within the terms of the submission, or contains decisions beyond the scope of the submission
4. The composition of the tribunal or procedure was not in accordance with the parties’ agreement or the ZPO
5. The subject matter is not arbitrable under German law
6. Recognition or enforcement would lead to a result contrary to public policy (ordre public)

The application to set aside must be made within three months of receipt of the award. The court may remit the case to the tribunal for remedy if grounds for setting aside are established and the party so requests. A decision refusing to set aside is final; a decision setting aside the award may be appealed to the Federal Court of Justice (Bundesgerichtshof, BGH).

Recognition and Enforcement

Domestic awards (seated in Germany) are enforceable upon application for an enforcement declaration (Vollstreckbarerklarung) under Section 1060 ZPO, which the court grants unless a ground for setting aside is established. Foreign awards (seated outside Germany) are recognised and enforced under Section 1061 ZPO, which applies the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958). German courts have a strong pro-enforcement tradition, refusing enforcement only on the narrow grounds of the New York Convention and the ordre public exception.