As recently reported in this BLOG, the Legal Venue Strengthening Act has created the possibility of establishing so-called Commercial Courts at the Higher Regional Courts through the new Section 119b (1) of the German Courts Constitution Act (Gerichtsverfassungsgesetz – GVG). Section 184a (1) GVG also creates the possibility of conducting proceedings before chambers at state courts in certain subject areas (identical to those of the Commercial Courts) in English. These chambers are then called Commercial Chambers.
However, the GVG does not decide where these courts are to be established. Rather, the law leaves it up to the federal states to decide on the establishment and exact design of the commercial courts. But what is the current status of implementation in the federal states? What does this mean for the decision of companies to agree on the jurisdiction of a commercial court (or a commercial chamber) instead of an arbitration clause? And are commercial courts (and commercial chambers) actually alternatives to arbitration tribunals?
Implementation in the German federal states
Nine out of 16 federal states have already decided to establish Commercial Courts by ordinance or plan to do so in the near future. The Commercial Courts are senates at the higher regional courts and are responsible in the first instance for disputes with an amount in dispute of at least EUR 500,000.00, as is already evident from Section 119b (1) GVG.
However, the specific jurisdiction of the Commercial Courts only arises from the ordinances of the federal states. Bremen, for example, has issued an ordinance according to which claims arising from freight, forwarding or warehousing transactions, hydrogen, aviation and space technology are to be heard by the Bremen Commercial Court. The Commercial Court in Baden-Würrtemberg wants to attract company law disputes, while the Commercial Court in NRW focuses on construction and architectural law, insurance law and company law.
Other federal states have announced the creation of commercial courts and commercial chambers, but have not yet implemented the necessary ordinance.
Commercial Court or arbitration clause?
But what do the findings on the implementation of the countries actually mean? In our BLOG article from 21.11.2024, we talked about eight advantages of the Commercial Courts. But are these advantages still recognizable after the actual implementation and are there possibly also disadvantages resulting from the implementation?
Initially, all of the advantages described above will still apply after implementation in the individual federal states. Proceedings before the Commercial Courts lead to a shortening of instances, as the appeal goes directly to the BGH. Specialization is also likely to prove to be an advantage after the first concrete implementations. In some cases, such as in Bremen, the responsibilities are so specific that the judges can be expected to have a high level of expertise simply due to a higher “number of cases”.
More efficient proceedings than before the chambers for commercial matters can certainly also be expected as a result of the case management appointments. English as the language of negotiation, verbatim protocols, confidentiality and costs (compared to arbitration proceedings) should also prove to be advantages in practice as described in the article of 21.11.2024.
And in purely practical terms, the commercial courts are likely to have a huge asset: They start afresh. As senates at the higher regional courts, the Commercial Courts can therefore deal directly with new incoming cases without any backlog of files.
Compared to arbitration proceedings, however, there are disadvantages when looking at the specific arrangements. On the one hand, there is a patchwork effect. Instead of, for example, Lower Saxony, Hamburg, Bremen and Schleswig-Holstein (possibly with Mecklenburg-Western Pomerania) joining forces to establish a uniform Commercial Court dedicated to maritime issues, Commercial Courts are established in Bremen, Hamburg and Celle (!), while Schleswig-Holstein has no Commercial Court. The result is a jagged judicial landscape with sometimes exotic special jurisdictions.
It will therefore not be easy for legal practitioners to find the right Commercial Court for them. Especially as it is not clear in advance what the value in dispute will be. If the amount in dispute is less than EUR 500,000.00, the Commercial Court will not have jurisdiction at all and it will go to the Commercial Chambers (if available) or to the Chamber for Commercial Matters.
In cross-border disputes, the well-known enforcement problems of German judgments outside the EU and EEA remain, where arbitral awards are significantly more enforceable due to the New York Convention.
The right dispute resolution clause remains a question of the individual case. The Commercial Courts provide a genuine alternative to arbitration tribunals, but their choice should always be assessed on a case-by-case basis based on the economic and actual interests involved.
