Litigation

What is litigation?

Litigation is the settlement of legal disputes before state courts.

The vast majority of commercial disputes between private parties in Germany are decided by the courts of the so-called civil law branch ("Ordentliche Zivilgerichtsbarkeit").

The court system consists of four hierarchical levels, stated as follows from low to high: the Local Courts ("Amtsgerichte"), the Regional Courts ("Landgerichte"), the Higher Regional Courts ("Oberlandesgerichte") and the Federal Court of Justice ("Bundesgerichtshof"). In Hamburg there are eight Local Courts, one Regional Court and one Higher Regional Court.

In Local Courts, civil cases are tried by a single judge. In Regional Courts, simple cases are tried by a single judge and complex cases by three judges. There is also a commercial division ("Kammer für Handelssachen") at the Regional Court, consisting of a professional judge plus two expert laymen from the commercial sector. In the Higher Regional Courts, cases are usually heard by three judges.

At entry level, Local and Regional Courts may have subject matter jurisdiction. Local Courts are equipped to deal with disputes reaching EUR 5,000 and Regional Courts for disputes exceeding EUR 5,000. Exceptions to this rule are made for example, in disputes on family law or the leasing of apartments.

The territorial jurisdiction of a Hamburg civil court can be based on an agreement by the parties. The parties may reach the agreement either prior to (by inserting a choice-of-forum clause into their contract), or after a dispute has arisen. If the parties have not reached an agreement, the territorial jurisdiction of Hamburg courts would be based on the rules of the so-called Brussels-I Regulation and / or the German Code of Civil Procedure ("ZPO"). Under these rules, it is generally considered that the defendants local court has jurisdiction. However, there are many exceptions to this rule. For example, for contractual claims, it is the place with which the breach of contract, whether it be by performance, tort or harm took place.

Main benefits

  • State court judgments can be enforced.
    State court judgments are recognized and enforceable in Germany as well as in all other EU member states by virtue of the Brussels-I Regulation. Germany has also established bilateral agreements with many countries,  providing mutual recognition and enforcement of state court judgments.
  • State Court proceedings can be relatively cheap.
    The cost of the proceedings depend upon the amount in dispute, they can also be defined by fixed regulatory schedules. At the Regional Court, fees are not increased even when three judges are required for decision. The court fees are reduced in case there is no oral hearing or in case the parties settle.
  • State Court proceedings can be relatively quick.
    In Germany it is possible to get a primary judgment relatively quickly in comparison to other countries. According to recent statistics, the average time in Germany for a Regional Court to render a judgment is 13 months. Hamburg courts are faster with an average time of 10 months.
  • State court proceedings offer efficient protection.
    State court proceedings offer efficient protection by granting fast interim and summary relief (for example injunctions against competitors in intellectual property right or family disputes).

Potential disadvantages

  • State court proceedings in Germany must be held in German.
    Not only written and oral pleadings, but also attachments must be submitted in the German language. Thus, if case relevant documents are in English or in any other language, they have to be translated, potentially entailing enormous costs. Recently however, there have been legislative attempts to introduce the English language into German state court proceedings. Especially in proceedings before the Commercial Divisions of the Regional Court of Hamburg a praeter legem practice of oral arguments in English and a waiver of the obligation to have relevant documents translated can occasionally be established on a consensual basis between the parties and the court.
  • State court proceedings may take longer due to appeal and review proceedings.
    State court decisions are potentially subject to appeal and review proceedings. Thus, even if a first instance judgment is rendered after a short time, the case may be heard another two times. These appellate and review proceedings may multiply the time and costs of the proceedings and may significantly increase internal and external costs.