On 26 June 2024, the federal government published the updated draft bill for an Act on the modernisation of German arbitration law (click here for the updated draft bill ). This is an update to the draft bill of 1 February 2024 (article of 12 February 2024), on which the Federal Ministry of Justice received numerous comments that were incorporated into the updated explanatory notes to the draft bill. The draft bill is intended to adapt German arbitration law as a whole to the needs of today’s world, increase its efficiency and thus make Germany more attractive as an arbitration location.
Updated draft bill largely confirms earlier draft
The updated draft bill only deviates from the earlier draft in a few places. The proposed regulations on the use of the English language and on video hearings have been retained in the updated draft bill without any substantive changes. The same applies to the possibility of concentrating proceedings in arbitration matters at the Commercial Courts. The provisions to increase legal certainty have also been retained, such as the possibility of obtaining a court decision on the existence and validity of the arbitration agreement, the introduction of the new ground for setting aside related to decisions by the arbitral tribunal declining jurisdiction, and the confirmation that dissenting (or concurring) opinions by an arbitrator are permissible. The clarifying provisions on interim relief also remain unchanged in the updated draft bill.
Deviations to earlier draft in updated draft bill
There are only a few deviations from the earlier draft bill, which we will briefly present:
- Arbitration agreements are not subject to any form requirements, unless a consumer is involved (section 1031 (1) ZPO-E). The earlier draft bill had provided that dispensing with form requirements should be limited to commercial transactions, but this limitation has been abandoned in the updated draft. The proposed provision that each party should be able to require the other party to confirm the content of an informally concluded arbitration agreement in text form has also been dropped. The updated draft bill thus completely abandons the written form requirement and follows Option II of Article 7 of the 2006 version of the UNCITRAL Model Law on International Commercial Arbitration.
- According to section 1054 (2) ZPO-E, the arbitral award can be issued as an electronic document as long as it contains the names of all members of the arbitral tribunal (the earlier draft bill had provided that the names need to be included “at the end”) and each member of the arbitral tribunal provides the award with their qualified electronic signature. If an electronic arbitral award is issued, each party can subsequently request to receive a written and signed arbitral award.
- The possibility already provided for in the earlier draft bill under section 1054b ZPO-E to publish arbitral awards in anonymised form remains in place. This is to be dependent on the consent of the parties, which is to be deemed to have been granted if the arbitral tribunal has requested consent and no objection is raised within three months of receipt of the request. The earlier draft bill had provided for one month.
- The new legal remedy to set aside arbitral awards, which is based on the action for restitution pursuant to section 580 ZPO, has been clarified. Instead of making a blanket reference to section 580 ZPO as in the earlier draft bill, the relevant case constellations from section 580 ZPO are now listed in detail in section 1059a (1) ZPO-E. The updated draft bill also addresses another point of criticism. While the earlier draft bill provided in general terms that section 581 ZPO should not apply, the new section 1059a (2) ZPO-E stipulates that an application for restitution is only possible for restitution grounds relating to criminal law if a final conviction has been handed down for the underlying offence or if criminal proceedings cannot be initiated or conducted for reasons other than a lack of evidence.
Conclusion
The earlier draft bill received a great deal of approval and was therefore only amended in certain limited areas in the updated draft bill. In particular, the explanatory notes to the draft bill were supplemented with further helpful considerations. Therefore, it is to be expected that the updated draft bill will be adopted as issued.
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