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Legal framework

National arbitration laws
What legislation applies to arbitration in your jurisdiction?

The German arbitration regime is set out in the tenth book of the German Code of Civil Procedure, which is essentially identical to the UNCITRAL Model Law. It applies to the extent that international treaties do not have priority.

The arbitration regime is underpinned by the following principles:

  • an environment that is conducive to arbitration;
  • freedom of contract within the area of arbitration; and
  • a three-arbitrator tribunal where the parties have not agreed otherwise (Section 1034, paragraph 1 of the Code of Civil Procedure).

Mandatory laws
Are there any mandatory laws?

Germany has many mandatory laws on numerous issues. The overarching principle of mandatory law is the German public order. The courts uphold certain principles of arbitration as mandatory, such as equal treatment of the parties with respect to the right to nominate arbitrators. Further mandatory arbitration law is contained in international treaties (eg, Articles 28 to 32 of the Convention concerning International Carriage on by Rail).

A tribunal will apply and/or give effect to many or most German or foreign overridingly mandatory laws in order to ensure that any award made is enforceable in the relevant jurisdictions (see Article V(e) of the New York Convention). This will usually include German mandatory law in substantive matters, where applicable. With respect to foreign mandatory law, a German arbitrator might take inspiration from Article 9(3) of the European Rome I Regulation on the law applicable to contractual obligations (593/2008). According to this provision, judges (though not arbitrators) are obliged to give effect to foreign mandatory law under certain circumstances, in particular at the place of execution of the contract. 

New York Convention
Is your country a signatory to the New York Convention? If so, what is the date of entry into force?

Germany is a party to the New York Convention. It ratified the convention on June 30 1961.

Are there any reservations to the general obligations of the convention?

Germany ratified the convention without any reservations.

Treaties and conventions
What other treaties and conventions in relation to arbitration is your jurisdiction party to?

Germany is also a signatory to the following treaties and conventions:

  • the Geneva Protocol on Arbitration Clauses of 1923;
  • the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927;
  • the European Convention on International Commercial Arbitration of 1961;
  • the Convention on the Settlement of Investment Disputes between States and Nationals of other States of 1965; and
  • the Energy Charter Treaty of 1994.

As of February 2016, Germany had signed 138 bilateral investment treaties, of which 129 were in force.

Germany is also a party to the Convention concerning International Carriage by Rail. 

UNCITRAL
Has your jurisdiction adopted the UNCITRAL Model Law?

The German legislature adopted the UNCITRAL Model Law when the arbitration law was revised in 1996. It entered into force on January 1 1998. 

Reform
Are there any impending plans to reform the arbitration laws in your jurisdiction?

No, but there are preliminary discussions in informed circles about whether it is necessary to modernise some aspects of German arbitration law.

Arbitration agreements

Validity
What are the validity requirements for an arbitration agreement?

The arbitration agreement must be signed by both parties (Section 1031 of the Code of Civil Procedure). It is also sufficient if the parties exchange letters/faxes or other means of communication which include the arbitration agreement.  

Under certain circumstances, it might also be possible for one party to provide the other with a document that refers to a previous agreement to arbitrate. However, this will very much depend on common usage, the status of previous negotiations and the applicable law of the place where the recipient of the document is located.

Unless one of the parties is a consumer, it might also be possible to include arbitration clauses in standard terms and conditions.

Specific requirements apply where a consumer is a party to an arbitration agreement: the agreement must be set out in a separate document which is signed by both parties and contains no provisions other than the arbitration clauses. This does not apply if the agreement is recorded by a notary public. The written form may be substituted by a qualified electronic form (Section 126a of the Civil Code).

Any failure to comply with these formal requirements will be remedied if the respondent does not object by submission of the statement of defence at the latest (Section 1036(6) of the Code of Civil Procedure).

As a matter of German substantive law, arbitration agreements in employment contracts are invalid.

Article V(1)(a) of the New York Convention explicitly permits choosing the law applicable to the arbitration agreement and provides that the law of the seat of arbitration will apply by default. In a modern interpretation of the New York Convention, the conflict of law rule set out in Article V(1)(a) of the New York Convention also applies when the arbitration clause is drafted, pursuant to Article II of the New York Convention. 

Enforcement of agreements
How are arbitration agreements enforced in your jurisdiction? What is the attitude of the national courts towards arbitration agreements?

Generally speaking, the German courts are pro-arbitration. Arbitration agreements are enforced by initiating arbitration proceedings or by invoking the arbitration agreement on the first occasion before an ordinary court (Section 1032(1) of the Code of Civil Procedure). 

Consolidation
Can an arbitral tribunal with its seat in your jurisdiction consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?

Only if the same parties are concerned and the parties consent.

Choice of law
How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

The tribunal will decide the matter in accordance with the statutory provisions that the parties have designated as applicable to the subject of the dispute (Section 1051 of the Code of Civil Procedure).

Such choice of law may also occur indirectly through the choice of arbitration rules containing a choice of law clause (eg, Article 35 of the UNCITRAL Arbitration Rules) or the choice of international rules containing a choice of law rule (eg, Article 23 of the German Institution of Arbitration Rules, Article 21 of the International Chamber of Commerce Rules or Article 35 of the Rules of the Chinese European Arbitration Centre, which is located in Germany).

In the absence of a direct or indirect choice of law clause, Section 1051(2) of the Code of Civil Procedure requires the application of the law with the closest connection to the dispute.

In addition to the substantive law applicable to the contract, and depending on the circumstances of the case, the tribunal will applyoverriding mandatory German and EU law and consider the application of overriding foreign mandatory law.

In matters under the Convention on the Contract for the International Carriage of Goods by Road 1956/78, the tribunal will apply the convention.

With regard to issues that are beyond the scope of the substantive contract law, the tribunal will determine the applicable law with due regard to private international law (eg, see Article V(1)(a) of the New York Convention, which sets out the requirements related to a party’s capacity to enter into an arbitration agreement under the law applicable).

Separability
Are there any provisions on the separability of arbitration agreements?

Arbitration agreements which are concluded with consumers must be separate from other written agreements (Section 1031(5) of the Code of Civil Procedure). 

Multiparty agreements
Are multiparty agreements recognised?

German law includes no explicit provisions on multiparty arbitration. However, it is recognised in practice that more than two parties may enter into an agreement to arbitrate. It is advisable to agree that both multiple claimants and multiple respondents (eg, shareholders of a company that are on the same side of a claim) each jointly nominate one arbitrator and the two arbitrators nominated by the parties will then nominate the chair of the tribunal (see the German Federal Supreme Court decision dated April 6 2009 – II ZR 255/08 (OLG Köln) and April 16, 2015 - I ZB 3/14).

Although it is within the parties’ autonomy to agree on a procedure for constituting the tribunal, the parties must have equal opportunity to influence the constitution of the tribunal (Section 1034(2) of the Code of Civil Procedure). In order to meet this challenge in multiparty agreements, the parties could agree on a procedure for constituting the tribunal whereby all arbitrators are appointed by a neutral third party.

The Arbitration Rules of the German Institution of Arbitration (DIS) foresee that the DIS Appointing Committee will nominate all arbitrators if the respondents fail to agree on a joint nomination. In such case any nomination made by the claimant(s) is superseded by the DIS Appointing Committee’s nomination (Section 13 of the DIS Rules). Article 23 of the International Chamber of Commerce Rules provides for a similar system. If the agreed procedure is not entirely clear, the parties may be forced to agree on a procedure for multiparty arbitration even after a dispute has arisen.

Arbitral tribunal

Criteria for arbitrators
Are there any restrictions?

It is for the parties to determine the criteria for the arbitrators, according to their preferences regarding the kind of expertise required. It is customary to provide that at least one arbitrator shall have the qualification of a judge (which, under German law, is the case for every attorney admitted to the German Bar). Further, it is common to provide for language skills and sometimes to impose restrictions on nationality. In specific industry-related arbitration agreements, the chairman may sometimes be required to have special industry-related qualifications.

Contractual stipulations
What can be stipulated about the tribunal in the agreement?

The parties can use their freedom of contract to regulate many issues in the arbitration agreement. It is usual and reasonable to include provisions on:

  • the qualifications of the arbitrators;
  • the number of arbitrators (sometimes with distinctions made on the basis of the amount in dispute);
  • the constitution of the tribunal;
  • the seat of the arbitration;
  • other venues for hearings; and
  • language issues (both for submissions and the hearing and for the production of documents).

In the case of institutional arbitration, it is often wise simply to copy the standard clause of the chosen arbitration institution as published on its website.

The shortest valid arbitration clause we have seen read: “Arbitration, if any, amicably Hamburg.”

Default requirements
Are there any default legal requirements as to the selection of a tribunal - for example, concerning the number of arbitrators or their characteristics?

In the absence of an agreement, there will be three arbitrators (Section 1034(1) of the Code of Civil Procedure).

Where the parties have agreed that the tribunal shall consist of a sole arbitrator, but cannot reach agreement on the appointment, the sole arbitrator shall be appointed by the court upon a party filing a corresponding petition (Section 1035(3) of the code).

Where the parties have agreed on three arbitrators, each party shall appoint one arbitrator and the two arbitrators selected by the parties shall in turn appoint the third arbitrator, who shall preside over the tribunal (Section 1035(3) of the code).

If a party fails to appoint the arbitrator within one month of receiving notice from the other party, or if the two arbitrators cannot reach agreement regarding the third arbitrator within one month of their appointment, the court shall make the appointment upon a party filing a corresponding petition (Section 1035(3) of the code).

The Arbitration Rules of the German Institution of Arbitration (DIS) foresee a similar default procedure (Sections 12 and 14 of the DIS Rules).

The parties may specify in the arbitration agreement certain characteristics or requirements for the arbitrators and/or the chairman. 

Challenging the appointment of an arbitrator
Can the appointment of an arbitrator be challenged? Can an arbitrator be disqualified? What is the procedure for this?

The parties may agree on a procedure for challenging the appointment of an arbitrator (Section 1037(1) of the Code of Civil Procedure).

In the absence of an agreement, any challenge to the appointment of an arbitrator must be raised within two weeks of the party becoming aware of the composition of the tribunal or of circumstances that give rise to justified doubts as to an arbitrator’s impartiality or independence (Section 1037(2) of the code), or that an arbitrator does not possess the qualifications agreed by the parties.

Unless the arbitrator refuses to resign from office or the other party does not consent to the challenge, the tribunal shall rule on the challenge (Section 1037(2) of the code). The Arbitration Rules of the German Institution of Arbitration (DIS) prescribe a specific procedure with regard to the challenge of arbitrators and the tribunal's decision on the challenge (see Section 18 of the DIS Rules).

If the challenge is unsuccessful, the challenging party may file a petition for the court to decide on the challenge. This petition must be filed within one month of becoming aware of the tribunal’s decision to reject the challenge (Section 1037(3) of the code).

Jurisdictional objections
How should an objection to jurisdiction be raised?

An objection to the tribunal’s jurisdiction must be raised by no later than submission of the statement of defence; otherwise, the party will lose the right to object in this regard (Sections 1031(6) and 1040(1) of the Code of Civil Procedure). The tribunal is competent to decide on its own competence regarding the matter in dispute (Section 1040 of the code). If the tribunal rules on the objection in an interim decision, either party may apply for a court decision within one month. If a party fails to do so, it loses its right to object (Section 1027 of the code).  

If proceedings are brought before an ordinary court regarding a matter that is subject to an arbitration agreement, the court must dismiss the case as inadmissible, provided that the defendant raises an objection before the hearing on the merits of the case commences in accordance with Section 1032(1) of the code.

Replacement of an arbitrator
Why and how can an arbitrator be replaced?

An arbitrator will be replaced and a substitute arbitrator appointed in case of a successful challenge to or termination of the arbitrator’s appointment (Section 1039(1) of the Code of Civil Procedure). The appointment of an arbitrator terminates if:

  • he is unable to perform his functions, either legally or factually or within a reasonable period;
  • he resigns from office; or
  • the parties to the dispute agree on his termination.

Where the arbitrator does not resign or the parties are unable to agree on his termination, either party may file a petition to the court to obtain a decision in this regard (Section 1038(1) of the code).

The substitute arbitrator will be appointed in accordance with the procedure followed for the original appointment (Section 1039(1) of the code).

The Arbitration Rules of the German Institution of Arbitration (DIS)  foresee similar rules regarding the replacement of arbitrators (see Section 19 of the DIS Rules). 

Powers and obligations
What powers and obligations do arbitrators have?

Arbitrators have the power to:

  • decide on their own competence (Section 1040(1) of the Code of Civil Procedure);
  • issue interim relief measures (Section 1041 of the code);
  • decide on the general conduct of the proceedings, insofar as this is not determined by the parties’ agreement or the applicable arbitration rules (Section 1042 of the code);
  • issue a final and binding award (Section 1055 of the code); and
  • decide on the costs of the proceeding, provided that there are no specific provisions on cost (Section 1056 of the code). 

Liability of arbitrators
Are arbitrators immune from liability?

Not under the Code of Civil Procedure; although Section 44 of theArbitration Rules of the German Institution of Arbitration contains an exclusion of liability clause. In addition, under German law, arbitrators are typically held liable for any acts of gross negligence or wilful conduct. 

Communicating with the tribunal
How do the parties communicate with the tribunal?

In writing, by filing relevant statements or briefs. The tribunal may agree on different means of communication with the parties. 

Reaching decisions
Is unanimous agreement of the tribunal required? If there is disagreement, does the will of the majority suffice? What are the implications of this?

A unanimous agreement from the tribunal is not required. 

The award can be issued by majority decision. The dissenting arbitrator may write a dissenting opinion which may be attached to the award. However, unless the dissenting opinion contains explicit indications that the award may breach mandatory law, the dissenting opinion should have no detrimental implications, especially with regard to enforceability of the award.   

Arbitrability
Are there any disputes incapable of being referred to arbitration?

According to Section 1030 of the Code of Civil Procedure, any monetary claim may be the subject matter of an arbitration agreement. An arbitration agreement regarding non-monetary claims has legal effect insofar as the parties to the dispute are entitled to conclude a settlement regarding the subject matter of the dispute.

Disputes over tenancy relationships for residential space in Germany and labour law issues are not arbitrable. 

Can the arbitrability of a dispute be challenged?

Any award issued on the basis of an arbitration agreement which concerns a non-arbitrable dispute can be set aside by the competent ordinary court (Section 1059(2)(2)(a) of the Code of Civil Procedure). This requires a respective petition to the competent ordinary court. 

Jurisdiction and competence-competence
Is the principle of competence-competence recognised in your jurisdiction? Can a party to an arbitration ask the courts to determine an issue relating to the tribunal’s jurisdiction and competence?

The principle of competence-competence is recognised. 

Generally, a party cannot ask the courts to determine an issue relating to the tribunal's competence. Only an objection against the tribunal’s jurisdiction may be brought before the court.

Arbitral proceedings

Starting an arbitration proceeding
What is needed to commence arbitration?

In the case of ad hoc arbitration, unless the parties have agreed otherwise, the arbitration proceedings will commence on the date on which the respondent receives the petition to bring the dispute before a tribunal. The petition must designate the parties as well as the subject matter of the arbitration, and indicate that an arbitration agreement was concluded (Section 1044 of the Code of Civil Procedure). It is advisable to include a nomination of one arbitrator (Section 1035 of the code).

In the case of institutional arbitration, the relevant institution must typically be addressed first. Arbitration at the German Institution of Arbitration (DIS) commences when the claimant files the statement of claim with the DIS Secretariat (Section 6 of the DIS Rules). The content of the filing is described in detail in Section 6 of the DIS Rules. Other German institutional arbitration rules contain similar rules (eg, Article 3 of the Chinese European Arbitration Centre Rules).

Limitation periods
Are there any limitation periods for the commencement of arbitration?

If the party does not nominate its arbitrator within one month of receiving a request from the other party, on the request of the other party, the ordinary court is competent to nominate the arbitrator (Section 1035(3) of the Code of Civil Procedure).

The claimant must present its claim and the facts on which this is based within a period determined by the parties or the tribunal (eg, Section 6.4 of the German Institution of Arbitration Rules and Article 20(1) of the Chinese European Arbitration Centre Rules). The defendant must state its position in this regard (Section 1046(1) of the code).  

Procedural rules
Are there any procedural rules that arbitrators must follow?

The parties are to be treated equally. Each party is to be given an effective and fair legal hearing. Attorneys may not be prohibited from acting as attorneys in fact (Section 1042 of the Code of Civil Procedure; Sections 15 and 26 of the German Institution of Arbitration Rules). 

Dissenting arbitrators
Are dissenting opinions permitted under the law of your jurisdiction?

Dissenting opinions are not forbidden, but likewise there are no provisions that expressly allow them. In practice, dissenting opinions are accepted. However, any arbitrator issuing an dissenting opinion should be aware of the confidentiality of the internal deliberations of the tribunal (Section 43 of the German Institution of Arbitration Rules) in order to avoid a petition for reversal of an arbitral award under Section 1059(2)(1)(d) of the Code of Civil Procedure.

Judicial assistance
Can local courts intervene in proceedings?

Yes, in connection with:

  • the appointment of arbitrators (Sections 1034 and 1035 of the Code of Civil Procedure);
  • the challenge of an arbitrator’s appointment (Section 1037 of the code);
  • an interim ruling of the tribunal with respect to its own competence (Section 1040 of the code);
  • interim relief (Section 1041 of code); and
  • the taking of evidence (Section 1050 of the code). 

Can the local courts assist in choosing arbitrators?

Yes, in ad hoc arbitrations, where an arbitrator refuses the appointment or the parties cannot agree on the appointment of a sole arbitrator (Section 1035(4) of the Code of Civil Procedure). However, if the parties have agreed on the rules of an arbitration institution, these might provide differently.

What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration? Can the courts compel parties to arbitrate? Can they issue subpoenas to third parties?

The applicable law where a party fails to participate is the Code of Civil Procedure.  

The courts cannot compel parties to arbitrate.

The courts cannot issue subpoenas to third parties.

Third parties
In what instances can third parties be bound by an arbitration agreement or award?

An arbitration agreement or award binds only the parties to the arbitration agreement. However, a third party may join the arbitration proceedings if the parties so consent. Therefore, a third party may voluntarily join the arbitration proceedings upon a third-party notice, but cannot be forced to join the arbitration proceedings or enforce its joinder. 

Default language and seat
Unless agreed by the parties, what is the default language and location for arbitrations?

The tribunal shall determine the language of the proceedings if this has not been agreed between the parties (Section 1045(1) of the Code of Civil Procedure; Section 21 of the German Institution of Arbitration (DIS) Rules and Article 19 of the Chinese European Arbitration Centre Rules).

Unless otherwise agreed between the parties, the tribunal shall determine the seat according to the circumstances of the individual case (Section 1043(1) of the Code of Civil Procedure; Section 21 of the DIS Rules and Article 18(1) of the Chinese European Arbitration Centre Rules, which lists Hamburg as the seat of arbitration). However, the tribunal is free to hold oral hearings at any other place where appropriate. 

Gathering evidence
How is evidence obtained by the tribunal?

According to Section 1042(4) of the Code of Civil Procedure, the tribunal is competent to:

  • decide on the admissibility of evidence;
  • take such evidence; and
  • assess the results at its sole discretion. 

What kinds of evidence are acceptable?

Typically, witnesses, experts, documents and inspections are admissible (Section 27 of the German Institution of Arbitration Rules).  The tribunal is free to consider the International Bar Association Rules on the Taking of Evidence.

Confidentiality
Is confidentiality ensured?

German law does not provide for an explicit confidentiality obligation. However, the nature of arbitration requires arbitrators to keep matters confidential as an implicit requirement of their contract with the parties. 

Section 43 of the German Institution of Arbitration (DIS) Rules contains a comprehensive confidentiality obligation, obliging the parties, the arbitrators and the DIS Secretariat not to disclose information regarding the proceedings (Article 34(5) and Paragraphs (e) and (f) of the Annex to the Chinese European Arbitration Centre Rules contain a similar confidentiality obligation).  

Can information in arbitral proceedings be disclosed in subsequent proceedings?

In case of a subsequent court case (eg, for enforcement of a foreign arbitral award), matters which were initially confidential may be discussed in a public hearing of a court case.

Ethical codes
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

Arbitrators are not per se subject to any ethical or professional code. However, lawyers are subject to their professional code, which includes rules on ethical behaviour. These statutory provisions apply to all dealings of the lawyer, whether giving legal advice as counsel or acting as a representative in a court case or as an arbitrator in arbitration proceedings. 

Costs

Estimation & allocation
How are the costs of arbitration proceedings estimated and allocated?

The arbitrators’ costs must be negotiated. In many cases arbitration institutions provide for a fixed fee schedule.

Unless otherwise agreed by the parties, the tribunal shall specify in the arbitral award which party is to bear the costs of the arbitration proceedings, including those incurred by the parties in the proper pursuit of their claim or defence. The tribunal shall decide at its discretion, taking into account the circumstances of the case and, in particular, the outcome of the proceedings (Section 1057(1) of the Code of Civil Procedure).

The tribunal will usually adhere to the principle in German civil procedure that the costs will be allocated in proportion to the outcome – in other words, the unsuccessful party will bear the costs of the proceedings (see Section 35 of the German Institution of Arbitration Rules and Article 42 of the Chinese European Arbitration Centre Rules). However, in international arbitration proceedings (eg, pursuant to Article 37 of the International Chamber of Commerce Arbitration Rules), the arbitral tribunal may use its discretion under the circumstances. 

In its award the tribunal will also take into account the necessary costs of filing a request for arbitration or defending against such a request (Section 1057(1) of the Code of Civil Procedure). This includes the lawyers’ fees, because the principles for proceedings before state courts apply accordingly (Section 36 of the Lawyers’ Fee Act).

Security for costs
Can the national court or tribunal order security for costs under the law in your jurisdiction?

Under German law, both national courts and tribunals can order security for costs. 

The award

Requirements
What legal requirements are there for recognition of an award? Must reasons be given for the award? Does the award need to be reviewed by any other body?

The award must be made in writing and signed by the arbitrators. Where more than one arbitrator is involved, the signature of the majority of all members of the tribunal will suffice, provided that the reasons for any omitted signature are stated (Section 1054(1) of the Code of Civil Procedure).

The award shall state the reasons on which it is based, unless the parties to the dispute have agreed that reasons need not be provided or that it is an award on agreed terms (Section 1054(2) of the code).

The award shall further state the date on which it was delivered and the venue of the arbitration proceedings (Section 1054(3) of the code).

The Arbitration Rules of the German Institution of Arbitration (see Section 34) and the Chinese European Arbitration Centre Rules (Article 43) foresee similar rules.

Timeframe for delivery
Are there any time limits on delivery of the award?

Under German law, there are no explicit time limits on delivery of the award. However, the tribunal shall render an award within a reasonable period (Section 33 of the German Institution of Arbitration Rules; according to Article 31A(1) of the Chinese European Arbitration Centre Rules, within nine months).

Remedies
Does the law impose limits on the available remedies? Are some remedies not enforceable by the court?

The tribunal is to decide on the matter in dispute in accordance with the statutory provisions that the parties have designated as applicable to the subject matter of the dispute (Section 1051 of the Code of Civil Procedure). Therefore, the substantive law determines the remedies available in the arbitration proceedings. Although the parties are basically free to agree on remedies, any remedy must comply with the public order. In general, German law does not recognise the concept of punitive damages and punitive damages, at least in some cases, could thus be against the public order.

What interim measures are available? Will local courts issue interim measures pending constitution of the tribunal?

An arbitration agreement does not preclude the court from ordering, at the request of a party before or after arbitration proceedings have commenced, that interim measures be taken with regard to the subject matter of the dispute (Section 1033 of the code; Section 20(2) of the German Institution of Arbitration Rules and Article 26 of the Chinese European Arbitration Centre Rules).

Unless otherwise agreed by the parties, the tribunal may order, at the request of a party, provisional measures or measures to provide such security as it may consider necessary in respect of the subject matter of the dispute (Section 1041 of the code; Section 20(1) of the German Institution of Arbitration Rules and Article 26(6) of the Chinese European Arbitration Centre Rules).

Interest
Can interest be awarded?

This always depends on the substantive law. Interest can thus be awarded if the substantive law provides for interest and the claimant has claimed interest.  

At what rate?

Again, the rate is subject to the substantive law. 

Finality
Is the award final and binding?

The award is final and binding (Section 1055 of the Code of Civil Procedure). 

What if there are any mistakes?

Only fundamental mistakes may lead to the unenforceability of the award.

Can the parties exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?

German mandatory arbitration law does not provide for an appeal, as the award is final and binding (Section 1055 of the Code of Civil Procedure). Therefore, an explicit exclusion is not necessary under German law. 

Appeal
What is the procedure for challenging awards?

Generally, only the procedure for recognition and enforcement (Section 1059 of the Code of Civil Procedure and New York Convention) allows for fundamental objections to be raised against the award in order to prevent its recognition. 

On what grounds can parties appeal an award?

The law does not provide for the appeal of arbitral awards. The award is thus final and binding (Section 1055 of the Code of Civil Procedure). However, it is possible to agree to allow for an appeal within the arbitration proceedings, although this is not very common. 

Enforcement
What steps can be taken to enforce the award if there is a failure to comply?

Enforcement proceedings can be initiated in the same manner as for court judgments. 

Can awards be enforced in local courts?

Yes.

How enforceable is the award internationally?

This depends on the rules of the foreign state in which the award will be enforced.

To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

In civil and commercial matters, the state has no immunity at the enforcement stage.

Are there any other bases on which an award may be challenged, and if so, by what?

Unless a challenge is possible under the applicable enforcement rules (eg, violation of public order), the award may not be challenged in Germany.

How enforceable are foreign arbitral awards in your jurisdiction?

This depends on the jurisdiction in which the award was rendered. Germany enforces awards under the New York Convention.

Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?

Unless the foreign court decision setting aside the award has not been recognised and declared enforceable in Germany, the award can be subject to a recognition procedure in Germany. 

Third-party funding

Rules and restrictions
Are there rules or restrictions on third-party funders?

No.

Class-action or group arbitration

Concept
Is there a concept in your jurisdiction providing for class-action arbitration or group arbitration? If so, are there any limitations to the arbitrability of such claims or requirements that must be met before such claims may be arbitrated?

No.

Hot topics

Emerging trends
Are there any hot topics or trends emerging in arbitration in your jurisdiction?

An emerging hot topic is the application of mandatory law in international arbitrations and its foundation. Further, a minority is still discussing whether the European Rome I Regulation on the law applicable to contractual obligations (593/2008) must be observed within the European Union, because European law has priority over national arbitration law. The vast majority simply ignore this discussion because Section 1051 of the German Code of Civil Procedure contains a lex specialis.