The concept of a US-style "class action" does not strictly exist in Germany although claimants and defendants do have certain rights that enable them to file claims collectively. These are set out in Section 59 et seq. of the German Code of Civil Procedure (ZPO).
One of the main driving factors towards collective action is the reduction of the legal costs for each party. Furthermore, collective litigation may reduce the possibility of conflicting judgments arising from similar facts, and thereby increase certainty in the law.
Requirements for a "joinder of parties"
A "joinder of parties" exists if there is more than one person or legal entity as claimant or defendant. The parties must be independent from one another and have to be in the same stage in the proceedings. A "joinder of parties" does not arise where a collective body (e.g. an association of individuals who are capable of being a party to legal proceedings) sues or is being sued, since the body only constitutes one party.
Each party to the joinder is still legally independent which means that the statement of one party in the joinder does not necessarily affect the statement of another (Section 61 ZPO). That said, the Court will not consider the evidence of one party to the joinder in isolation and will have regard to the evidence of the other parties to the joinder. Further, as all the members are legally independent, each individual member of the joinder has to satisfy all necessary elements before its claim can succeed.
Whilst the courts have some discretion, the following factors are considered:
- Whether there must is an inherent connection between the claims of the different claimants.
- Whether the overall procedural burden will be reduced (by way of the joint hearing rather than holding several individual hearings).
- Whether contradicting or conflicting judgments (resulting from claims based on the same facts) can be avoided.
Different kinds of "joinder of parties"
The ZPO provides for two different kinds of joinder of parties:
i. A "necessary joinder" of parties (Section 62 ZPO).
ii. An "admissible joinder" of parties, which includes all the cases that do not fall under Section 62 ZPO (Section 59 and 60 ZPO).
The "necessary joinder" is an exception to the principle that the members remain independent from one another. The "necessary joinder" of parties can be split further into two different classes. Either:
a. where the joinder is required because there is a necessity for an identical outcome (e.g. where one claimant brings proceedings but judgment extends to joint litigants); or
b. where the joinder is required because collective action is necessary (“Rechtsverfolgung”) (e.g. where one person is not able to bring a claim because he lacks a right of action (“Sachbefugnis”), but has the right to sue collectively).
In both cases the judgment has to be consistent for all claimants/defendants involved.
Below are some examples of where, in general, a joinder of parties is required:
- A claim brought by the co-owners of a property;
- A claim in relation to a company - all the members of the company will be a joinder of parties; or
- A road traffic claim - a claim will be against the vehicle owner, the insurance company and the insurance policy holder.
A joinder of parties is permissible under Section 59 ZPO in cases where joint rights exist because the same matter is in dispute. A joinder of parties is also permissible in cases where the claimants/defendants sue or are being sued and there are identical legal and factual grounds, for example, where the individuals are party to the same contract.
The distinction between Section 59 and Section 60 ZPO is not always clear. In general, a joinder of parties will be possible if the claim arises because the legal and factual reasons for the claim are similar or at least the material parts are similar. Whilst it is not necessary for the claims to be identical, the claims must have an inherent connection. Simple similarities in the factual or economic background of the claims are not sufficient to give rise to a joinder.
It is not necessary for each of the parties to a joinder to be seeking the same form of relief. A joinder is therefore possible where the parties’ claims are quite different, as long as they are suing on the same contract.
Formation and termination
In general a joinder of parties originates from the collective commencement of proceedings by several claimants and/or against several defendants. A joinder of parties can also come into existence after proceedings have commenced in cases where a new party joins either the claimant or the defendant.
A joinder of parties is terminated (a) if one person takes the place of all the joint parties through separation (Section 145, 147 ZPO); or (b) by termination through a single action by a member of the joinder.
Other legal regulations
The “investor model procedural law” was enacted in 2005 and was designed to facilitate the claims of investors for wrong or misleading information regarding the money markets. Investors are now able to claim collectively, mainly for reasons of efficiency and acceleration of proceedings.
The district court of Düsseldorf is currently hearing a case that comes closer to a US-style "class action". The claimant is a stock company which regularly tries to enforce claims on behalf of consumers relating to infringements of national and international competition law. The stock company gains a right of action by consumers assigning to the stock company their right to sue. The stock company is then able to bring a claim at its own risk.
At the time of writing, the German Court has only handed down an interim judgment. It will be interesting to see what the Court has to say in its final judgment about the company’s ability to bring this type of collective action.
The interim judgment has already led to uproar, as many businesses are anxious about of the potentially significant claims for compensation which, in turn, may have severe consequences for those businesses (including insolvency).
Pending the final outcome of this case, serious discussion in Germany about the implementation of true “class actions” into the existing regulations seems inevitable.