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Damages and costs
What rules and standards govern the calculation and award of damages?
The basic rule under German damages law is that the person liable must restore the position that would exist if the circumstance obliging him to pay damages had not occurred (principle of restoration). If restoration is not possible, as is often the case, the person liable for damages has to compensate the claimant so as to restore the state that would exist without the damaging event.
Statutory prospectus liability cases
The claimant in a prospectus liability case may file for the reimbursement of the purchase price against the return of the securities, as well as the costs usually involved in the purchase if it still owns the securities. Otherwise, if the claimant is no longer the owner of the securities, damages are calculated on the difference between the purchase price and the selling price, as well as the costs usually involved in the purchase and the disposal. In both cases, the purchase price is limited to the initial issue price of the securities.
Ad hoc liability cases
With regard to ad hoc liability, the Federal Court of Justice grants a right to choose between the following two types of damage:
- Reimbursement of the purchase price against return of the securities if reliance is established; or
- The price difference between the purchase price and the hypothetical purchase price had the issuer complied with its disclosure obligations.
Are damages capped?
Caps for of damages exist in specific areas under German law, but there are no caps with regard to securities-related damages.
Are punitive damages allowed?
Punitive damages are alien to German law. The claimant is entitled to claim only for actual occurred damages.
Are any other remedies available?
The defendant may also be liable for reimbursement against return of the securities, which is described above.
Who bears the costs of proceedings? Can this burden be shifted in any way?
Under the German law of civil procedure, the unsuccessful party bears the costs of the lawsuit. This includes the court costs, as well as extra-judicial costs such as own and the opponent’s lawyer's fees. Where both parties have partially won the case, the costs will be borne separately on a pro rata basis.
The cost burden of the losing party can be shifted only in the rare case of an immediate acknowledgment of the claim by the defendant, where the defendant has not given cause for an action to be brought. However, the costs (not the burden itself) can be at least partly reduced:
- for the claimant if it withdraws the lawsuit;
- for the defendant if it acknowledges the claim; or
- for both parties where the parties declare the lawsuit terminated or agree to settle.
How are costs calculated? Does interest accrue on costs?
The litigation costs include court fees and extra-judicial costs. Court fees will be determined based on the value of the dispute pursuant to the Court Fees Act. Attorney’s fees are, if no agreement on remuneration has been made, calculated in accordance with the Code for the Remuneration of Lawyers and determined also on the value of the dispute. The prevailing party’s claim to reimbursement of their own attorney’s fees against the losing party is capped under the Code for the Remuneration of Lawyers. The prevailing party must file a petition for assessment of the amount to be reimbursed with the court of first instance. Interest on costs accrues principally upon the date on which the court receives the petition regarding the assessment of costs. Interest amounts to five percentage points above the base rate of interest, which is currently minus 0.88%.
What rules and procedures apply to the provision of security for costs?
Sections 110 and following of the Code of Civil Procedure apply for the provision of security for costs. The claimant does not have to provide security for costs unless the defendant demands it. However, the claimant is not required to provide security for costs if it:
- has its habitual place of abode in an EU or European Economic Area member state; or
- is exempt from the obligation to provide security for costs under international treaties (eg, the Hague Convention on Civil Procedure 1954).
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