Boris Kasolowsky and Carsten Wendler, Freshfields Bruckhaus Deringer LLP
This is an extract from the first edition of GAR’s The Guide to Challenging and Enforcing Arbitration Awards. The whole publication is available here.
Applicable requirements as to the form of arbitral awards
Applicable legislation as to the form of awards
1 Must an award take any particular form (e.g., in writing, signed, dated, place, the need for reasons, delivery)?
German law provides for form requirements for arbitral awards. Under Section 1054(1) of the German Code of Civil Procedure (ZPO), an award has to be in writing and signed by the arbitrators. If there is more than one arbitrator, the award need only be signed by the majority of the arbitrators, subject to the requirement that an explanation for the missing signatures is provided. Furthermore, the award shall specify the date and the seat of the arbitration (Section 1054(3), ZPO) and contain a statement of reasons, unless the parties have agreed otherwise (Section 1054(2), ZPO). Finally, a signed version of the arbitral award shall be transmitted to each party (Section 1054(4), ZPO). There are no additional requirements for transmission of the award. A formal transmission (e.g., service) is not required.
Applicable procedural law for recourse against an award
Applicable legislation governing recourse against an award
2 Are there provisions governing modification, clarification or correction of an award?
Section 1058 of the ZPO governs the modification, clarification and correction of an award. In the absence of an agreement to the contrary, each party may request the correction, interpretation or supplementation of an award within one month of receiving it. The tribunal has one month to correct or interpret the award and two months to supplement it. The correction, interpretation and supplementation of an award is subject to the form requirements under Section 1054 of the ZPO.
Appeals from an award
3 May an award be appealed to or set aside by the courts? If so, on what grounds and what procedures? What are the differences between appeals and applications for set-aside?
German arbitration law does not provide for an appeal mechanism. Although an arbitral award is final, the parties are free to agree on an appellate mechanism, which the German courts would then respect.
However, an award rendered in a German-seated arbitration can be challenged and potentially set aside (Section 1059, ZPO) (see also Federal Supreme Court (BGH), SchiedsVZ 2017, 103, 106). A party has three months from receipt of an award to challenge it. The grounds for a challenge are adopted from the UNCITRAL Model Law and are as follows:
- a party asserts that:
- a party to the arbitration agreement did not have the capacity to agree on arbitration, or the arbitration agreement is invalid;
- it has not been properly notified of the appointment of an arbitrator or of the arbitration proceedings, or was otherwise unable to present its case;
- the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration; or
- the composition of the arbitral tribunal or the arbitral procedure was not in accordance with a provision of German arbitration law or with an admissible agreement of the parties and this presumably affected the award; or
- the court finds that:
- the subject matter of the dispute is not arbitrable under German law; or
- recognition or enforcement of the award leads to a result that violates public policy.
In this context, it is important to emphasise that the setting aside proceeding is not considered an appeal against an award, as the court will not re-evaluate the merits of the case.
Applicable procedural law for recognition and enforcement of arbitral awards
Applicable legislation for recognition and enforcement
4 What is the applicable procedural law for recognition and enforcement of an arbitral award in your jurisdiction? Is your jurisdiction party to treaties facilitating recognition and enforcement of arbitral awards?
Arbitration proceedings in Germany are governed by the 10th book (Section 1025 et seq.) of the ZPO. Recognition and enforcement of arbitral awards are dealt with in Chapters 8 and 9 of the 10th book.
German arbitration law provides for different regimes regarding the recognition and enforcement of domestic (Section 1060, ZPO) and foreign awards (Section 1061, ZPO).
Germany is a party to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) as of 30 June 1961, the 1961 European Convention on International Commercial Arbitration (the Geneva Convention) as of 27 October 1964, and the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention) as of 18 April 1969.
The New York Convention
5 Is the state a party to the 1958 New York Convention? If yes, what is the date of entry into force of the Convention? Was there any reservation made under Article I(3) of the Convention?
Germany signed the New York Convention in 1958 – subject to the reservation made under Article I(3) regarding reciprocity – and ratified it on 30 June 1961. The Convention entered into force in Germany on 28 September 1961.
In 1998, Germany withdrew its reciprocity reservation. Thus, German courts will also enforce awards made in a state that is not a party to the New York Convention.
Recognition proceedings
Competent court
6 Which court has jurisdiction over an application for recognition and enforcement of arbitral awards?
The higher regional courts have jurisdiction over applications for the recognition and enforcement of arbitral awards.
For domestic awards, the jurisdiction lies with the higher regional court designated in the arbitration agreement or, failing any such designation, with the higher regional court in whose district the place of arbitration is situated (Section 1062(1), ZPO).
For foreign awards where there is no specific agreement between the parties, jurisdiction lies with the higher regional court in whose district the opposing party has its place of business or place of habitual residence, or where assets of that party or the property in dispute or affected by the measures are located. In the absence of any of the foregoing, the Higher Regional Court of Berlin will have jurisdiction (Section 1062(2), ZPO).
Jurisdictional issues
7 What are the requirements for the court to have jurisdiction over an application for recognition and enforcement of arbitral awards? Must the applicant identify assets within the jurisdiction of the court that will be the subject of enforcement for the purpose of recognition proceedings?
Other than the requirements stated in question 6, there are no additional requirements for a higher regional court to have jurisdiction over an application for the recognition and enforcement of arbitral awards.
If the jurisdiction is based on assets being located in the district of the higher regional court, the applicant bears the burden of proving that the assets are in fact situated within that district. Mere speculations (e.g., based on the fact that the respondent had prior business dealings with a bank located in that jurisdiction) may not suffice (Court of Appeal (OLG) Frankfurt, decision dated 23 May 2011 – 26 Sch 6/11, recently confirmed in its decision dated 5 December 2016 – 26 Sch 2/16). Moreover, it is not sufficient for jurisdictional purposes that the assets may have been located temporarily in that district (e.g., moving objects such as aeroplanes (Munich Court of Appeal, IPRspr 2011, 811, 812)).
For the purpose of jurisdiction, however, it is irrelevant whether the assets are sufficient to satisfy the award in full (OLG Cologne, BeckRS 2011, 19891; OLG Munich, BeckRS 2016, 09823) or whether the enforcement for the assets will eventually be possible (Supreme Court (KG), Berlin, SchiedsVZ 2007, 108, 111). In fact, the applicant does not have to show in detail whether the assets are suitable for potentially successful enforcement proceedings (OLG Munich, BeckRS 2016, 09823).
Form of the recognition proceedings
8 Are the recognition proceedings in your jurisdiction adversarial or ex parte?
Recognition and enforcement proceedings are adversarial (Section 1063(1)(2), ZPO). The recognition and the declaration of enforceability cannot be granted ex parte.
Form of application and required documentation
9 What documentation is required to obtain the recognition of an arbitral award?
The party seeking recognition and enforcement of an award must submit the original award or a certified copy of the award with its application (Section 1064(1), ZPO). A certified copy of a foreign award also needs to certify the authenticity of the arbitrator’s signature (OLG Munich, BeckRS 2016, 09823).
In contrast to Article IV of the New York Convention, German law does not require a party seeking enforcement to submit the original or a certified copy of the arbitration agreement. This more favourable national regulation not only applies to domestic awards but also to foreign awards in light of the principle of most favourable treatment contained in Article VII of the New York Convention (BGH, SchiedsVZ 2003, 281, 282).
Translation of required documentation
10 If the required documentation is drafted in a language other than the official language of your jurisdiction, is it necessary to submit a translation with an application to obtain recognition of an arbitral award? If yes, in what form must the translation be?
An application for recognition and enforcement must be in German and must be accompanied by the original of the arbitration award or a certified copy thereof. The application does not necessarily need to be accompanied by the arbitration agreement or a translation of the arbitration award. However, the court may request the arbitration agreement or a certified translation of the award by a sworn translator (Section 142, ZPO).
Pursuant to the requirements of the New York Convention, an application for the recognition and enforcement of a foreign arbitral award must be accompanied by a certified translation of the award made by an official or sworn translator or by a diplomatic or consular agent. However, in light of the principle of most favourable treatment, the German courts generally apply the more generous practice pursuant to which awards and clauses need not necessarily be translated (BGH, SchiedsVZ 2003, 281, 282).
Other practical requirements
11 What are the other practical requirements relating to recognition and enforcement of arbitral awards?
The party seeking recognition and enforcement of an award may submit its application to the court without being represented by a member of the German Bar. Only in cases where an oral hearing will be conducted does each party have to be represented by an attorney admitted to the German Bar (see Section 78(3), ZPO).
Moreover, the applicant is required to make an advance payment on the court costs based on the amount in dispute (Section 10 et seq. Courts Costs Act (GKG)).
Recognition of interim or partial awards
12 Do courts recognise and enforce partial or interim awards?
When deciding on the recognition and enforcement of an arbitral award, German courts will take into consideration the substance of the award rather than the language and labelling used by the tribunal. An award may only be recognised and enforced to the extent that it contains a final and binding decision. If a binding decision resolves the complete matter in dispute, it is referred to as a final award; if it merely deals with an independent or separable part of the main dispute, it is referred to as a partial award. Both a final and a partial award can be recognised and enforced (OLG Munich, BeckRS 2016, 06078).
Awards that decide on specific issues of a claim with a binding character on the tribunal only are often referred to as interim awards. They will generally not be recognised and enforced.
Interim measures ordered in the form of an award are also often referred to as interim awards. These types of interim awards have a binding character and may thus be recognised and declared enforceable by German courts (Section 1041(2), ZPO).
Finally, the decisions on jurisdiction do not fall within any of the foregoing descriptions. While they may be challenged before German courts within one month of being rendered (Section 1040(3), ZPO), they are not directly enforceable. However, any decision on costs issued in a decision on jurisdiction may be enforceable.
Grounds for refusing recognition of an award
13 What are the grounds on which an award may be refused recognition? Are the grounds applied by the courts different from the ones provided under Article V of the Convention?
Germany is a UNCITRAL Model Law state. The grounds for refusing recognition of domestic awards accordingly comprise: the invalidity of the arbitration agreement; violations of the right to be heard and to fairly present one’s case; the tribunal exceeding its jurisdiction; incorrect constitution of the tribunal; incorrectly conducted arbitral proceedings; a violation of public policy; and non-arbitrability of the dispute (Section 1060, ZPO). Incidentally, these are also the grounds for challenging domestic arbitral awards (Section 1059, ZPO).
If an application for a declaration of enforceability must be rejected and the arbitral award will be set aside because one of the grounds for setting aside specified in Section 1059(2) of the ZPO exists, Section 1059(4) of the ZPO shall apply mutatis mutandis and the case will be remitted to the arbitral tribunal (BGH, SchiedsVZ 2018, 318, 319).
For foreign awards, the grounds for refusing recognition contained in Article V of the New York Convention apply directly (Section 1061(1), ZPO) (see also, for example, BGH, SchiedsVZ 2017, 200). The party opposing recognition of the award bears the burden of proof for the existence of a ground for refusing recognition (see, for example, OLG Brandenburg, SchiedsVZ 2016, 43). Any aspect that could have, but out of negligence has not, been raised during recognition proceedings is precluded from being invoked during later enforcement proceedings (Frankfurt County Court (LG), SchiedsVZ 2017, 206).
Effect of a decision recognising an award
14 What is the effect of a decision recognising an award in your jurisdiction? Is it immediately enforceable? What challenges are available against a decision recognising an arbitral award in your jurisdiction?
German arbitration law distinguishes between recognition and enforcement. The main effect of the recognition of an award is the binding decision on the question of res judicata. The recognition of the award is a prerequisite for enforcement, but it does not render the award immediately enforceable. Unlike foreign awards, domestic awards do not require a recognition decision, but automatically have the effect of a German court decision (Section 1055, ZPO). The enforceability of the award requires a declaration of enforceability by the higher regional court. The declaration of enforceability of the court is the required title for the execution proceedings, which can be executed as any other title under German civil procedure (Section 794(1) (No. 4a), ZPO). In practice, the recognition and enforcement of foreign awards will usually be applied for and decided simultaneously.
Under Section 1065(1) of the ZPO, the parties are entitled to appeal a decision on recognition and enforcement to the Federal Court of Justice (Section 133 of the German Courts Constitution Act).
Decisions refusing to recognise an award
15 What challenges are available against a decision refusing to recognise an arbitral award in your jurisdiction?
The higher regional court’s decision refusing to recognise and enforce an award can be appealed to the Federal Court of Justice (Section 1065(1), ZPO).
Stay of recognition or enforcement proceedings pending annulment proceedings
16 Will the courts adjourn the recognition or enforcement proceedings pending the outcome of annulment proceedings at the seat of the arbitration? What trends, if any, are suggested by recent decisions? What are the factors considered by courts to adjourn recognition or enforcement?
In the case of pending annulment proceedings at the seat of arbitration, a German court may adjourn the recognition and enforcement proceedings (Article VI, New York Convention).
German courts have held that a party seeking adjournment in recognition and enforcement proceedings has to demonstrate the prospects of success of the annulment action (KG Berlin, SchiedsVZ 2013, 112, 118; BGH SchiedsVZ 2018, 53, 59). Moreover, in such instances, German courts will generally require the setting aside proceedings to have been formally commenced and to still be pending.
Security
17 If the courts adjourn the recognition or enforcement proceedings pending the annulment proceedings, will the defendant to the recognition or enforcement proceedings be ordered to post security? What are the factors considered by courts to order security? Based on recent case law, what are the form and amount of the security to be posted by the party resisting enforcement?
Commentators are divided as to whether Article VI of the New York Convention provides a basis for the German courts to order security. The prevailing opinion is that the courts have discretion to order security whenever they deem it necessary to preserve the applicant’s chances for successful execution of the award. However, there is no published case law available on this matter.
When ordering security in any civil proceeding, which should include proceedings for the recognition and enforcement of foreign arbitral awards, the courts generally require it to be approximately 110 per cent of the total amount claimed. The security can be – and often is – posted in the form of a bank guarantee (Section 108, ZPO).
Recognition or enforcement of an award set aside at the seat
18 Is it possible to obtain the recognition and enforcement of an award that has been fully or partly set aside at the seat of the arbitration? If an award is set aside after the decision recognising the award has been issued, what challenges are available against this decision?
German courts will generally deny the enforcement of a foreign arbitral award set aside at the seat of arbitration (BGH, NJW 2001, 1730, 1731; OLG Munich, SchiedsVZ 2012, 339, 341). However, it cannot be ruled out that a German court assuming exceptional circumstances may use its discretion to proceed with the recognition and enforcement notwithstanding the annulment of the award by the courts of the seat of arbitration.
A decision on the recognition and enforcement of an arbitral award that subsequently has been set aside at the seat of arbitration may be annulled by the competent higher regional court (Sections 1061(3), 1062(1)(No. 4) and 1062(2) ZPO).
Service
Service in your jurisdiction
19 What is the applicable procedure for service of extrajudicial and judicial documents to a defendant in your jurisdiction?
German civil procedure distinguishes between service of process ex officio (Sections 166 to 190, ZPO) and service between the parties (Sections 191 to 195, ZPO). In the former case, service may be conducted by clerks of the court, the postal service, an employee of the judiciary or a bailiff. If service between the parties is admissible or required, the parties may instruct a bailiff or rely on service between the parties’ attorneys.
Documents can only be served to a natural person, not a legal person. For legal persons, such as companies, it is sufficient to serve either the company’s legal representative or the entity’s director (Section 170, ZPO). If legal proceedings are pending, service is to be made to the attorney on record (Section 172, ZPO).
Service may be established by a certificate recording the service, service against a receipt, in person at the offices of the court, or a registered letter with acknowledgment of receipt. Service between attorneys is established by means of service against a receipt.
If none of the above-mentioned means of service is available, the document may be served by publication on the bulletin board and is deemed served one month after publication (Section 188, ZPO).
Service out of your jurisdiction
20 What is the applicable procedure for service of extrajudicial and judicial documents to a defendant out of your jurisdiction?
The procedure for service of documents out of the German jurisdiction is governed by international instruments (e.g., the Hague Service Convention of 15 November 1965 or Regulation (EC) No. 1393/2007), statutory provisions in the ZPO (Section 183 et seq.) and the Ordinance on Legal Assistance in Civil Matters (ZRHO).
If an international instrument provides for service by post, service shall be made by a registered letter with acknowledgment of receipt. In all other cases, service shall be made upon request by the presiding German judge directly through the public authorities of the relevant other state (Section 183(2), ZPO). The specific procedure for the transmission of documents through the transmitting agencies in Germany to the receiving agencies abroad is regulated by the ZRHO.
However, if there is no applicable international instrument, or the competent bodies of the foreign state refuse to provide legal assistance, then service may be made by the responsible diplomatic or consular mission of Germany in the relevant country or by any other competent German public authority (Section 183(3), ZPO).
If the documents cannot be served abroad, the option of service by publication exists (Section 185 (No. 3), ZPO).
Identification of assets
Asset databases
21 Are there any databases or publicly available registers allowing the identification of an award debtor’s assets within your jurisdiction?
There are several databases and registers available for identifying an award debtor’s assets. Such information may be found for companies in the commercial register; immovable property in the land register; ships in the ship register; aircraft in the aircraft register; and intellectual property (i.e., patents, trademarks, designs and utility models) in the register for intellectual property.
Moreover, schedules of assets prepared by bailiffs in enforcement proceedings are electronically stored for two years at www.vollstreckungsportal.de, to which bailiffs and other public enforcement institutions have access whenever they hold an enforcement title against a debtor. Private parties must request access through the competent bailiff (Sections 802f(6), 802d(1), ZPO). The schedule of assets will be available in the event that a debtor has previously been ordered by a court to give full disclosure of its assets (see question 22).
Information available through judicial proceedings
22 Are there any proceedings allowing for the disclosure of information about an award debtor within your jurisdiction?
Bailiffs properly charged with an enforcement may require an award debtor to make full disclosure of its assets and its financial situation (Sections 802a(2) (No. 2), 802c, 802e, 802f, 807(1), ZPO), including information with respect to immovable, movable and intangible property (Section 802c(2), ZPO).
Additionally, bailiffs may obtain information from the relevant public entity, such as the public pension funds, Federal Central Tax Office or Federal Motor Transport Authority, which has information regarding the ownership of cars registered in Germany (Section 802(1), ZPO).
Enforcement proceedings
Availability of interim measures
23 Are interim measures against assets available in your jurisdiction? May award creditors apply such interim measures against assets owned by a sovereign state?
Under German civil procedure, pre-award interim measures are generally available pursuant to Section 916 et seq. of the ZPO, which provide for an attachment and a preliminary injunction. While an attachment serves to secure a potential monetary award (Section 916, ZPO), a preliminary injunction is available to provisionally protect other rights or regulate legal relationships (Sections 935 and 940, ZPO). Pre-award interim measures granted by an arbitral tribunal may be declared enforceable by German courts (Section 1041, ZPO).
For arbitral award creditors, German arbitration law provides for a special regime to obtain interim measures. Pursuant to Section 1063(3) of the ZPO, an award creditor may request the preliminary enforceability of an arbitral award, which then forms the legal basis for interim enforcement measures. However, these may only comprise protective measures (e.g., the freezing of bank accounts, the attachment of tangible assets or company shares). In principle, the proceedings pursuant to Section 1063(3) prevail over the proceedings pursuant to Sections 916 et seq. (LG Braunschweig, SchiedsVZ 2015, 292, 294).German courts dealing with the enforceability of an arbitral award may also issue an order that enforces the interim measures of protection of the arbitral tribunal (Section 1063(3), ZPO).
Interim measures may also be granted against assets owned by a sovereign state. However, German courts will apply the sovereign immunity doctrine used in regular execution proceedings (Federal Constitutional Court (BVerfG), NJW 1983, 2766, 2768). Assets that serve a diplomatic purpose, for example, cannot be subject to interim measures (e.g., bank deposits for expenses of a diplomatic mission) (BVerfG, NJW 1978, 485, 486, 487). Interim measures against assets that are not serving a public function (e.g., bank deposits from a state-owned entity that shall be transferred to the foreign state’s central bank to cover its budget) are admissible (BVerfG, NJW 1983, 2766, 2768).
Procedure for interim measures
24 What is the procedure to apply interim measures against assets in your jurisdiction? Is it a requirement to obtain prior court authorisation before applying interim measures? If yes, are such proceedings ex parte?
Interim measures pursuant to Section 1063(3) of the ZPO are only available for (domestic and foreign) awards that are the subject matter of proceedings for a declaration of enforceability before the competent higher regional court. A court authorisation is required, which can only be granted upon a specific request of the party seeking the declaration of enforceability.
The competence to grant interim measures lies with the presiding judge of the senate of the higher regional court dealing with the application for a declaration of enforceability. Section 1063(3) of the ZPO does not contain any explicit requirements for granting interim measures. The presiding judge therefore has wide discretion. In making his or her decision, the presiding judge will consider the prospects of success of the proceedings for the declaration of enforceability; the impact on the award debtor; and most notably the risks of the respondent taking steps to frustrate the enforcement of the award. Courts have granted such interim measures when the award debtor had intangible and movable assets in Germany, which could easily have been transferred outside Germany (OLG Frankfurt, SchiedsVZ 2010, 227, 228).
To ensure the effectiveness of the protective interim measures, proceedings pursuant to Section 1063(3) of the ZPO may be conducted ex parte. The interests of the award debtor are protected mainly by being permitted to provide security to prevent the enforcement (Section 1063(3)(3), ZPO). Security may be provided in form of a bank guarantee.
The decision of the presiding judge is final and may not be challenged (BGH, decision dated 7 July 2016 – I ZB 90/15). However, the decision may be amended and revoked at any time, especially if the original circumstances have changed.
An order for interim measures granted by the presiding judge constitutes the legal title that is the basis for the interim measures described below (see questions 25 to 27).
Interim measures against immovable property
25 What is the procedure for interim measures against immovable property within your jurisdiction?
German civil procedure law distinguishes between various types of enforcement proceedings depending on the substantive claim of the enforceable title. In the interests of simplicity, the sections on enforcement proceedings referred to below assume that the enforceable title secures a monetary claim.
The order of interim measures pursuant to Section 1063(3) of the ZPO may, in principle, form the basis of protective interim measures against immovable property.
In this situation, the award creditor may request the land register to register an equitable mortgage on the award debtor’s immovable property (Section 867, ZPO). The awarded amount must exceed €750 without interest (Section 866(3), ZPO). The respondent has to be either listed as the owner of the property (Section 39, Land Registry Rules (GBO)) or be a legal successor (Section 40, GBO). The latter must be proven by the applicant.
Interim measures against movable property
26 What is the procedure for interim measures against movable property within your jurisdiction?
The order of interim measures pursuant to Section 1063(3) of the ZPO may form the basis of protective interim measures against movable property.
Movable assets that are at risk of being transferred outside Germany may be attached by way of a temporary seizure pursuant to Section 808 of the ZPO. A temporary seizure will be performed by a bailiff (Section 803, ZPO) of the local court in whose district the movable assets are located.
The debtor will generally be allowed to remain in possession of his or her assets, but cannot dispose of them (i.e., the assets are frozen). The bailiff must inform the debtor of the performed seizure (Section 808(3), ZPO).
Interim measures against intangible property
27 What is the procedure for interim measures against intangible property within your jurisdiction?
The order of interim measures pursuant to Section 1063(3) of the ZPO may form the basis of protective interim measures against intangible property.
Intangible property is secured by attachment pursuant to Sections 829 et seq. of the ZPO. However, in this context, the intangible assets may not be transferred to the award creditor. The application must be made to the court that is local to where the award debtor has its seat or where the intangible assets are located (Sections 828(2), 12, 13, 17, 23, ZPO). The most common protective measures are the attachment (i.e., freezing) of bank accounts (Sections 829 and 833a, ZPO) and claims to money (Section 829, ZPO). Shares in a limited liability company (Section 857, ZPO) and shares in other types of companies (Section 859, ZPO)) can also be subject to attachment pursuant to Sections 829 et seq. of the ZPO. Note that registered shares (Section 821, ZPO) are regarded as tangible movable property and are thus subject to the regime described in question 26.
Patents, trademarks, designs and utility models may also be attached. Attachment can be registered at the register for intellectual property.
Attachment proceedings
28 What is the procedure to attach assets in your jurisdiction? Is it a requirement to obtain prior court authorisation before attaching assets? If yes, are such proceedings ex parte?
There are three (main) steps for attaching assets on the basis of the enforcement of an award in Germany.
First, the award creditor has to obtain a declaration of enforceability of the award from the competent higher regional court (Sections 1060 and 1061, ZPO). These proceedings cannot be conducted ex parte (Section 1063(2), ZPO). Once the award has been declared enforceable, the clerk of the court will issue the certificate of execution (Sections 794(1) (No. 4a), 795, 724(1), ZPO), which is the legal basis for the attachment proceedings.
Second, the documentation has to be served on the respondent (Section 750(1), ZPO). The third step is the initiation of the execution procedure for attaching the specific type of asset (i.e., immovable, movable or intangible property (see questions 29 to 31)).
Attachment against immovable property
29 What is the procedure for enforcement measures against immovable property within your jurisdiction?
Immovable property is attached by ordering the registration of a compulsory mortgage at the land registry (Section 867, ZPO). The awarded amount must exceed €750 without interest (Section 866(3), ZPO). The respondent must either be listed as the owner of the property (Section 39, GBO) or be a legal successor (Section 40, GBO). The latter must be proven by the applicant.
Execution is then effected by either a compulsory administration or a compulsory sale in a public auction of the immovable property (Section 866(1), ZPO). Both enforcement measures have to be requested at the enforcement court (i.e., the court that is local to the district where the immovable property is located (Section 1(1) of the Foreclosure Law (ZVG)). Compulsory administration is applied for in cases where the immovable property generates profits that can be used to satisfy the award (Sections 146 to 161, ZVG). The compulsory sale generally takes a considerable period of time and the award debtor has various options to stop the procedure and thus to keep his property (Sections 30, 30(a) to (d), 31, 85(a), ZVG).
Attachment against movable property
30 What is the procedure for enforcement measures against movable property within your jurisdiction?
Movable property can be attached by way of seizure (Section 803, ZPO). An application must be made to the court that is local to the place where attachment is sought. In principle, the applicant may instruct the bailiff to attach specific objects to the extent that the performance of the instruction does not (1) infringe legitimate interests of the respondent, (2) cause unnecessary costs, or (3) cause undue pressure on the respondent. Certain objects are excluded from attachment (e.g., property used in connection with the respondent’s employment) (Sections 811, 812, ZPO). Execution is then effected by compulsory sale in a public auction (Section 814 et seq., ZPO).
Attachment against intangible property
31 What is the procedure for enforcement measures against intangible property within your jurisdiction?
Attachment and execution against intangible property is effected by ordering its attachment and its transfer. Intangible property may comprise claims against third parties, such as claims to money, claims to the delivery of goods, or other rights (e.g., shares in a company). Such an order has the legal effect of assigning the claim of the award debtor against a third party to the award creditor (Sections 829, 835, 857, 886, ZPO). Patents, trademarks, designs and utility models may also be attached and transferred to the award creditor (Section 857, ZPO).
Generally, an application has to be directed to the court that is local to where the award debtor has its seat in Germany or where the intangible assets are located (Section 828(2), 12, 13, 17, 23, ZPO). The third party does not need to be heard prior to the attachment (Section 834, ZPO). The claim to be attached can be due in the future, but execution can only be ordered when the claim is due (Section 751(1), ZPO). Certain claims are excluded from attachment (e.g., the earned income of the award debtor may only be attached to a certain extent) (Sections 850 et seq., ZPO).
Moreover, an applicant may also preliminarily attach claims that an award debtor has against third parties (Section 845, ZPO).
Enforcement against foreign states
Applicable law
32 Are there any rules in your jurisdiction that specifically govern recognition and enforcement of arbitral awards against foreign states?
There are no domestic, codified rules that specifically govern recognition and enforcement of arbitral awards against foreign states. Thus, German courts will apply the general rules on recognition and enforcement and the general sovereign immunity principles described in questions 33 to 35.
Service of documents to a foreign state
33 What is the applicable procedure for service of extrajudicial and judicial documents to a foreign state?
Service on a foreign state in its capacity as a defendant in a proceeding depends on whether the proceeding relates to acta jure gestionis or acta jure imperii. In the case of acta jure gestionis, the general procedure applies (see question 20). However, it should be noted that even if international agreements allow for service by other means, German authorities are likely to serve the foreign state through diplomatic means.
For acta jure imperii cases, international agreements may not apply (see, for example, Court of Justice of the European Union (BeckEuRS 2015 432880)) and service on a foreign state will be made through diplomatic or consular channels (Section 183(3), ZPO). In practice, the German foreign mission will be commissioned with servicing the state authority responsible for receiving extrajudicial and judicial documents. Service to the diplomatic mission of the foreign state in Germany is generally not permissible as the diplomatic mission will usually not have the authority to receive such documents.
Immunity from enforcement
34 Are assets belonging to a foreign state immune from enforcement in your jurisdiction? If yes, are there exceptions to such immunity?
To apply rules on state immunity in enforcement proceedings, it is necessary to differentiate between the declaration of enforcement and the execution proceedings. With regard to the former, German courts will have to determine whether the arbitration dealt with acta jure imperii or acta jure gestionis. By contrast, in execution proceedings, courts will have to distinguish between assets used for a sovereign purpose and assets used for a commercial purpose. This distinction is made on the basis of the doctrine of limited sovereign immunity. Accordingly, an award can be enforced against assets of a foreign sovereign that are situated in Germany and have commercial use. State assets that fulfil a sovereign purpose, however, are protected against an enforcement measure (BVerfG, NJW 2012, 293, 295), unless the foreign state gives its consent to enforcement against that particular asset (BVerfG NJW 2012, 293, 295).
Waiver of immunity from enforcement
35 Is it possible for a foreign state to waive immunity from enforcement in your jurisdiction? If yes, what are the requirements of such waiver?
Under German law, the agreement to arbitrate is generally understood as a waiver of immunity for the purposes of the arbitration proceedings and, most likely, for the declaration of enforceability (BGH, SchiedsVZ 2013, 110, 112; BGH SchiedsVZ 2018, 53, 54). However, the waiver of immunity resulting from an arbitration agreement will not extend to the execution proceedings (BGH, SchiedsVZ 2013, 110, 112; BGH SchiedsVZ 2018, 53, 54). For execution proceedings, an explicit or implicit waiver is required. The latter requires the clear intent of the state to make available for enforcement those of its assets that are protected by immunity.
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