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Background

Concept of sovereign immunity

What is the general approach to the concept of sovereign immunity in your state?

German courts follow international law rules on restrictive immunity. The concept of restrictive immunity refers to the principle that a state may enjoy immunity in domestic courts when exercising its sovereign power (acta jure imperii) but not for commercial activities (acta jure gestionis).

Legal basis

What is the legal basis for the doctrine of sovereign immunity in your state?

Germany does not have a specific domestic law on state immunity. As confirmed by various German courts, the legal basis for the doctrine of sovereign immunity in Germany is customary international law. Pursuant to article 25 of the German Basic Law, the general rules of international law (ie, customary international law) is an integral part of federal law and shall take precedence over the laws.

The doctrine of sovereign immunity is also reflected in the German Courts Constitution Act governing the jurisdiction and organisation of German courts. For example, according to section 20, paragraph 2 of the Courts Constitution Act, German jurisdiction shall not apply to persons insofar as they are exempt therefrom, pursuant to the general rules of international law or on the basis of international agreements.

Multilateral treaties

Is your state a party to any multilateral treaties on sovereign immunity? Has the state made any reservations or declarations regarding the treaties?

Germany ratified the 1972 European Convention on State Immunity on 15 May 1990. It declared that, in cases not falling within articles 1 to 13 of the Convention, German courts are entitled to entertain proceedings against another contracting state to the extent that its courts are entitled to entertain proceedings against states not party to the Convention. Such a declaration is without prejudice to the immunity from jurisdiction that foreign states enjoy in respect of acts performed in the exercise of sovereign authority.

Germany has not signed or ratified the 2004 United Nations Convention on Jurisdictional Immunities of States and Their Property.

Jurisdictional immunity

Domestic law

Describe domestic law governing the scope of jurisdictional immunity.

Foreign states enjoy jurisdictional immunity based on customary international law, pursuant to article 25 of the German Basic Law (see question 2).

Sections 18 and 19 of the German Courts Constitution Act stipulate that the members of the diplomatic missions, their families and their private servants, as well as members of the consular posts, including the honorary consular officers, shall be exempt from German jurisdiction. Pursuant to section 20, paragraph 1 of the Courts Constitution Act, German jurisdiction does not apply to representatives of other states and persons accompanying them who are staying in the territory of application of this Act at the official invitation of the Federal Republic of Germany. In addition, section 20, paragraph 2 extends the exemption from German jurisdiction to persons that are exempt from German jurisdiction pursuant to the general rules of international law, international agreements or other legislation. This applies to heads of states, heads of governments and ministers of foreign affairs.

State waiver of immunity or consent

How can the state, or its various organs and instrumentalities, waive immunity or consent to the exercise of jurisdiction?

Immunity may be waived either explicitly or by implication (eg, by taking a substantive step in proceedings).

In which types of transactions or proceedings do states not enjoy immunity from suit (even without the state’s consent or waiver)? How does the law of your country assess whether a transaction falls into one of these categories?

In Germany, foreign states do not enjoy immunity from suits in respect to non-sovereign acts.

The decisive characteristic for the distinction between acta jure imperii and acta jure gestionis is, as repeatedly held by the German Federal Supreme Court, ‘the nature of the act of the state or of the underlying legal relationship’. In other words: did the state exercise its sovereign power or did it act like any private person?

If one of the exceptions to sovereign immunity set out above applies, is there any related principle that could prevent a court having jurisdiction over the state?

As, according to the Federal Constitutional Court, the act of state doctrine cannot be considered part of the general rules of international law and is, therefore, not applicable in the German legal order, German courts are entitled to examine foreign sovereign acts where an exception to state immunity is given.

 

Proceedings against a state enterprise

To what extent do proceedings against a state enterprise or similar entity affect the immunity enjoyed by the state? Is there precedent for piercing the corporate veil to subject the state itself to those proceedings?

While the immunity of state-owned enterprises is subject to debate, the prevailing jurisprudence of the higher German courts generally holds that immunity can be recognised only in respect of any specific sovereign acts. A state-owned enterprise may not claim immunity as regards acts of a commercial nature.

Standing

What is the nexus the plaintiff needs to have standing to bring a claim against a state?

As a general procedural prerequisite for initiating a court case in Germany, the plaintiff must invoke that it is a potential holder of a right to have standing to bring a claim against the defendant.

Nexus of forum court

What is the nexus the forum court requires to exercise jurisdiction over a state if the property or conduct that forms the subject of the claim is outside the forum state’s territory?

Where neither property nor conduct is located in Germany, German courts might generally be quite reluctant to assume jurisdiction. However, there are several exemptions to that principle.

For example, the competent court for summary proceedings in relation to a payment order is the local court where the claimant has his or her general venue (see section 689, paragraph 2 of the Code of Civil Procedure). Further, section 29 of the Code of Civil Procedure stipulates that for any disputes arising from a contractual relationship or disputes regarding its existence, the court of that location shall have jurisdiction at which the obligation is to be performed that is at issue.

Interim or injunctive relief

When a state is subject to proceedings before a court or arbitral tribunal in your jurisdiction, what interim or injunctive relief is available?

There are two types of interim relief available in Germany: seizure and injunctions.

The latter relates only to issues regarding the subject matter of the proceedings. Pursuant to section 935 of the Code of Civil Procedure, a party that is concerned that a change of the status quo might frustrate the realisation of its right, or might make realisation of such a right significantly more difficult, may apply for an injunction.

Section 916 of the Code of Civil Procedure stipulates that seizure is a remedy serving to secure compulsory enforcement against movable or immovable property for a monetary claim or a claim that may evolve to become a monetary claim. To obtain a seizure, the petitioner needs to demonstrate that it has a monetary claim against the respondent and that there are reasons to believe that, without the interim relief, the petitioner’s chances to enforce its claim against the respondent’s assets would be seriously hampered or rendered impossible. Such a reason exists, for example, where the respondent is said to move assets out of the country.

Final relief

When a state is subject to proceedings before a court or arbitral tribunal in your jurisdiction, what type of final relief is available?

Any type of relief may be claimed against a state.

Service of process

Identify the court or other entity that must be served with process before any proceeding against a state may be issued.

There is no precondition as to the effect that a court or entity must be served with process prior to service on the respondent state.

How is process served on a state?

According to section 54 of the Regulation on Civil Proceedings, a claim against a foreign state will be forwarded to the Federal Office of Justice. The Federal Foreign Office (Ministry of Foreign Affairs) will serve the documents via diplomatic channels (ie, the competent German diplomatic mission).

Judgment in absence of state participation

Under what conditions will a judgment be made against a state that does not participate in proceedings?

When a respondent does not participate in proceedings (ie, by not appearing before the court or refusing to file submissions), a claimant may apply for a default judgment pursuant to section 331 of the Code of Civil Procedure. In this case, the court will assess the relief sought on the basis of the facts as presented by the claimant.

 

Enforcement immunity

Domestic law

Describe domestic law governing the scope of enforcement immunity.

Germany does not have a specific law governing enforcement immunity of foreign states. Customary international law guarantees foreign states enforcement immunity with respect to property in use or intended for use for sovereign or public purposes. German courts directly apply customary international law pursuant to article 25 of the German Basic Law, which stipulates that the general rules of international law form an integral part of federal law and take precedence over other laws.

Application of civil procedure codes

When enforcing against a state, would debt collection statutes and the enforcement sections of civil procedure codes or similar codes also apply?

In the case of enforcement measures against foreign states, German debt collection statutes and the enforcement sections of the German Code of Civil Procedure would generally apply.

Consent for further enforcement proceedings

Does a prior submission to the jurisdiction of a court or tribunal constitute consent for any further enforcement proceedings against the property of the state?

The German Federal Supreme Court held that a foreign state’s prior waiver of jurisdictional immunity or consent to the exercise of jurisdiction does not constitute the state’s consent to any further enforcement proceedings.

It is generally held that a waiver of immunity resulting from an arbitration agreement does not extend to the enforcement proceedings stage. The German Federal Supreme Court recently ruled that this issue must not be decided if the arbitration clause states that the award shall be enforced according to the law of the enforcing state. This was deemed as a waiver of immunity in respect of enforcement proceedings before German courts. If this is not the case, a waiver resulting from an arbitration agreement will not extend to the execution proceedings, for which, a separate explicit or implicit waiver is required.

Property or assets subject to enforcement or execution

Describe the property or assets that would typically be subject to enforcement or execution.

German courts directly apply rules of customary international law (see question 2 on article 25 of the German Basic Law). Property or assets of foreign states in use or intended for commercial use and not for sovereign purposes is therefore subject to enforcement or execution in Germany.

Assets covered by enforcement immunity

Describe the assets that would normally be covered by enforcement immunity and give examples of any restrictive or broader interpretations adopted by the courts.

Enforcement against the property of a foreign state that is presented or situated in German territory is inadmissible without the consent of the foreign state if such property serves sovereign purposes of the foreign state. This especially includes property or assets serving the fulfilment of official functions of diplomatic missions of the foreign state.

The German Federal Constitutional Court noted that claims against a general current bank account of the embassy of a foreign state that exists in the state of the forum and where the purposes include covering the embassy’s costs and expenses are not subject to forced execution by the state of the forum.

In the case of ‘mixed use’ property of foreign states, the Federal Constitutional Court noted that customary international law does not preclude enforcement measures with respect to such parts of property in use or intended for commercial purposes.

Notably, the German Federal Constitutional Court held that a general waiver of immunity contained in notes issued by a foreign state, may be sufficient to waive immunity for enforcement proceedings. According to the Federal Constitutional Court, this waiver may, however, not be construed as a waiver of sovereign immunity in relation to an embassy’s bank accounts if those bank accounts are needed to uphold the rudimentary functioning of the embassy.

Explain whether the property or bank accounts of a central bank or other monetary authority would be covered by enforcement immunity even when such property is in use or is intended for use for commercial purposes.

German courts directly apply customary international law on enforcement immunity. Generally, a central bank or other monetary authority is protected by enforcement immunity. The German Federal Constitutional Court repeatedly declared that forced execution of judgment by the state of the forum under a writ of execution against a foreign state that has been issued in respect of non-sovereign acts of that state, or property of that state within the territory of the state of forum, is unlawful without the consent of the foreign state if such property serves sovereign purposes of the foreign state. With regard to bank accounts of a foreign state, the Federal Constitutional Court clarified that the decisive criterion is the purpose of the funds in the bank account.

The German Federal Supreme Court decided that currency reserves of a foreign state’s central bank, in a bank account administered by a third-party debtor in Germany, serve sovereign or public purposes of the foreign state. It also decided that such a bank account is covered by enforcement immunity and cannot be subject to forced execution in Germany.

The Federal Supreme Court further noted that property or bank accounts of central banks or other monetary authorities enjoy absolute enforcement immunity under the United Nations Convention on Jurisdictional Immunities of States and Their Property, and that the Convention - which has not yet come into effect - reflects trends of commonly accepted rules of international law.

Test for enforcement

Explain whether domestic jurisprudence has developed any further test that must be satisfied before enforcement against a state is permitted.

In Germany, domestic courts generally have not developed any further test that must be satisfied before enforcement against a foreign state is permitted.

However, if a claim or enforcement action is solely based on the fact that property or funds of a foreign state are located in Germany, which would allow German courts to have jurisdiction pursuant to section 23 of the Code of Civil Procedure, German courts require a sufficiently close nexus to Germany.

Service of arbitration award or judgment

How is a state served with process or otherwise notified before an arbitration award or judgment against it (or its organs and instrumentalities) may be enforced?

Pursuant to section 750 and sections 794, paragraph 1, No. 4, letter a, 795 of the German Code of Civil Procedure, enforcement may be commenced only if judgments or decisions declaring arbitration awards as enforceable are served. According to section 54 of the Regulation on Civil Proceedings, documents to be served to a foreign state will be forwarded to the Federal Office of Justice. The Federal Foreign Office (Ministry of Foreign Affairs) will serve the documents via diplomatic channels (ie, the competent German diplomatic mission).

 

History of enforcement proceedings

Is there a history of enforcement proceedings against states in your jurisdiction? What part of these proceedings is based on arbitral awards?

While there is a plethora of German jurisprudence in relation to enforcement proceedings against states, the percentile relating to the enforcement of arbitral awards cannot be stated with absolute certainty.

Public databases

Are there any public databases through which assets held by states may be identified?

No.

Court competency

Would a court in your state be competent to assist with or otherwise intervene to help identify assets held by states in the territory?

No.

Immunity of international organisations

Specific provisions

Does the state’s law make specific provision for immunity of international organisations?

Pursuant to section 20, paragraph 2 of the Courts Constitution Act, the jurisdiction of German courts does not extend to persons listed in section 18 of the Act (diplomats accredited to Germany, their families, and domestic staff members), section 19 (members of the consular staff in Germany), and section 20, paragraph 1 (representatives of foreign states and their attendance officially visiting Germany), and, furthermore, to ‘other persons’ enjoying jurisdictional immunity according to the general rules of international law (ie, customary international law), the rules of international treaties, or other legal rules. International organisations were counted among those ‘other persons’, either with reference to specific immunity clauses in international agreements establishing an international organisation to which Germany is a party (or protocols on privileges and immunities that complement such agreements), or with reference to general rules of international law.

Further, according to article 3 of the German Law on the Accession of the Federal Republic of Germany to the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations of 21 November 1947, the Federal Government, upon consent of the Federal Council, has the express power to extend the application of the Convention’s rules on immunity to other international organisations.

Domestic legal personality

Does the state consider international organisations headquartered or operating in its territory as enjoying domestic legal personality and could such organisations be subjected to proceedings before a court or arbitral tribunal?

With respect to most international organisations created after 1945, their constituent treaties expressly provide that they enjoy legal personality within the treaty member states. This also applies to Germany as a member state of an international organisation. The domestic legal personality of international organisations is often functionally limited in nature (see, eg, article 104 of the UN Charter or article XV of the Statute of the International Atomic Energy Agency). Also ‘headquarters agreements’ or ‘seat agreements’, as bilateral treaties between an international organisation and Germany where the organisation has its headquarters or seat, typically include further provisions on the domestic legal personality of an international organisation.

The determination of domestic legal personality is more difficult where Germany is neither a member state of a particular international organisation nor bound to accord domestic legal personality in a headquarters or host agreement. In this case, German courts could have recourse to a customary international law rule providing for legal personality or to principles of private international law through which the domestic legal personality enjoyed by an international organisation in a third country can be recognised.

As outlined above, the legal basis for international organisations that are subjected to proceedings before domestic courts can be found in German legislation. According to section 20, paragraph 2 of the German Courts Constitution Act, international organisations that enjoy immunity under international law are exempted from the jurisdiction of German courts. This was confirmed by the Labour Court of Munich in a case initiated against the European Patent Organisation, among others.

Enforcement immunity

Would international organisations in the state enjoy enforcement immunity? Are there any cases where debtors sought to enforce against a state by attaching or executing assets held by international organisations?

The immunity of international organisations based on, for example, international agreements establishing the organisation, headquarters agreements or seat agreements regularly includes immunity of the organisation from enforcement measures.

With respect to the UN, article 2, section 2 of the Convention on the Privileges and Immunities of the United Nations of 13 February 1946, to which Germany is a member state, clarifies that immunity applies not only to the UN, but also to its assets, which may otherwise be subject to enforcement measures. It further clarifies that any waiver of immunity does not extend to enforcement measures. That means that, even in exceptional situations where German courts may be allowed to render a judgment, the resulting judgment cannot be directly enforced because the organisation would enjoy separate immunity from execution or enforcement measures.

The authors are not aware of a German enforcement case against a foreign state by attaching or executing assets held by an international organisation.

Updates & Trends

All questions

Updates and trends

Draft legislation from 2017 proposes a specific German Federal Law on Privileges, Immunities, Exemptions and Facilitations of International Organisations in the Federal Republic of Germany as Host State (the Host State Law).