Commercial Courts

What are Commercial Courts?

Commercial Courts are special tribunals of first instance at the Higher Regional Courts, intended for large commercial disputes under private law with a value in dispute of EUR 1 million or more. These special tribunals are to specialize in international matters relating to business and thus ensure fast and efficient procedural negotiations. In addition to the specific specialization of the tribunals in the field of commercial law, the proceedings are to be conducted entirely in English language. Conducting an appeal proceeding at the German Federal Court of Justice should also always be admissible. For internationally operating companies, the introduction and expansion of commercial courts should provide a good alternative to national and international arbitration courts.

In addition to the commercial courts, the establishment of commercial chambers is planned for commercial disputes with a lower value in dispute at various regional courts. Here, too, it should be possible for the proceedings to be conducted entirely in English language if the parties agree on this.

What is the purpose of the introduction of commercial courts?

The primary purpose of the commercial courts is to challenge the monopoly positions of the arbitration tribunals in commercial disputes and also to negotiate large-scale civil disputes between international business enterprises before German ordinary courts.

This is intended to strengthen case law of German ordinary courts through conducting proceedings by the commercial courts. German case law of the highest courts should be extended to legal areas with an economic focus and should not allow arbitration courts solely to deal with these legal issues relevant to internationally operating companies. In addition to the purpose of further development of German law, the German Federal Government also has economic interests. Through the creation of the commercial courts, the state also benefits from collecting court fees.

What are the advantages and disadvantages of litigation before the Commercial Court for companies as parties to the proceedings?

Commercial courts are primarily characterized by their flexible and efficient conduct of proceedings. For example, oral hearings should be able to be held on several consecutive days without the parties having to wait several months between court hearings. In addition, the use of video conferencing technology in civil proceedings is to be expanded. Video hearings and video evidence recordings are intended to speed up litigation proceedings and also enable parties based abroad to participate in the proceeding with little effort. In order to narrow down the facts of the case and the relevant legal issues at an early stage, the "Case-Management-Conference" is to take place as an early first hearing.

Another advantage is the possibility of negotiating and presenting statements in English language. This is an important aspect, especially in international disputes based on contracts and evidence in English, which in turn has a positive effect on the costs for translations and client communication.
When conducting potential settlement negotiations, the focus should be on the business relationship of the parties and thus the possible interest of the parties in continuing the business relationship in a spirit of partnership after the conclusion of the court proceedings.

A major disadvantage of commercial courts is the international recognition and enforcement of judgments and decisions. At present, recognition and enforcement of foreign judgments does not extend beyond the borders of the member states of the EU. In this respect, arbitration tribunals have an advantage compared to commercial courts. On the basis of the New York Convention, arbitration decisions can also be enforced in other economically important countries such as China or the USA.

Conclusion

The introduction and expansion of commercial courts in Germany would make a positive contribution to the internationalization of jurisdiction for commercial disputes in Germany and would make ordinary courts more popular for disputes in the context of international business relations and disputes. Moreover, the number of commercial courts in Germany would have to be further expanded in order to offer an appropriate alternative to arbitration courts for the large number of commercial disputes.

Published May 2024

Author: Lara Sophie Worbs
Co-author: Grischa Hagemann