International Commercial Courts 'Made in Germany'

In 2023, the US industrial giant Carrier Global acquired the German climate solutions provider Viessmann in a landmark deal worth € 12 billion Euros. The contract was submitted to German law. Nonetheless, the parties decided not to settle disputes arising from the contract before German courts. Instead, they agreed on arbitration under the rules of the International Chamber of Commerce (ICC). The largest 2023 M&A transaction with German participation was, thus, entrusted to a foreign arbitral institution thereby highlighting a problem that has troubled the German civil justice system for years: Germany’s courts, while highly competent, struggle to attract high-volume (international) commercial disputes.

However, all that may be about to change: On 1 April 2025, the Law on the Strengthening of Germany as a Place to Settle (Commercial) Disputes (Justizstandort-Stärkungsgesetz) entered into force. Adopted in October 2024 after decade-long discussions the new Law sets out to improve Germany’s position vis-à-vis recognized (foreign) litigation and arbitration venues. To this end, the new Law allows the German federal states (Bundesländer) to establish specialized ‘commercial courts’ that may hear certain high-volume (international) commercial disputes in English and in an arbitration-style fashion. These international commercial courts ‘made in Germany’ follow in the footsteps of other international commercial courts that various jurisdictions have established in recent years. But will they be attractive alternatives for big business? Will foreign courts and international commercial arbitration tribunals soon face serious competition from Germany?

In an article forthcoming in the Journal of Law & Commerce we provide first – tentative – answers. We argue that the new Law introduces welcome innovations that will actually improve the framework conditions for the settlement of international commercial disputes in Germany. However, we also demonstrate that shortcomings remain that will prevent German courts from becoming serious competitors for leading international commercial courts as well as international commercial arbitration.

English Language Court Proceedings

The Law on the Strengthening of Germany as a place to settle disputes brings three innovations to the German civil justice system. The first concerns the language of court proceedings. To make German courts attractive for international – non-German speaking – litigants, the Law allows the German federal states to establish so-called 'commercial chambers' at selected regional courts (Landgerichte) that will be allowed to conduct proceedings in English from beginning to end if the parties so wish. Before these chambers parties will, therefore, be allowed to file all their briefs and statements in English. In addition, the oral hearings will be held in English and witnesses will be examined in English. And, finally, commercial chambers will communicate with the parties in English and write all orders, decisions and the final judgment in English.

The new Law, however, goes even further. In addition to allowing the establishment of (full) English language commercial chambers at the regional court level it requires the federal states to ensure that appeals against English-language decisions rendered by these chambers will also be heard (completely) in English in second instance at the higher regional courts (Oberlandesgerichte). Moreover, the new Law permits the Federal Court of Justice (Bundesgerichtshof) to conduct proceedings entirely in English. Unfortunately, however, the Federal Court of Justice is not mandated to hear cases in English (even if they started in English). Rather, it will be in the discretion of the Court to decide on a case-by-case basis whether proceedings will continue in English – or revert to German. As a consequence, parties cannot be sure that a case that is heard in English at first and second instance will also be heard in English by the Federal Court of Justice which in turn, may well dampen the overall attractiveness of opting for English-language proceedings in the first place. That said, it is nonetheless a significant and welcome development that, after years of intensive debates, the German federal legislature, has taken the step of formally opening the German civil justice system to English as the language of civil proceedings.

Specialised Commercial Courts for High-volume Disputes

Even more important is the second innovation that the new Law brings: It allows the federal states to establish specialised bodies for the settlement of high-volume commercial cases (both international and domestic) at the higher regional courts (Oberlandesgerichte). Referred to as ‘commercial courts’ these bodies will hear commercial cases in first instance if the parties so wish (thereby deviating from the general rule that cases have to start either in the local courts or in the regional courts). In addition, commercial courts will conduct their proceedings in English (upon application of the parties) and in a more arbitration-style fashion. More specifically, they will hold a case management conference at the beginning of proceedings and prepare a (real-time) verbatim record of the hearing upon application of the parties. Finally, commercial courts will also benefit from privileged access to the Federal Court of Justice in that appeals will be admissible without any further requirements. In particular – and again deviating from the general rule – there will be no need for either the commercial court or the Federal Court of Justice to allow the appeal.

In the light of all this commercial courts will be able to offer more specialised legal services as well as services that correspond to the needs and expectations of (international) commercial parties. In addition, they will speed up legal proceedings by limiting the proceedings to two instances (instead of three). Unfortunately, however, jurisdiction of the commercial courts will be limited in two respects. First, commercial courts will only be allowed to deal with certain subject matters, namely 1) disputes between two or more companies (with exceptions relating to IP disputes), (2) disputes arising from or in connection with the acquisition of a company or shares in a company and (3) disputes between a company and the members of the management body or supervisory board. And second, commercial courts will only be allowed to hear disputes with a value of € 500.000,00. The latter is problematic for a number of reasons, which we detail in our article. The most important one is, that there is a risk that the commercial courts will not receive enough cases to build up expertise and, thus, reputation.

Enhanced Protection of Trade Secrets

The third innovation, finally, concerns the protection of trade secrets. According to the new Law parties will be allowed to apply to the court for protection of information that qualifies as a trade secret within the meaning of the German Act on the Protection of Trade Secrets. If successful, parties and the court itself will be required to treat the protected information confidentially during and after the proceedings. In addition, the court may exclude the public from the oral hearing. All this accounts for the parties’ legitimate interests in having their trade secrets protected without unduly restricting the public nature of civil proceedings, which is one of the cornerstones of German civil justice system. At the same time, the new Law borrows – again – an important feature from arbitration. However, it stops short of granting full arbitration-like confidentially since the new rules are concerned with the protection of trade secrets only. As a result, the parties cannot request that the fact that there is a court case at all be kept secret.

Conclusion and Outlook

The Law on the Strengthening of Germany as a Place to Settle (Commercial) Disputes is the most significant reform of the German law of civil procedure in years. It brings important innovations. And even though some provisions invite criticism the reform as a whole improves the overall framework for resolving (international) commercial disputes in Germany. However, two caveats remain.

First, the new Law places the burden to establish commercial chambers and commercial courts on the federal states. The extent to which it will be possible for civil court proceedings to be conducted entirely in English and the extent to which there will be specialized bodies for high-volume commercial disputes will, therefore, depend on whether the federal states will exercise their powers. And while a number of states, namely Baden-Württemberg, Berlin, Bremen, Hamburg, Hesse and North-Rhine-Westphalia have already established (or announced to establish) commercial courts, it remains to be seen what will happen. The practical success of the law will, however, not only hinge on the establishment of commercial courts as such, but also on the state’s willingness to invest in the necessary infrastructure. This includes (1) appointing qualified judges with both the legal and linguistic skills – ideally also practical experience – to handle complex (international) commercial cases, (2) ensuring judges have sufficient time for such proceedings, and (3) providing adequately sized and technically equipped courtrooms. Should federal states not be willing to make these kinds of investments commercial chambers and commercial courts will most likely be of limited use.

Second, even if the federal states implement the new Law perfectly – by establishing a sufficient number of commercial chambers and commercial courts and by making the necessary investments – German courts will most likely continue to be less attractive for most business parties than leading foreign courts or international commercial arbitration. For example, unlike in arbitration, the parties have no influence on the selection of the judges. As a consequence, they will have to live with the fact that their – international – legal dispute is decided exclusively by German (national) judges who will rarely be as specialized as arbitrators hand-picked to settle a specific dispute. In addition, digital communication and technical equipment of German courts is far behind what has been standard in arbitration for many years. And finally, one must not forget that there is no uniform legal framework for state judgments that would ensure their uncomplicated worldwide recognition and enforcement.

Against this background it seems fair to conclude that the new Law holds the greatest potential for national high-volume commercial disputes while its impact on international disputes will remain marginal. However, it seems equally fair to conclude that the limited impact of the new Law on the settlement of international disputes is not only due to shortcomings of the Law itself, but also – and perhaps mainly – to structural limits on what national courts can offer to international business parties. One may, therefore, wonder what this means for the future of international commercial litigation? Is the establishment of national international commercial courts – the semantic paradox aside – actually the best way forward – or would it not be better to join forces and to create a single European Commercial Court as has been suggested elsewhere? Clearly, such a Court would come with a number of advantages that national courts are not able to offer and which could, therefore, be attractive for international commercial parties. However, as of yet the European legislature has not embraced the idea of such a court. In fact, while the European Parliament has expressed support, the European commission has politely declined. For the foreseeable future, international business parties will therefore remain confined to choosing between arbitration and national courts—including international commercial courts ‘made in Germany’. Time will tell whether the latter can secure a meaningful share of the international dispute resolution market or whether their role will remain confined to domestic cases.

Giesela Rühl is a Professor of Law at Humboldt University of Berlin.

Nicolas Dewitte Langenfeld is a Doctoral Candidate and Research Fellow at Humboldt University of Berlin.

The full article is available here.