What happens in arbitration

Federal Ministry of Justice and Consumer Protection

In the area of ​​out-of-court dispute resolution, there are various procedures that the parties can use to end a dispute.

A distinction is made between procedures in which the parties find their own decision with the help of a third party (mediation, arbitration) and those in which a third party makes a binding decision for the parties (arbitration). Arbitration is a procedure for binding private dispute resolution that takes the place of proceedings before an ordinary court.

A distinction is made between investor state arbitration (ISDS) and other cases of arbitration such as commercial jurisdiction. ISDS is a special arbitration procedure for investors against states, which finds its reason and its structure in international agreements, mostly investment promotion agreements or free trade agreements. Commercial arbitration concerns arbitration proceedings between natural and / or legal persons in the field of commercial law. The contracting parties can determine by means of an arbitration agreement that an arbitration tribunal instead of a state court decides their legal dispute. The decision of the arbitral tribunal, the arbitral award, then binds the parties like a judgment of the state court. In these cases, the way to the state court is generally closed to the parties.

However, it is not only commercial law claims that are arbitrable, but all property law claims and those non-property law claims about which the parties can reach a settlement (Section 1030 (1) of the Code of Civil Procedure (ZPO)).

Advantages for the parties

Dispute resolution through arbitration has the advantage for the parties that they can largely choose their arbitrator and the procedure themselves. In addition, if you wish, the arbitration process cannot be conducted publicly, so confidentiality is guaranteed.

The parties can also largely determine the arbitration procedure themselves or access an existing arbitration institution and its rules and regulations. Institutionalized arbitration courts are e.g. B. located at chambers of industry and commerce. The German Chamber of Commerce and Industry (DIHT) is an active advocate for arbitration in Germany. The most important arbitration institution in Germany is the German Institution for Arbitration (DIS).

Procedure and enforcement of arbitral awards in Germany

In the ZPO, basic regulations on the admissibility and implementation of arbitration proceedings are regulated in Sections 1025-1066 ZPO, which are predominantly dispositive and only intervene if the parties on certain points (e.g. the dismissal of an arbitrator due to bias) have not made any arrangements. However, these provisions also contain mandatory procedural guarantees from which the parties cannot deviate, e.g. the right to be heard for both parties to a legal dispute. The ZPO rules were largely modeled on the model law on international commercial arbitration (1985/2006) of the United Nations Committee on International Trade Law (UNCITRAL; UN Commercial Law Committee).

Arbitral awards must be admitted for enforcement by a German court if they are to be enforced here. For foreign arbitral awards, the enforcement requirements in the New York UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958 (Federal Law Gazette 1961 II p. 123) or the Geneva European Convention on International Commercial Arbitration of April 21, 1961 (Federal Law Gazette 1964 II p. 425).

Arbitral awards can also be set aside in German courts if the appointment of the arbitral tribunal, the conduct of the arbitrators, the arbitration procedure or the arbitral award was or is seriously incorrect.

Many international arbitration proceedings are heard before the International Chamber of Commerce (ICC) in Paris. Germany is trying to become even more important as a place of arbitration.

Advancement of women in arbitration

Unfortunately, the proportion of female arbitrators at national or international arbitration tribunals does not yet correspond to their importance as lawyers and experts; Women are underrepresented in arbitration. The BMJV wants this to change quickly and therefore supports the "Equal Representation in Arbitration" initiative. Lawyers, arbitrators, company representatives, states, arbitration institutions, academics and other people involved in international arbitration have come together and are committed to raising the profile and increasing the proportion of women in arbitration. The initiative takes the view that is worthy of support that women should have equal opportunities when appointing referees. For example, we are strongly committed to ensuring that committees, administrative bodies and conference panels in the field of arbitration have a balanced proportion of women. States, arbitration institutions and national bodies should also include a balanced proportion of female candidates in lists of members or lists of potential arbitrators, if they can co-determine or manage them. Germany already took this into account when the ICSID arbitrators were last named.

The initiative has created a pledge that company representatives, arbitrators, lawyers, states, scientists and many other people can join. The voluntary commitment can be filled out here and sent electronically. Here you can download a list of the people and institutions that have already made their voluntary commitment.

UNCITRAL Arbitration Rules

The UNCITRAL Rules of Arbitration contain a comprehensive set of procedural rules that the parties agree on when conducting international arbitration proceedings. The rules cover all aspects of arbitration; from procedural rules for appointing arbitrators and conducting proceedings to rules relating to the form, effect and interpretation of the award.

A comparison of the provisions of the UNCITRAL Arbitration Rules from 1976 and 2010 as well as a German translation of the UNCITRAL Arbitration Rules from 2010 can be found here.