Open for business: the German Commercial Court, in English
21 June 2010 | By Tom Phillips
15 September 2014
10 January 2014
16 July 2014
M&A Weekly Update: when is there a duty of good faith between contracting parties; prospectuses: acceptable languages; and more
9 April 2014
8 November 2013
The first Commercial Court case in Germany to be held in English took place at the end of May.
The pilot case, held in Düsseldorf and which concluded on 31 March, came after the German state of North Rhine-Westphalia announced that it would use English in Commercial Court cases in a bid to attract more international business litigation to the country (The Lawyer, 8 February).
Under the original plan, oral submissions and witness statements could be heard in English without the need for translation. A draft bill, currently in discussion, proposes that written submissions and verdicts would also be dealt with in English, broadening the scope of the proposal and going further than last month’s pilot case.
Annerose Tashiro, head of cross-border restructuring and insolvencies at Schultze & Braun, believes a nationwide introduction of English language cases would make German courts significantly more attractive to foreign clients.
“At the moment a lot of agreements are made in English and parties tend to agree on English courts,” said Tashiro. “Currently German courts would reject a case in English because it costs a lot of money and the proceedings can be held up by discussions over the translation.”
Tashiro believes that if German courts used English then clients would benefit from German courts’ speed and enforcement, while paying less in legal fees.
Due to differences in procedures such as disclosure, a case that would take 10 weeks to negotiate under US law would take two days under the streamlined German civil code.
German law will become much more appealing for creditors in European insolvency cases, argues Tashiro, as German insolvency law is geared toward liquidation of the debtor and insolvency plan procedures are only applied in exceptional cases.
“If you compare US, UK and German courts, then German courts are fairly reasonably priced. If the German courts used English it would save clients a lot of time, stress and money,” she said.
Tashiro believes that the current situation of German being the official language of German courts has driven companies, including German multinational BASF, to seek other jurisdictions for complex commercial cases.
Criticisms of the change, such as the assertion by some commentators that the finer points of law will be ’lost in translation’, are unjustified, she added.
“As long as this idea remains an opportunity and not an obligation, it can only be an advantage,” added Tashiro.
However, there are some unresolved issues with the proposals. Philipp Simon, a bilingual rechtsanwalt who heads the Luxembourg office of Simon & Simon and barrister at 4KBW, said German judges’ grasp of English could be a stumbling block.
“There’s a question of how good the German judiciary is at English. As a result of the differences between the legal systems there are also certain terms in German law that don’t translate into English,” said Simon. “It would make Germany more attractive as a legal forum, but there are going to be problems. It’s certainly worth the try they’re giving it, but I don’t think [the bill] will go all the way.”
Tashiro agreed that judges’ language skills are a “major” issue not covered by the bill. German judges typically start their careers after graduating and many may not have experience of using English legalise prior to the bill being passed.
“How these judges are able to provide expertise in an English-speaking court is an important question,” admitted Tashiro.