International Fraud & Asset Tracing 2024 Comparisons

Dual-Track Structure of the German Legal System

The German legal system is characterised by its dual-track structure. Criminal law governs the relationship between the State and its citizens, whereas civil law governs the relationship between citizens. While the prosecution of fraud is a task of official bodies (eg, the public prosecutor), claims for damages arising from criminal offences are governed by civil law and therefore, in principle, are open to civil proceedings under German law. This particularly applies to:

• the assertion of claims for damages; and
• claims for restitution and claims for recovery from unjustly obtained advantages.

The legal basis for claims for damages is, alongside Section 826 of the German Civil Code, the provision of Section 823(2) of the German Civil Code in conjunction with Section 263(1) of the German Criminal Code.

• Section 263 of the German Criminal Code criminalises fraud and is considered a so-called protective statute, thus enabling claimants to base their claims on Section 823(2) of the German Civil Code, which aims at – inter alia ‒ protecting the assets of victims of criminal offences.
• A fundamental characteristic of fraud is “deception”, which can manifest in various forms – both explicitly and implicitly – and may consist in remaining silent in cases where there is a duty to provide information.

If fraud is already proven in criminal proceedings, bringing forward a claim based on Section 823(2) of the German Civil Code tends to be the most frugal way for the victim to obtain compensation.

Participation of Third Parties

Furthermore, it should be noted that German criminal law doctrinally distinguishes between the criminal offences themselves and the possibilities of participation of parties who assist or facilitate fraudulent acts. Fundamentally, as is the case with fraud, the criminal offence is defined independently from the participation of other individuals.

Adhesion Proceedings

German criminal procedure law grants the victim of fraud the possibility of adhesion proceedings. The victim is given the opportunity to assert civil claims arising from the criminal offence directly in criminal proceedings. This benefits both the victim and the judicial economy.

Consequences Under Labour Law

If the agent of the claimant accepts bribes, not only possible criminal liability but also consequences under civil law may arise, particularly under labour law. If the acceptance of bribes is proven (in some cases, mere suspicion may suffice), the company may terminate the agent’s contract without notice, without the need for prior warnings. However, if the agent is a civil servant, they additionally may face disciplinary measures.

Claims for Damages

The agent must provide compensation under civil law to compensate for the damage caused by their actions. Additionally, there is the possibility of criminal asset forfeiture concerning the benefits obtained through the offence. The forfeiture does not benefit the claimant but rather the public treasury.

The participants involved in fraud are also subject to the claims for surrender and recovery from unjustly obtained advantages, provided that they possess the property obtained through fraud. If these conditions are not met, only claims for damages can be asserted. In principle, the same legal bases apply as those against the perpetrator themselves; that means a victim can bring claims for damages in particular based on Section 826 of the German Civil Code and Section 823(2) of the German Civil Code in conjunction with Section 263(1) of the German Criminal Code.

The victim can choose to pursue action against either the perpetrator or the accomplice or both.

General Three-Year Limitation Period

The limitation periods for claims arising do not differ from the limitation periods for any other claims. In general, the limitation period is three years, pursuant to Section 195 of the German Civil Code.

The regular limitation period commences at the end of the year in which the claim arose and:

• the obligee obtained knowledge of the circumstances giving rise to the claim and of the identity of the obligor; or
• would have obtained such knowledge if they had not shown gross negligence.

Longer Limitation Period

For final verdicts and claims that have become enforceable as a result of the determination made in insolvency proceedings, the limitation period is 30 years (Section 197 of the German Civil Code).

The limitation period for claims that have become enforceable (eg, because of a verdict) commences:

• on the date on which the verdict comes final and binding; or
• when the claim is recognised in insolvency proceedings, but not before the claim arises.

Claims for damages that are not based on injury to life, limb, health or liberty are statute-barred ten years after they arise, notwithstanding knowledge or a grossly negligent lack of knowledge, and 30 years from the date on which the act, breach of duty or other event that caused the damage occurred – regardless of how they arose and of knowledge or a grossly negligent lack of knowledge. The period that ends first is applicable.

After limitation occurs, the obligor is entitled to refuse performance – ie, the limitation period must be asserted in court, the court does not take the limitation period into account ex officio.

Suspension of Limitation Period

The limitation period is suspended by various acts, such as:

• by the bringing of an action for performance or for establishment of the existence of a claim;
• by the service of an application for an attachment order, an injunction or an interim order; and
• by the filing of a claim in insolvency proceedings.

Civil Law

Claim against injuring party

The victim can generally demand the return of an object that the injuring party obtained from the victim through fraud or misappropriation if the original contract for the transfer of ownership of the object is null and void.

However, the victim can only file a claim for compensation in money against the injuring party if:

• the injuring party combined the object with real estate property or another movable object;
• the object has been inseparably mixed or blended with other objects; or
• if a new movable object has been produced by processing or transforming the object.

If the contract for the transfer of ownership between the victim and the injuring party is void, the injuring party is also obliged to surrender the proceeds exceeding the original value of the (original) object which he has realised by selling the object to a higher price or investing.

Claim against third party

If the injuring party has transferred the object to a third party, the victim can no longer demand the return of the object if the third party was in good faith with regard to the injuring party’s ownership position.

The victim can demand the return of the object:

• if the injuring party has disposed of the property to the third party free of charge; or
• if the third party knew or was grossly negligent in failing to recognise the injuring party’s lack of ownership.

Precedence in an insolvency

Claims for damages do not grant a victim a privileged position vis-à-vis (other) insolvency creditors (Section 38 of the German Insolvency Code). However, if the victim is still the owner of the property and the contract for the transfer of ownership is void, the victim is privileged vis-à-vis the other insolvency creditors and can demand the return of the object. If the object has already been sold by the injuring party or the insolvency administrator, the victim may still demand the consideration.

Criminal Law

Concept of “continuation of unlawfulness”

German criminal law recognises the legal concept of “continuation of unlawfulness”; the object is then “marked as illegal”.

In connection with the criminal offence of money laundering (Section 261 of the German Criminal Code), items that the offender has not obtained directly through an offence but which have “taken the place of the original item” are also to be regarded as proceeds of crime.

This can be assumed if the asset embodied in the original object:

• is still comprehensibly present in the new asset, regardless of the form of its embodiment (eg, purchase, rent, exchange); and
• has not been displaced by other asset-related factors.

As regards an offence committed abroad, the rules above also apply if the offence is also punishable by law in the country abroad.

Confiscation by court

By means of confiscation in accordance with Section 73 et seq of the German Criminal Code, the court can order the offender to forfeit unlawfully obtained financial benefits from criminal offences. Notably, this also serves to return the objects to the victim or compensate the victim. Both the original objects as well as utilisations and surrogates can be confiscated. If difficulties are encountered with regard to the confiscation of the surrogate, the court must order the confiscation of the compensation.

Unlike the American legal system, the German legal system is not based on the principle of case law as regards both criminal and civil law. Courts are not bound by judicial decisions in similar cases from the past. In theory, the legal assessment may also differ from that of a higher court. However, in most cases, lower courts will align their judgments with that of the higher courts.

Nevertheless, as the German legal system is structured in a dual-track manner (see 1.1 General Characteristics of Fraud Claims), different principles regarding pre-action conduct exist in criminal and civil proceedings.

Principle of Official Investigation in Criminal Proceedings

Occasionally, criminal proceedings are initiated by a criminal complaint from the victim. Subsequently, owing to the principle of official investigation, the public prosecutor’s office conducts a comprehensive investigation and decides whether to press charges or not. Apart from the possibility of the adhesion procedure (see 1.1 General Characteristics of Fraud Claims), criminal proceedings do not concern the assertion of civil law claims for damages or similar matters.

Principle of Submission in Civil Proceedings

Civil law claims, especially in complex and extensive situations, are separately asserted before civil courts. Unlike in criminal proceedings, civil proceedings are subject to the principle of submission. It is not the courts that must gather the necessary evidence but, rather, the parties themselves. Parties can, in general, submit evidence requests until the pronouncement of judgment. Thus, it is not necessary for all evidence to be provided to the court before filing a lawsuit.

Existing Claim and Particular Urgency Required to Grant Seizure

An obligee can assert protection via preliminary legal protection proceedings to prevent a defendant from dissipating assets or secreting them (Sections 916 et seq of the German Code of Civil Procedure).

Claims for damages or other claims to secure the enforcement of monetary claims can be granted by issuing a seizure. Other individual claims or claims for the purpose of providing for a temporary status concerning a legal relationship can be granted by issuing an interim injunction. This possibility of preliminary legal protection proceedings also exists in the case of an effective arbitration agreement between the parties.

Prerequisites are:

• the creditor’s petition to the competent court;
• the existence of a claim to seizure – ie, the existence of a monetary claim; and
• the existence of special urgency ‒ ie, the enforcement of the judgment would be frustrated or be significantly more difficult.

The creditor needs to demonstrate the existence of the claim to seizure and special urgency as a matter of fact to the satisfaction of the court. Special urgency can be assumed if:

• the obligor is wasting their assets senselessly;
• if the obligor is trying to conceal their financial circumstances in order to get rid of their assets; or
• if the obligor is threatened with relocation abroad.

Assets and Person of Obligor Subject to Seizure

In principle, only the seizure against the assets of the obligor is an available remedy (Section 917 of the German Code of Civil Procedure). This is granted with regard to movable assets and with regard to debt claims by distraint and is granted with regard to immovable assets by registration of a debt-securing mortgage.

Seizure to be issued in the case of an obligor being arrested in person ‒ meaning confiscation of identity documents or detention ‒ is only an available remedy if it is required for compulsory enforcement against the property of the obligor when such compulsory enforcement is at risk (Section 918 of the German Code of Civil Procedure). It is only a “last resort” if no other form of remedy is possible.

Fees Depend on the Amount in Dispute

The amount of the fees depends on the amount in dispute and the fee table. The court costs are based on the Court Costs Act and are made up of a fee depending on the amount in dispute multiplied by a factor depending on the scope of the proceedings.

Compulsory Enforcement

If the obligor does not comply with the court orders, the creditor can have the methods enforced by way of compulsory enforcement (see 5.1 Methods of Enforcement).

There is no separate legal institute under German law by which the defendant can be obliged to disclose their assets before rendering of a judgment. However, there are ways to enhance the claimant’s knowledge of the facts of the case on which the claim has to be based.

Action by Stages

If the obligee’s claim against the obligor for payment or restitution cannot yet be quantified or otherwise specified, the action for restitution can be combined with an action for rendering of accounts, submission of a list of assets, information and submission of an affidavit and valuation. The action is inadmissible if the obligee only wants to find out whether they are, in general, entitled to file a suit against the defendant.

Secondary Burden of Presentation

In principle, each party bears the burden of presentation and proof for the circumstances and legal norms favourable to them, the plaintiff for the facts establishing and maintaining their claim, and the defendant for the facts denying the claim. Under certain circumstances, the burden of presentation is reversed in favour of the opposing party ‒ ie, so-called secondary burden of presentation.

This is the case if:

• it is impossible or unreasonable to expect the party primarily burdened with the burden of presentation to provide more detailed substantiation;
• the opposing party knows the essential facts or can easily obtain these facts;
• the opposing party can reasonably be expected to disclose them; and
• the submission of facts of the party burdened with the burden of presentation is sufficiently substantiated.

If the opposing party does not fulfil its secondary burden of presentation, the party primarily burdened with the burden of proof’s submission is deemed to be admitted (Section 138(3) of the German Code of Civil Procedure).

Other procedures

If the plaintiff is not seeking information but instead primarily the securing of the obligor’s assets to fulfil their claims, the plaintiff can assert protection via the preliminary legal protection (see 1.7 Prevention of Defendants Dissipating or Secreting Assets).

If the obligee already has an enforceable judgment against the obligor, the obligee is able to file a petition for information from the debtor on the debtor’s assets for the purpose of enforcing the obligee’s monetary claim. The obligor is thereby obliged to disclose their financial circumstances and the assets they own.

The claim includes the disclosure of:

• income and its sources;
• bank details and account balances;
• property ownership;
• vehicles and other valuable assets;
• information on existing debts and liabilities;
• information on current enforcement proceedings; and
• maintenance obligations.

Such an application will not be successful against natural or legal persons who have already filed for insolvency.

If the debtor refuses to provide the information or provides false information, the court may impose means of coercion with a fine of up to EUR250,000, coercive detention, or summons.

If false or incomplete information is provided by the obligor, they can be punished with an imprisonment of up to one year or a fine. Further claims for damages may occur for the obligee.

Regarding procedures available for preserving evidence in circumstances where it is feared that important evidence might be destroyed or suppressed, it is important to differentiate between civil proceedings and criminal proceedings.

Regarding civil proceedings, there is only the possibility of a so-called independent evidence procedure. It is a judicial procedure to secure evidence in cases of urgency ‒ for example, if the applicant would otherwise risk losing evidence owing to the lengthy duration of the main proceedings. The procedure can be conducted before or without any pending main proceeding.

The victim of fraud cannot demand any incriminating material from the accused. Notably, the defendant can refuse to co-operate without facing civil action.

In criminal proceedings, only the public prosecutor’s office has the authority to conduct a search and subsequent seizure of evidence. A judicial warrant is usually required for such action.

Additionally, searches at the defendant’s residence of place of business are not permitted for the plaintiff/victim in either civil or criminal proceedings.

The public prosecutor’s office has various powers, including the authority to conduct searches and seizures in order to secure evidence, even from third parties. In terms of criminal proceedings, it is not necessary for the identity of the accused to be clear at the time of the measure – specifically, a search may be conducted to identify the accused. However, the measure itself is already part of the investigative proceedings, but not necessarily of the main proceedings. Such measures must always be assessed under the principle of proportionality, in particular.

In civil proceedings, on the other hand, there are no means to compel third parties (nor the defendant) to disclose specific information or documents.

Prosecutorial investigative measures, such as searches, often capitalise on the element of surprise to prevent the purpose of the measure from being obstructed by the affected party. This means that the unawareness of the affected party is of crucial importance for the execution of the measure to be successful. In general, there are no special requirements arising from this, and prior notification may be omitted. Rather, a comprehensive assessment of all circumstances must be made solely within the framework of proportionality. The affected party is typically notified after the implementation of the measures taken against them.

Criminal and civil proceedings are independent of each other ‒ meaning they may run concurrently and do not influence each other. Notably, the commencement of criminal proceedings does not interrupt civil proceedings. However, it is generally advisable to await the outcome of the criminal proceedings and to introduce any potentially favourable criminal judgment as documentary evidence in the civil proceedings (see 1.1 General Characteristics of Fraud Claims).

However, the civil court is to decide on the evaluation of evidence upon the principle of discretion and conviction. The civil court is not bound by the findings of the criminal court. The criminal judgment only has an indicative effect. To be able to decide whether alleged facts are true or false, the judge needs to have “full judicial conviction”. If the evidence of both parties is equally credible and believable, a decision is made to the detriment of the party with the burden of proof (please refer to 2.1 Disclosure of Defendants’ Assets for more on the burden of proof).

In contrast, in criminal proceedings, the principle of “when in doubt, favour the accused” applies. With regard to criminal proceedings, there is the option of an adhesion procedure (see 1.1 General Characteristics of Fraud Claims and 1.6 Rules of Pre-action Conduct).

Interim Legal Protection

In principle, every final judgment requires the implementation of the complete course of main hearing. However, this does not apply to interim legal protection. Interim legal protection is characterised by the issuance of a provisional judgment based on only preliminary findings. This requires, in addition to the prospects of success in the main proceedings, that the (special) urgency of interim legal protection can be asserted (see 1.7 Prevention of Defendants Dissipating or Secreting Assets for more on special urgency).

Default Judgment

In civil law, there is also the option of a default judgment. A default judgment is rendered against a party who fails to appear in court without excuse or refuses to participate in a contested hearing. The judgment is issued upon request of the non-defaulting party and is based on the plaintiff’s submissions.

Dismission

In exceptional cases, a lawsuit may be dismissed without main proceedings taking place. However, this scenario does not involve a completely unfounded “defence” by the defendant but, rather, a situation where the lawsuit is insufficiently and inadequately substantiated. Nonetheless, a completely unfounded defence by the defendant cannot render main proceedings unnecessary.

Criminal Proceedings

In criminal proceedings, the main hearing can proceed without the defendant in exceptional cases. This requires that the defendant has been properly summoned and notified in the summons that the hearing may take place in their absence. Additionally, only penalties such as fines of up to 180 daily rates, warnings with a penalty reserve, driving bans, or the confiscation, destruction or rendering unusable of property can be expected.

There are no special regulations or requirements for pleading fraud that differ from other criminal allegations. As with any criminal accusation, it is necessary to establish that all the elements of fraudulent behaviour are present and there are no significant doubts in this regard. However, when proving fraud, particular attention must be paid to quantifying the specific damages caused by the fraudulent act. An estimation of the damages is not enough. As with other cases, the initiation of investigations by the public prosecutor’s office requires the existence of a reasonable suspicion. Furthermore, for the filing of charges, a higher degree of suspicion is required; it must be sufficient. This means that at the time of filing charges, based on a preliminary assessment of the evidence, the defendant’s conviction is more likely than their acquittal.

Criminal Law

In terms of criminal law, the victim can file a criminal complaint against “Unknown”, thereby initiating investigations by law enforcement agencies. These investigations will initially target “Unknown”. If the public prosecutor’s office successfully identifies the unknown person during their investigations, charges can be brought. If this is not the case, the proceedings cannot be continued and must be terminated. Resumption at a later date is possible as long as the fraud offences have not become statute-barred under criminal law.

Civil Law

In civil law, however, a claim against “Unknown” cannot be asserted. According to the principle of specificity applicable in civil proceedings, all claims and motions instead have to be formulated clearly and unambiguously, including those directed towards the opposing party. In Germany, civil courts do not investigate unknown circumstances for the parties; rather, the parties only consider what each party presents, and a judgment must be “enforceable”. As compulsory enforcement “against unknown persons” is not possible, a civil claim against unknown persons is also not possible.

Every witness who is subject to German jurisdiction has a basic duty to testify (for persons who are not subject to German jurisdiction, see 4.1 Joining Overseas Parties to Fraud Claims). This includes the obligation to appear, as well as the obligation to testify and take an oath. The fulfilment of these legal obligations is enforceable.

If the witness does not appear at the hearing, the costs resulting from the failure to appear shall be imposed on the witness if they were duly summoned by the court and either:

• the witness has not sufficiently excused their failure to appear; or
• the witness not declared their refusal to testify.

Concurrently, a coercive fine shall be levied against that witness and ‒ where this cannot be recovered from said witness ‒ they shall be sentenced to coercive detention.

In the event of a witness failing to appear in several instances, the means of administrative coercion shall be levied or ordered once again. Likewise, the forcible production of the witness may be ordered.

Under the conditions of Section 30 of the Act on Regulatory Offences, the imposition of a fine on a legal entity or association of persons is possible. If any of the individuals listed under this Act (including the managing director) commits a criminal offence or regulatory offence – and thereby violates a company-related obligation or enriches or intents to enrich the company – the company can also be fined.

As a point of reference, at least Section 130 of the Act on Regulatory Offences can usually be invoked. This provision establishes a regulatory offence in the event that the owner of a business or company intentionally or negligently fails to implement the supervisory measures necessary to prevent violations of company-related obligations threatened with a fine or penalty and, subsequently, such a violation occurs that could have been prevented or significantly hindered by proper supervision.

Under German civil law, the knowledge of an individual corporate director or officer can be attributed to the company.

Direct claims against those who stand behind a corporation are limited to very few exceptions. In the event of wilful, immoral damage to creditors, it is possible to bring a claim in tort pursuant to Section 826 of the German Civil Code against the person acting. Direct tortious liability applies irrespective of the legal form of the company and is therefore also applicable to companies with a foreign legal form.

A direct claim against the acting party is also possible in the event of a commingling of assets. In such cases, the acting party then loses its liability privilege, which is usually granted to those who stand behind a corporation.

Under German company law, the company itself has the option of claiming damages from fraudulent managing directors or board members for losses incurred in breach of duty. This is regulated by special legislation in Section 93(2) of German Stock Corporation Act and in Section 43(2) of the German Act on Limited Liability Companies.

Directors must always exercise the diligence of a prudent and conscientious manager in their management of the company. If directors fail to do so (eg, in the event of fraud), directors are liable to the company.

Individual shareholders cannot assert damage claims in their own name or in the name of the company. The option to take action against the director under tort law is very limited for the individual shareholder. Although Section 263 of the German Criminal Code is a protective law within the meaning of Section 823(2) of the German Civil Code, it only protects the victim of fraud, not the shareholder who is indirectly harmed by it.

Foreign natural and legal persons can be involved in proceedings as a party with their own claims on the side of the plaintiff in the ongoing proceedings or without becoming a party, with the effect of being bound by the verdict.

Participation as a Party

Participation as a party is possible in accordance with the provisions of joinder of parties (Sections 59 et seq of the German Code of Civil Procedure). A participation is admissible if a joint hearing and decision are expedient in terms of procedural economy. This is always the case if the hearing of evidence is relevant for all parties.

Intervention in Support of a Party

The third party intervening in support of a party to the dispute (Sections 66—71 of the German Code of Civil Procedure) allows the participation of a third party in a dispute in its own name, for the purpose of supporting the main party. In order to do so, the third party must be able to demonstrate its own legal interest.

The third party is able to avert the non-appearance of the main party at trial. The third party can basically perform all procedural acts of the main party – notably, to lodge an objection against a default verdict, to lodge an appeal against the verdict, and more. The third party may not, without the prior consent of the main party, amend, extend or withdraw the action, withdraw the main party’s appeal, file a counterclaim or interlocutory counterclaim, admit the action, declare the matter to be terminated, enter into a settlement or appeal against the will of the main party.

Exercising Extraterritorial Jurisdiction

The international jurisdiction of German courts is primarily governed by EU regulations and international treaties (eg, VO (EU) 1215/2012, VO (EG) 4/2009, VO (EU) 650/2012 and Lugano Convention II). International jurisdiction is determined subordinately by the provisions on local jurisdiction – the decisive factor is not a person’s nationality but, rather, their place of residence. It is possible that a (German) court has exclusive jurisdiction. If the courts of a state to which the foreign court belongs do not have jurisdiction under German law, recognition of the verdict of a foreign court is excluded (Section 328(1) No 1 of the German Code of Civil Procedure).

Cases of exclusive jurisdiction include:

• exclusive jurisdiction as to the subject matter (forum rei sitae);
• exclusive jurisdiction for false or misleading public capital market disclosures and exclusive jurisdiction in the event that such disclosures have not been made;
• exclusive jurisdiction for model declaratory judgment proceedings; and
• exclusive jurisdiction in enforcement proceedings and for proceedings regarding the petition on the issuance of a seizure or an interim injunction.

Territorial and Personal Jurisdiction (Sections 18 et seq of the German Courts Constitution Act)

Whether a party is subject to German jurisdiction depends on the territorial and personal jurisdiction of the German State. In principle, jurisdiction includes all persons located in Germany regardless of their nationality (the “territoriality principle”). There are exceptions for extraterritorial persons who are excluded from German jurisdiction on the basis of international treaties ‒ for example, members of diplomatic or consular missions, representatives of other states and their escorts who are in Germany on official invitation, or other persons who are exempt from German jurisdiction under general rules of international law, international agreements or other legal provisions.

The requirements for the service of documents abroad within or outside proceedings, or in party proceedings, depend on whether the service is to take place in a country within the EU or a third country.

In the case of service ex officio, service abroad is effected at the instigation of the presiding judge of the trial court. A petition by the party is only required in the case of international service within the party’s organisation, but the presiding judge of the trial court remains responsible.

Within the EU, service of judicial or extrajudicial documents in civil and commercial matters is governed by EU Regulation ((EU) 2020/1784). Whether a translation of the document to be served is to be made is decided by the person in whose interest the service is effected.

In third countries, service shall be effected by the German diplomatic mission or consular post abroad if third countries do not provide service or at least do not provide legal assistance reliably or promptly or if service is made to third countries (Section 183(4) of the German Code of Civil Procedure).

Service in third countries with which there is an agreement under international law is governed by the agreement (Section 183(2) of the German Code of Civil Procedure). The most important agreement under international law is the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters of 15 November 1965 (the “Hague Convention”). This provides for service via central authorities, service by diplomatic or consular agents, service by post, and direct service by judicial officers.

Options to Speed Up Service

The court may order the party to nominate an authorised representative for service who resides in Germany or has a place of business there within a reasonable period of time if the party has not appointed an authorised representative for service of process.

Public Service

In exceptional cases, public service is possible but only under strict conditions – for example, if the place of residence of a person is unknown and service on a representative or authorised agent is not possible or service abroad is not possible or does not promise success.

The usual methods of enforcement are regulated in law by Sections 802a—910 of the German Code of Civil Procedure.

The method of enforcement depends upon both the type of claim the obligee wants to enforce and the object of the enforcement the obligee wants to be ordered by court, as follows.

• For a monetary claim against movable property, compulsory enforcement is through attachment and realisation of property.
• For enforcement on account of a monetary claim in claims and other rights, compulsory enforcement is through:
1. attachment and transfer of a monetary claim;
2. attachment and realisation in the event of compulsory enforcement of a claim for the return of movable property;
3. surrender to a sequestrator as the debtor’s representative in the event of compulsory enforcement of a claim for the surrender of immovable property; or
4. attachment of other assets (in particular shares in companies).
• On the basis of a monetary claim to immovable property (ie, land and co-ownership shares in land), compulsory enforcement is through:
1. registration of a compulsory mortgage by the land registry;
2. enforced auction by the court of enforcement; or
3. forced receivership by the court of enforcement.
• To obtain the surrender of property (Sections 883—886 of the German Code of Civil Procedure), compulsory enforcement is through:
1. taking away and physically submitting the movable asset to the creditor;
2. seizure and transfer of the claim for restitution if a third party has the movable property in its custody; or
3. removing the debtor from possession and instructing the creditor in the case of immovable property.
• To ensure that actions are taken or refrained from, compulsory enforcement is through:
1. actions through others – authorisation of the creditor by the trial court to have the action taken by a third party at the costs of the obligor;
2. levying a coercive penalty payment or ordering a coercive punitive detention, or sentencing the obligor to coercive punitive detention for all actions that may not be taken by others as they exclusively depend on the will of the obligor; or
3. coercive fine (up to EUR250,000) or coercive detention up to six months should the obligor violate their obligation to cease and desist from actions or to tolerate actions to be taken.
• To obtain the submission of a declaration of intent, compulsory enforcement through declaration shall be deemed to have been made as soon as the judgment has attained legal force.

Enforcement proceedings that are successful for the creditor offer increased protection under criminal law (Sections 113, 136(1) and (2), and 288 of the German Criminal Code) for the obligee.

Privilege Against Self-Incrimination and Admissible Conclusions in This Regard

The consequence of the privilege against self-incrimination is that an individual accused of fraud has no obligation to co-operate in the determination of truth. The exercise of the constitutionally entrenched privilege against self-incrimination generally does not allow any adverse inferences to be drawn against the accused. However, according to prevailing opinion, an exception applies if the accused only partially remains silent. In such cases, if the accused provides certain factual statements while leaving some questions unanswered (despite being previously informed of their right to remain silent), their “partial silence” can be used to their detriment ‒ given that the accused voluntarily makes themselves a source of evidence.

Coercive Measures and Duty of Providing Information Under Labour Law

However, this right against self-incrimination does not prevent law enforcement authorities from independently securing evidence from the accused’s sphere through the enforcement of coercive measures.

Additionally, there is a particularity in labour law regarding the relationship between employees and employers. According to jurisprudence, employees are obligated to provide comprehensive answers to employers’ inquiries. Statements made in this context can ‒ according to contentious opinion ‒ also be used in later criminal proceedings against the employee.

However, if the employee is at risk of incriminating themselves or a relative, they too have a right to remain silent. Therefore, it is advisable before any inquiry to inform the employee of their rights; otherwise, statements may not be admissible in court.

In German law, attorney–client privilege is limited to written communication between the suspect of a criminal offence and their defence attorney, as well as to documents prepared by the defence attorney in this context. Therefore, even though the protection is limited, it applies universally and may not be subject to seizure.

However, a different scenario applies to other attorney documents, such as work products in the form of work plans or interrogation protocols. These documents (eg, those created as part of internal corporate investigations) do not enjoy the protection of attorney–client privilege and can be seized by the competent law enforcement authority in the context of criminal proceedings. Therefore, it is advisable to carefully label and separately store protected and unprotected files to minimise the risk of protected documents being seized.

In civil proceedings, there is no possibility of compulsory seizure against the defendant.

German law strictly differentiates between fines and damages. Damages are intended to compensate the victim of fraud for the losses incurred and are neither meant to enrich the victim (known as the prohibition of enrichment through damages) nor to punish the fraudster.

In the context of sanctioning companies under Sections 30 and 130 of the Act on Administrative Offences, administrative law provides for an adjustment of the amount of the sanction upwards to exceed the benefits obtained through the offence.

However, these sanctions do not benefit the victim of fraud but, rather, the state treasury. Similarly, the sanctioning provisions do not confer a subjective right. A fine against the company cannot be demanded judicially.

Definition of Banking Secrecy

Banking secrecy is not legally defined in German law; however, it is acknowledged and assumed by law-makers, jurisprudence, and the banking industry. Banking secrecy can be understood as the obligation of a financial institution to maintain confidentiality regarding customer-related facts and assessments that have become known to it on the occasion of ‒ or in the course of – its business relationship with the customer and which the customer wishes to keep secret. The precise civil law anchoring of bank secrecy is disputed but is not relevant for further explanations.

Effects Arising From Banking Secrecy

However, banking secrecy primarily applies between the bank and the customer. In relation to law enforcement authorities, only the fundamental guarantee of their business secrets exists, which must be considered in the context of the proportionality of certain measures. In principle, the prosecution can collect questionable information through seizure and witness interrogation. Notably, banking secrecy does not confer a right to refuse to testify in criminal proceedings. A different scenario applies to civil proceedings. In this context, owners and employees of financial institutions can invoke a right to refuse to testify based on banking secrecy.

Under German civil law, ownership can only be held over tangible objects. Owing to their intangibility, crypto-assets are not considered tangible objects, and thus one cannot obtain ownership over them according to civil law. However, cryptocurrency units are tradable and therefore have a market value formed by supply and demand – meaning they have a value expressible in money. They are afforded legal protection as assets. Consequently, crypto-assets are also suitable subjects of fraud.

Similarly, cryptocurrencies are generally subject to confiscation under criminal law. However, there is an issue regarding the exact type of confiscation that applies to cryptocurrencies.

Although confiscation as a substitute asset would not be a problem in execution, it might legally fail owing to the priority of original confiscation. Nevertheless, original confiscation poses enforcement problems due to the unique nature of cryptocurrencies, as German law only recognises a right to grant factual control over crypto tokens. There may not be a right to the token itself, so it cannot be enforced in a manner applicable to third parties. Furthermore, on a practical level, it could fail owing to the state’s ignorance of the key combination. Therefore, some argue for assuming impossibility of original confiscation and instead proceeding through substitute asset confiscation.