Germany has historically adopted a favourable stance toward investment arbitration. Notably, it concluded the world’s first bilateral investment treaty (BIT) with Pakistan in 1959 and is on the podium of states that have concluded the most such treaties. This longstanding commitment reflects Germany’s consistent recognition of the legal and economic significance of investment treaties.

Germany’s approach has evolved in response to developments within the European Union’s legal framework, particularly following the judgment of the Court of Justice of the European Union (CJEU) in Slovak Republic v Achmea B.V. (Case C-284/16, Achmea), which held that investor–state arbitration clauses in intra-EU BITs are incompatible with EU law. In line with this jurisprudence and subsequent EU policy, Germany, along with most EU member states, signed the Agreement for the Termination of Bilateral Investment Treaties Between the Member States of the European Union on 5 May 2020. This plurilateral termination treaty implements the Achmea decision by collectively cancelling the arbitration clauses (and other substantive provisions) of intra-EU BITs.

Germany formally withdrew from the Energy Charter Treaty (ECT), which took effect on 21 December 2023, citing concerns over the compatibility of the ECT’s investor–state dispute settlement provisions with EU law and climate policy objectives.

The Federal Government of Germany supports the European Commission’s efforts to establish a reformed multilateral framework for investment protection and dispute resolution, consistent with the EU’s evolving legal and policy landscape.

BITs concluded by Germany with third (non-EU) countries remain in force and continue to have full legal effect.

Germany is a contracting state to the 1958 New York Convention (the “NY Convention”) and has adopted its provisions without reservation. Specifically, Germany has not entered into either the commercial or reciprocity reservations permitted under Article I(3) of the Convention. Pursuant to Section 1061(1) of the Code of Civil Procedure, the recognition and enforcement of foreign arbitral awards in Germany are governed directly by the Convention.

Germany is a party to the European Convention on International Commercial Arbitration (ECICA), a regional treaty that aims to facilitate arbitral procedure among European states. Its most important feature is that it supplements the NY Convention. However, it has little practical relevance because its scope is narrow. It applies solely to cases such as when all parties to the arbitration agreement are based in contracting states and both the state of origin and enforcement are ECICA members.

Germany was among the early supporters and signees of the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the “ICSID Convention”), which was ratified on 18 April 1969. An autonomous and far-reaching regime of enforcement applies under the German Law on the Convention of 18 March 1965 on the Settlement of Investment Disputes (InvStreitÜbkG) for awards rendered under the ICSID Convention. Article 2(4) InvStreitÜbkG provides that an application for a declaration of the admissibility of enforcement of an ICSID award may only be refused if the award has been annulled under Articles 51 or 52 of the ICSID Convention.

Germany further signed the UNCITRAL Convention on Transparency in Treaty-Based Investor-State Arbitration (the “Mauritius Convention”) on 17 March 2015, which seeks to render investment arbitrations under legacy BITs more transparent. The ratification procedure by the EU is ongoing (see also 7.2 Confidentiality and Transparency).

On 5 May 2020, Germany joined 22 other EU countries in signing the Agreement for the Termination of Bilateral Investment Treaties between the Member States of the EU, which entered into force on 29 August 2020 (see also 1.1 National Position).

Finally, it is worth noting that Germany is also a party to the 1899 and 1907 Hague Conventions for the Pacific Settlement of International Disputes, which established the Permanent Court of Arbitration.

Until the 2010s, investor–state proceedings against Germany were essentially non-existent. The first investment case against Germany, Ashok Sancheti v Germany (2000) was terminated without an award being rendered. Germany did not face an ICSID arbitration until 2009 in Vattenfall AB, Vattenfall Europe AG, Vattenfall Europe Generation AG v Germany (ICSID Case No ARB/09/6; Vattenfall I). Vattenfall II in 2012 was triggered by extraordinary policy shifts on nuclear power in the aftermath of the Fukushima nuclear accident. In contrast, in the early 2020s, Germany faced an influx of ISDS claims – all in the energy sector, as foreign investors reacted to Germany’s ambitious energy transition policies (Energiewende) that include nuclear shutdown, coal phase-out and renewables re-regulation (see details in 1.5 Major Arbitrations). Despite the latter, the total number of cases against Germany stands at seven, which is small relative to the size of Germany’s economy and the number of BITs in force (see also 2.1 Bilateral and Multilateral Investment Treaties). In addition, Germany’s prevalence of ISDS as a respondent has been mitigated by settlements.

By contrast, German investors abroad have been active claimants in over 85 cases over the same period.

The key industry that has experienced ISDS in Germany as a respondent is the energy sector. The influx of cases is rooted in energy transition and policy changes.

Germany has been involved as a respondent in seven publicly known cases, all but one commenced under the ECT.

2009 – Vattenfall AB, Vattenfall Europe AG, Vattenfall Europe Generation AG v Germany (ICSID Case No ARB/09/6; Vattenfall I)

Swedish utility Vattenfall and partners commenced ICSID proceedings against Germany under the ECT over delays and environmental restrictions on a new coal-fired power plant (Moorburg in Hamburg). This marked the first major ICSID case against Germany. The principles debated were indirect expropriation, fair and equitable treatment, full protection and security and arbitrary, as well as unreasonable and/or discriminatory measures. No breaches were found and the parties settled the dispute in 2011.

2012 – Vattenfall AB and others v Germany (ICSID Case No ARB/12/12; Vattenfall II)

In response to Germany’s post-Fukushima legislation to accelerate nuclear power phase-out, Vattenfall (as co-owner of two nuclear plants) filed a second ICSID claim under the ECT. The principles debated were indirect expropriation, fair and equitable treatment, the umbrella clause and full protection and security, as well as arbitrary, unreasonable and/or discriminatory measures. In 2018, the German Constitutional Court ruled on the parallel constitutional complaint (Verfassungsbeschwerde) and ordered the government to compensate nuclear operators. Germany subsequently reached a EUR2.4 billion settlement which concluded the arbitration.

2019 – Strabag SE, Erste Nordsee-Offshore Holding GmbH and Zweite Nordsee-Offshore Holding GmbH v Germany (ICSID Case No ARB/19/29)

Strabag initiated ICSID proceedings against Germany under the ECT. The tribunal issued an award in favour of the investor in the amount of approximately EUR240 million – reportedly the first-ever investment arbitration award against Germany. While details remain confidential, the case concerned claims arising out of the government’s legislative changes to its renewable energy regime, including for offshore wind energy production, which allegedly caused the claimants to abandon their offshore wind projects.

2021 – Mainstream Renewable Power Ltd and others v Germany (ICSID Case No ARB/21/26)

Similar to the Strabag case, this ICSID arbitration under the ECT concerns claims arising from the government’s regulatory measures regarding its wind energy regime, which allegedly affected the claimants’ wind energy projects, resulting in a loss to their investments. The Tribunal held that Article 26 of the ECT provided unconditional consent to arbitration and therefore rejected Germany’s intra-EU objection.

2022–2023 – Klesch and Raffinerie Heide v Germany (ICSID Case No ARB/23/49) and AET v Germany (ICSID Case No ARB/23/47)

Shortly before Germany formally withdrew from the ECT (see also 1.1 National Position), two ECT claims were lodged: Azienda Elettrica Ticinese (AET) v Germany (a Swiss investor in a coal plant) and Klesch v Germany (a UK investor in an oil refinery). In AET v Germany, the claims arise from the government’s 2020 decision to prohibit energy production from coal-fired power plants, mandating the shutdown (by 2031) of a coal-fired power plant in Lünen in which the claimant had invested. Shortly after, several entities belonging to Klesch Group have simultaneously lodged a trio of arbitration proceedings against Denmark, Germany and the European Union. The claims stem from the EU Council Regulation 2022/1854 on an emergency intervention to address higher energy prices, which Germany implemented in late 2022. This Regulation adopted measures aimed at:

• reducing electricity consumption;
• introducing price caps on certain energy producers; and
• introducing a windfall profit tax (also “solidarity contribution” of 33% on excess revenue generated from oil, gas, coal and refinery activities).

Conversely, German investors have been involved in over 85 investor-state proceedings. Some of the latest cases which commenced in 2024 are:

• Hüseyin Avni Kiper and Yusuf Aydemir v Federal Democratic Republic of Ethiopia (PCA Case No 2024-44) in the education sector; and
• Wintershall Dea GmbH v Russian Federation (I) and Wintershall Dea GmbH v Russian Federation (II) concerning the extraction of crude petroleum and natural gas.

Since the first adverse award against Germany was issued in December 2024 in Strabag SE et al v Germany (ICSID Case No ARB/19/29) (see also 1.5 Major Arbitrations), the state has adopted an offensive approach against awards rendered under the ECT. Germany filed a request for rectification under Article 49 of the ICSID Convention, arguing the award contained factual or clerical errors warranting correction. Simultaneously, Germany requested a stay of enforcement of the award until the decision on the rectification is rendered. The tribunal rejected the latter due to a lack of authority to order the stay.

Meanwhile, Strabag has filed a petition in a US court to recognise and enforce the award. In August 2025, Germany initiated ICSID annulment proceedings (under Article 52 of the ICSID Convention). The situation is in legal limbo, pending a decision on the annulment.

Germany has ratified 134 BITs. 113 are still in force. The German Ministry for Economics and Energy (BMWE) provides an exhaustive list on its homepage. The list includes the agreements that have entered into force, as well as expired agreements and those that have been signed but have not yet entered into force.

For ongoing negotiations, see also 2.3 Free Trade Agreements.

The treaties outlined in 2.1 Bilateral and Multilateral Investment Treaties are based on the 2008 Model BIT, which replaced the 1998 Model BIT and contains the following basic protections:

• fair and equitable treatment (Article 2);
• full protection and security (Article 2);
• protection against arbitrary or discriminatory measures (Article 2);
• national treatment (NT) and most-favoured-nation (MFN) treatment (Article 3 – with the caveat that measures to be taken for reasons of public security and order shall not be deemed less favourable treatment);
• protection against unlawful expropriation (Article 4);
• free transfer of payments (Article 5); and
• umbrella clause (Article 7.2).

The 2008 Model BIT contains both state-to-state (Article 9) and investor–state dispute settlement (Article 10) mechanisms.

Germany is part of the EU’s free trade structure, including the Comprehensive Economic and Trade Agreement with Canada (CETA), the EU-Japan Economic Partnership Agreement, the EU-Vietnam Free Trade Agreement, the EU-Singapore and EU-Mexico agreement. In 2026, the EU concluded negotiations on both the EU-Australia Free Trade Agreement, securing breakthroughs on agricultural tariffs and digital trade and the EU-India Free Trade Agreement, following the relaunch of negotiations in 2022. Both agreements require ratification and have not yet entered into force. Furthermore, the EU-Mercosur partnership agreement entered into provisional application and ratification is expected to take years.

Germany has no official commentaries on investment treaties or similar official interpretive aids.

Germany has no national investment law. For relevant laws and their interactions with investment treaties, see 1.2 Arbitration Conventions.

While investment contracts with arbitration clauses between a foreign investor and the federal government or one of the 16 federal states may in theory be concluded in specific contexts, such as large infrastructure or privatisation projects, Germany defers investment protection to its extensive portfolio of BITs, which generally offer more comprehensive and reliable protection mechanisms for investors. Indeed, arbitration agreements in investment contracts can be entered into only for matters in which administrative contracts are admissible under German administrative law, which limits the arbitrability of certain matters (eg, tax) that are not subject to such limits under BITs.

Against Germany, breaches of fair and equitable treatment and indirect expropriations have been invoked the most. This is due to the nature of the legislative changes that have occurred in the context of Germany’s energy transition (see also 1.3 Prevalence of Investor–State Arbitration).

Parties may freely determine the number of arbitrators, the method of their appointment and the qualifications they should possess. In domestic arbitration proceedings in particular, it is not uncommon for professionals such as engineers, accountants or other subject-matter experts to be selected as arbitrators, depending on the technical nature of the dispute.

However, this freedom is subject to safeguards. The most significant limitation concerns arbitrators’ impartiality and independence. They are under a continuing duty to disclose any circumstances that may give rise to justifiable doubts in this regard. While there are no statutory nationality requirements, parties remain free to impose such conditions contractually. Under Section 1036(2) of the German Code of Civil Procedure (ZPO), an arbitrator may be challenged if circumstances exist that give rise to justifiable doubts regarding their impartiality or independence.

Beyond this, public policy considerations may restrict party autonomy. Any appointment mechanism that violates fundamental principles of fairness or procedural equality will be deemed invalid. Section 1034(2) ZPO introduces a corrective mechanism where the arbitration agreement grants one party a dominant role in the appointment process – such as the exclusive right to nominate the sole or presiding arbitrator. In such cases, the disadvantaged party may, within two weeks of becoming aware of the arbitral tribunal’s composition, request the competent court to intervene and appoint a substitute arbitrator.

If there is no agreement between the parties on the appointment procedure, Section 1035(3) ZPO provides a standard procedure when German lex arbitri is applicable. In a three-member arbitral tribunal, each party appoints its own arbitrator and the two party-appointed arbitrators then appoint the presiding arbitrator.

Should a party fail to appoint its own arbitrator and subsequently fail to do so within one month of a request by the other party, the other party may request the court to make the appointment. If the party-appointed arbitrators fail to agree on a chairperson within one month of their appointment or if the parties fail to agree on a sole arbitrator, the court will make the appointment upon a party’s request.

According to Section 1035(4) ZPO, if the parties have agreed on a procedure for appointing arbitrators and one party fails to act as required or if the parties or co-arbitrators cannot reach an agreement, the competent court may be called upon to make the appointment. This ensures the arbitration process does not stall due to procedural deadlock.

German arbitration law currently provides no specific rules for multi-party arbitrations. The proposed arbitration law reform currently being examined by the German parliament provides a mechanism for courts to appoint co-arbitrators in multi-party arbitrations when parties on one side fail to agree on a joint arbitrator. Under the proposed new regime, the court may also, in appropriate cases, make, in addition to the default appointment, an appointment of the other co- arbitrator.

In Germany, courts may intervene in the selection of arbitrators, but only under specific conditions and within the framework set out in the ZPO, particularly in Sections1034 and 1036. This intervention is designed to support, rather than override, party autonomy, which remains a core principle of German arbitration law. The courts will intervene to appoint arbitrators where the parties and/or the co-arbitrators fail to do so (Section 1035 (3)-(5) ZPO, see also 4.2 Default Procedures).

Furthermore, Section 1037 ZPO allows a party to request court assistance if a challenge to an arbitrator has been rejected by the arbitral tribunal itself. In such cases, the court will make a final and binding decision on the challenge.

Courts will also intervene where the appointment mechanism violates fundamental principles of fairness or procedural equality (see also 4.1 Limits on Selection).

With regard to challenges, a two-tier system applies:

• a party can file a challenge with the arbitral tribunal (Section 1037 (1)-(2) ZPO); and
• if the arbitral tribunal dismisses the challenge, the challenging party may apply to the competent higher regional court to decide the challenge.

Otherwise, the challenging party is generally precluded from invoking the improper constitution of the arbitral tribunal in post-award proceedings on the ground that the arbitral tribunal was not properly constituted. The court is not bound by the decision of the arbitral tribunal or of a third party (such as an institution or an appointing authority). The parties cannot waive recourse to the courts.

Pursuant to Section 1036(2) ZPO, an arbitrator may only be disqualified if circumstances exist that give rise to justified doubts as to their impartiality or independence or if they do not meet the requirements agreed between the parties.

German arbitration law and the German Arbitration Institute’s 2018 Arbitration Rules (DIS and the “DIS Arbitration Rules” respectively) do not further qualify the independence and impartiality requirements contained in Section 1036(1) ZPO and Section 9.1 DIS Arbitration Rules. A challenged arbitrator’s compliance with these requirements is assessed on a case-by-case basis.

The International Bar Association (IBA) Guidelines on Conflicts of Interest in International Arbitration, last updated in 2024 (the “IBA Guidelines”), are widely known and used in Germany. Some courts apply the standard applicable to state judges to assess whether the facts give rise to justifiable doubts as to an arbitrator’s impartiality and independence. In this respect, courts also tend to consider the principles laid down in the IBA Guidelines. Despite that, the courts do not explicitly refer to or stress that they are not bound by, the IBA Guidelines.

The DIS Arbitration Rules follow an objective approach; ie, the disclosures shall include any facts or circumstances that could cause a reasonable person in the position of a party to have doubts as to the arbitrator’s impartiality and independence (Section 9.4 DIS Arbitration Rules). This disclosure obligation remains for the entire duration of the arbitration (Section 9.6 DIS Arbitration Rules).

German arbitration law empowers arbitral tribunals to grant interim measures (Section 1041 ZPO). However, the parties may agree to exclude the arbitral tribunal’s authority to do so (Section 1041(1) ZPO).

Arbitral tribunals enjoy broad discretion in determining the nature and scope of interim relief (eg, attachment, preliminary injunctions), but they lack enforcement powers and cannot compel compliance on their own. To ensure enforceability, judicial assistance is required (Section 1041(2) ZPO). When called upon to enforce such measures, German courts do not reassess the underlying merits of the case, in line with the prohibition of judicial review on the merits (révision au fond).

The validity of ex parte interim measures ordered by the arbitral tribunal remains controversial, but under the prevailing view, they should be permissible under the same conditions that apply to state courts, including the obligation to grant the affected party a subsequent right to be heard.

German courts may issue interim measures before and during arbitral proceedings, including where the arbitration is seated outside Germany, provided the court has international jurisdiction (Sections 1033 and 1025(2) ZPO). Such relief may be granted ex parte and, depending on the urgency and circumstances, can be issued within a very short time.

Typical forms of interim protection include pre-award attachments to secure monetary claims, preliminary injunctions to preserve rights or prevent harm and orders to safeguard or secure evidence.

Where a party successfully demonstrates that the interim measure was unjustified from the outset, the applicant may be held liable for damages resulting from its enforcement (Sections 945 and 1041(4) ZPO).

German arbitration law does not forbid the use of emergency arbitrators and decisions of emergency arbitrators are treated as any other form of interim relief under Section 1041 ZPO. Accordingly, where interim relief is sought in Germany based on a decision rendered by an emergency arbitrator in an arbitration with a foreign seat, deviation from the requirements of Section 1041 ZPO and, for ex parte relief, the lack of subsequent hearing of the affected party, may pose a problem with the enforcement of the measures by German courts (see also 5.1 Types of Relief).

As emergency arbitrators are not treated differently from the remaining forms of interim relief under Section 1041 ZPO, courts may still intervene once an emergency arbitrator has been appointed.

German arbitration law does not expressly regulate the issue of security for costs. Consequently, if a party applies for such security, the arbitral tribunal would have the power to grant it, to the extent allowed by the applicable arbitration rules.

Section 110(1) of the Code of Civil Procedure, which requires claimants domiciled outside the European Union or European Economic Area to furnish security for costs upon request in state courts litigation, extends to proceedings seeking the recognition and enforcement of arbitral awards. The Federal Court of Justice (12 January 2023, I ZB 33/22) has given up its previous position and established that Section 110 (1) ZPO applies by analogy to such proceedings.

Third-party funding is permissible in Germany and not regulated under German law. However, the involvement of a non-party funder may raise both confidentiality and transparency concerns. To mitigate the risk of unauthorised disclosure, it is standard practice to require funders to enter into confidentiality agreements. As regards the attorney-client relationship, German law restricts lawyers’ contingency fees pursuant to Section 49 lit. b of the German Federal Lawyers’ Act (BRAO).

No domestic court decisions address current issues of third-party funding in arbitration.

German law does not obligate parties to disclose third-party funding. In contrast, the European Parliament passed a resolution in 2022 recommending a Directive to regulate third-party funding, including mandatory disclosure and authorisation systems for funders. However, as of mid-2026, no binding EU legislation has been enacted and Germany has not adopted such rules independently.

Moreover, third-party funding does not trigger a requirement for security for costs under the ZPO, including German arbitration law. State courts, for example, assess such applications on a case-by-case basis, considering factors such as the prima facie likelihood of success of the claim and the plaintiff’s financial standing (see also 5.3 Security for Costs).

Under Article 11 of the 2008 German Model BIT, the path to arbitration includes a so-called cooling-off period and an 18-month local litigation clause.

The cooling-off period requires written notice of the dispute and amicable consultations. The investor must first officially notify the host state of the dispute and subsequently engage in consultations to resolve the matter amicably. The model BIT stipulates a six-month cooling-off period from the date of notice, during which arbitration proceedings are prohibited.

In addition to the cooling-off period, either party may submit the dispute to the competent domestic court. The disputes may be submitted to an arbitral tribunal if 18 months have elapsed since initiating domestic proceedings or if both parties agree to arbitration.

The 18-month local litigation requirement in German BITs has been widely discussed. Notably, arbitral case law shows mixed approaches: some tribunals strictly uphold the requirement as part of the state’s consent to arbitration, while others have allowed investors to bypass it using most-favoured-nation (MFN) clauses. For instance, in Siemens AG v Argentina (ICSID Case No ARB/02/8), the German investor invoked an MFN clause to avoid the Argentina-Germany BIT’s 18-month local courts requirement, a move the tribunal accepted by importing a more favourable dispute resolution clause from another treaty.

Germany has actively supported greater transparency in investor–state arbitration. On 11 July 2013, the United Nations Commission on International Trade Law (UNCITRAL) adopted comprehensive new transparency rules for investor–state arbitration proceedings. As a full member of UNCITRAL, the German government actively participated in the drafting of the new transparency rules.

However, all existing German BITs were concluded before 2014. The UNCITRAL transparency rules do not apply to investor–state arbitration under these treaties.

In order to enable the application of the UNCITRAL transparency rules to legacy agreements, the so-called Mauritius Convention was enacted. It extends the application of the UNCITRAL transparency rules to existing investment protection agreements (see also 1.2 Arbitration Conventions).

German arbitration law imposes no inherent restrictions on the types of remedies a final award may grant. In the absence of limitations agreed upon by the parties, arbitral tribunals are empowered to award any relief that a competent state court could grant in comparable proceedings. This includes, but is not limited to, compensatory damages orders for specific performance, declaratory relief and interim measures.

Punitive damages, however, are contrary to ordre public and a Germany-seated arbitral tribunal may not award them, even when applying the substantive law of another state.

The arbitral tribunal’s authority is confined to the scope of the claims submitted by the parties. Relief granted beyond the bounds of the pleadings constitutes an ultra petita ruling, which may expose the award to annulment or refusal of enforcement under Section 1059(2) No 1(c) ZPO and Article V(1)(c) of the New York Convention.

The most popular and recognised valuation method in domestic courts is the capitalised earnings method (Ertragswertverfahren). The IDW S1 standard, an authoritative guideline for business valuation published by the Institute of Public Auditors in Germany, sets out the procedure. This method focuses on future maintainable earnings, capitalised using a risk-adjusted discount rate. The German Supreme Court (Bundesverfassungsgericht) has deemed the method constitutional.

The internationally recognised discounted cash flow method (DCF) is equally recognised under the IDW S1 Standard. In practice, German auditors typically perform one method as the primary valuation and use the other as a cross-check to validate the outcome.

Market-based approaches are not an independent method under the IDW S1 standard. They are used as a cross-check or secondary method and are based on comparable company or transaction multiples (eg, EV/EBITDA). It is less common as a standalone method in German court proceedings due to data limitations and subjectivity in selecting comparables.

Net asset value/liquidation value is backwards-looking in nature and considers only the sum of individual assets in contrast to the DCF method. As a result, its application is limited to insolvency, real estate or asset-heavy industries.

Germany generally follows a “costs-follow-the-event” approach (English rule). Parties are entitled to recover legal and expert fees and arbitral institution costs. Under Section 1057 of the Code of Civil Procedure, arbitral tribunals in Germany are vested with broad discretion to allocate the costs of the proceedings, unless the parties have agreed otherwise. In exercising this discretion, arbitral tribunals are expected to consider all relevant circumstances, with particular emphasis on the outcome of the dispute.

However, arbitral tribunals increasingly consider additional factors when allocating costs. These may include procedural conduct such as obstructive tactics, the handling of jurisdictional objections, excessive document production requests or non-compliance with procedural orders. As a result, a party may be ordered to bear a portion of the arbitration costs – including arbitrator fees and legal expenses – regardless of the substantive outcome.

German arbitration law is silent on the question of interest. If and to what extent interest will be awarded depends on the substantive law applicable to the dispute.

The duty to mitigate its losses is recognised as a general principle of public international law. In German civil law, it is expressly stipulated in Section 254 BGB and rooted in the principle of full compensation (Grundsatz der Naturalrestitution) of Section 249 para. 1 BGB.

Germany is a contracting state to the New York Convention and has adopted its provisions without reservation. Specifically, Germany has not entered either the commercial or reciprocity reservations permitted under Article I(3) of the Convention. Pursuant to Section 1061(1) of the Code of Civil Procedure, the recognition and enforcement of foreign arbitral awards in Germany are governed directly by the Convention.

To initiate enforcement proceedings in Germany, the applicant must submit a written application or make a formal declaration at the court registry (Section 1063(4) ZPO). The application must be accompanied by the arbitral award or a certified copy thereof (Section 1064(1) ZPO). Unlike the stricter documentary requirements under Article IV of the New York Convention, German courts apply the more liberal standard permitted by Article VII(1), meaning that a translation, typically of the dispositive part, is submitted in practice, though not strictly required.

German courts may refuse enforcement on any of the grounds listed in Article V of the New York Convention (ie, for invalidity of the arbitration agreement, lack of proper notice or inability to present one’s case, excess of jurisdiction, irregular composition of the arbitral tribunal or procedure, award not yet binding or set aside, subject matter not arbitrable under German law or recognition or enforcement would be contrary to ordre public).

The Federal Court of Justice (12 January 2023, I ZB 33/22) has abandoned its previous position and found that Section 110(1) ZPO, which provides for security for costs, applies by analogy to recognition and enforcement proceedings.

Additionally, awards rendered in the form of a consent award (ie, awards on agreed terms) in foreign arbitral proceedings are enforceable under Section 1061 ZPO, as confirmed by the Bavarian Superior Court (20 November 2023, 102 Sch 173/23e).

The Federal Court of Justice (9 March 2023, I ZB 33/22) has held that a foreign court’s refusal to annul an award does not preclude German courts from independently assessing enforceability. Where set-aside proceedings are pending at the seat, German courts may suspend enforcement proceedings in accordance with Article VI of the New York Convention. Courts exercise this discretionary power on a case-by-case basis, taking into account the likelihood of annulment and the interests of procedural efficiency.

Under German law, a state or state entity may only invoke sovereign immunity successfully if the enforcement measure would interfere with sovereign (as opposed to commercial) activity. The burden lies with the state to demonstrate that the act in question qualifies as acta iure imperii. This principle is also reflected in Article 31(4) of the Vienna Convention on Consular Relations, which Germany ratified through the Consular Relations Act (KonsÜbkG).

The Higher Regional Court (Kammergericht) of Berlin (4 June 2012, 20 Sch 10/11) ruled on the sovereign immunity defence in enforcement proceedings and established that states have no general immunity in enforcement proceedings. In particular, the state waives its sovereign immunity when concluding an arbitration agreement to the extent of the agreement.

German courts generally support enforcement of investment arbitration awards, as well as investor–state arbitration proceedings.

However, specifically with regard to intra-EU disputes, German courts have aligned with the decisions rendered by the European Court of Justice in its recent judgments in the Achmea and Komstroy cases, pursuant to which arbitration clauses are considered invalid as far as disputes between a member state and an investor from another member state are concerned.

Most recently, German courts have also affirmed this for intra-EU investment arbitrations conducted under the ICSID Convention. They did so by relying on a particularity of German arbitration law: the respondent may apply to the Higher Regional Court to declare an arbitration inadmissible before the arbitral tribunal is constituted (Section 1032 ZPO).

In April 2022, the Higher Regional Court of Berlin rejected Germany’s application to declare the Mainstream Renewable Power Ltd et al v Germany arbitration inadmissible. The court held that the dispute resolution mechanism established under the Washington Convention constitutes a self-contained legal regime and that Article 1032 ZPO does not permit challenges to the admissibility of ICSID proceedings. The tribunal in the underlying arbitration proceedings reached the same conclusion regarding Germany’s objection that Article 26 ECT provides unconditional consent to arbitration and declared the arbitration proceedings admissible. By contrast, in September 2022, the Higher Regional Court of Cologne declared two ICSID arbitrations filed by German investors against the Netherlands inadmissible under Section 1032 ZPO, finding that the arbitration clause in Article 26 ECT violates EU law. In doing so, it expressly referred to the Achmea judgment of the European Court of Justice.

Both Germany in the Mainstream case and the investors in the two cases against the Netherlands appealed to the German Federal Court of Justice, which rendered its decision on 27 July 2023. The Federal Court of Justice joined the Higher Regional Court of Cologne’s position that intra-EU arbitration clauses that refer disputes between the parties to ICSID tribunals contravene EU law and are therefore inadmissible under German procedural law.

It is therefore to be expected that German courts will no longer recognise and enforce intra-EU awards, regardless of whether the underlying arbitrations were conducted under the Washington Convention or other arbitration rules. While the tribunal in Mainstream rejected Germany’s intra-EU objection, this will probably not affect the German courts’ jurisprudence.

At the same time, German courts are generally reluctant to interfere with enforcement of intra-EU awards in non-EU jurisdictions, as demonstrated in the recent judgment of the German Regional Court of Essen concerning the enforcement of the RWE Innogy v Spain award in the US. The respondent state requested the German court to restrain the claimant from enforcing the intra-EU award in the US, citing the award’s incompatibility with EU law. The German court in this case refused to issue such injunctive relief with reference to, inter alia, the universal principle of state sovereignty and territoriality, which in the court’s view would have been violated had the German court granted the requested relief in relation to the US enforcement proceedings.

German courts adopt a pro-enforcement stance towards arbitral awards, both domestic and foreign. In practice, the grounds for refusing recognition and enforcement under Article V of the New York Convention are interpreted narrowly. German courts have frequently declined to find that a defence exists, even in cases where foreign courts have exercised discretion to deny enforcement. In the enforcement context, only violations of international public policy (those that offend Germany’s most fundamental legal principles) will justify refusal. In particular, German courts adopt a strict interpretation of the prohibition of judicial review of the merits of an arbitral award by state courts (révision au fond).

Where a party invokes a defence under Article V(1) of the New York Convention, German courts may still assess whether the same facts give rise to a violation of procedural public policy under Article V(2)(b) of the New York Convention. This is particularly relevant in cases involving the absence of a valid arbitration agreement or a breach of the right to be heard.

See 9.1 Enforcement Procedure for the position of domestic courts in respect of sovereign immunity.

State assets can be identified prior to and within enforcement proceedings.

Prior to enforcement proceedings, creditors can access a public register that provides data on specific asset types.

• The land registers (Grundbücher) provide ownership and encumbrance details for real estate.
• The motor vehicle register (Fahrzeugregister) lists registered keepers of vehicles.
• Vessel and aircraft registers (Schiffsregister and Luftfahrzeugrolle, respectively) contain ownership and third-party rights information for ships and planes.
• Intellectual property rights can be traced through the German Patent and Trade Mark Office (Deutsches Patent- und Markenamt), which maintains registers for patents, trade marks, utility models and designs.
• In respect of German corporations, ownership is reported in the commercial register (Handelsregister), insolvency in the insolvency register (Insolvenzregister) and for specific forms, financial reports are published in the company registry (Unternehmensregister).

At the enforcement stage, the debtor is obligated to disclose all relevant financial information and assets to a court-appointed enforcement officer under Section 802 lit. c ZPO. This disclosure must be confirmed by statutory declaration (in lieu of an oath) and covers all assets unless specifically exempted from enforcement.

Enforcement is limited to the state’s commercial assets (acta jure gestionis) (see 9.1 Enforcement Procedure).

To prevent asset dissipation, creditors may also seek freezing orders. These can be issued by state courts under Sections 916 and following of the ZPO or by arbitral tribunals under Section 1041 ZPO if the arbitration is seated in Germany.

Piercing the corporate veil in Germany is a limited exception to the rule of limited shareholder liability established by the German Federal Court of Justice – eg, in the Trihotel case of 2007. A shareholder in Germany can generally rely on the corporate veil unless they themselves engaged in wrongful conduct such as commingling assets, intentionally undercapitalising to defraud, using the company as a facade for illicit dealings or stripping the company’s assets. In those exceptional cases, courts will “see through” the entity and hold the individual accountable, often citing that legal personality cannot be a vehicle for fraud, inter alia under Section 826 BGB (intentional abuse). The principle also applies in the context of groups of companies in exceptional circumstances. Generally, each company within a corporate group is treated as a separate legal entity with its own rights and liabilities. The pretence of a right in a corporate group (Rechtsscheinhaftung im Konzern) constitutes an exception. Pretence occurs in cases of de facto domination and asset shifting as well as the blurring of corporate group boundaries (Sphärenvermischung) – eg, when the same individual manages the parent and subsidiary. In addition, in stock corporation (AG) groups, German law provides for formal control agreements (Beherrschungs- und Gewinnabführungsvertrag), which stipulate the parent’s liability for the subsidiary’s losses.

On a separate yet related note, piercing the corporate veil does not apply to the extension of an arbitration agreement. On 9 March 2023, the German Federal Court of Justice (I ZB 33/22) confirmed the Higher Regional Court of Koblenz’s decision to refuse recognition and enforcement of an arbitral award issued in Russia. Among others, the BGH held that the Arbitral Tribunal exceeded its personal jurisdiction by extending an arbitration agreement to a de facto group of companies.