Germany: Germany Introduces Class Actions For Consumer Claims

Last Updated: 11 July 2018
Article by Christian Fulda, Jakob Hübert, Rebekah Byers Kcehowski and Anna Masser

The Situation: The German Parliament has approved the Act on Model Declaratory Proceedings ("Act"), which introduces, for the first time, class action-style litigation for consumer claims.

The Plan: The Act will give qualified institutions the right to raise claims on behalf of groups of consumers in order to obtain a declaratory judgment. In contrast to the initial proposal to the German parliament, the Act now provides for the jurisdiction of the Higher Regional Courts in the first instance and includes a presumption that model proceedings always have fundamental significance. This allows the parties to file an appeal on points of law to the Federal Supreme Court.

Looking Ahead: The Act becomes effective on November 1, 2018.

The German Parliament has whipped through the legislation proposed by the German coalition government in record speed, in an effort to have the Act take effect at the end of this year. The core elements of the approved Act are:

  • A qualified institution may raise an action against a company to obtain a declaratory judgment on a question regarding a claim or a legal relationship between a consumer and a consumer-facing company. The right to sue is limited to only those institutions that have been registered for four years under the German Injunctive Relief Act or (if foreign) with the European Commission under Directive 2009/22/EC. Additionally, the institution must consist of 10 associations or 350 natural persons. Qualified institutions may not receive more than 5 percent of their finances from corporate entities and may not initiate model proceedings claims for profit.
  • A qualified institution filing a claim with a Higher Regional Court (Oberlandesgericht) initiates the claim, showing that at least 10 persons are affected by the alleged wrongdoing. Raising a claim under the Act does not prevent consumers from filing individual claims; however, no other model proceedings based on the same facts may be raised against the same defendant.
  • The claim is admissible if 50 applicants join the claim by registering their claims with the claims register within two months. Other affected consumers may join the proceedings by registering their claim until the day before the oral hearing.
  • The model proceedings end when the court issues a declaratory judgment or the parties reach a settlement. If the court issues a declaratory judgment, its findings have binding effect on any consumer who joined the proceedings. The consumer may initiate an individual proceeding for damages based on these findings. Alternatively, the parties may settle the claim. If they do so, settlement is subject to review by the court. The settlement is deemed valid unless 30 percent or more of all registered consumers explicitly opt out of settlement.
  • Any judgment under the Act may be (directly) appealed to the Federal Supreme Court (BGH).


At the outset, the Act does not provide for an easy way to enforce consumers' rights, as consumers still face the problem of having to raise individual claims once a consumer association has obtained a declaratory judgment under the Act. It remains to be seen whether consumer associations will want to file claims under the Act and whether consumers will want to initiate individual follow-on claims. Regardless, the Act will increase the risk of litigation for consumer-facing companies.

The fact that the right to initiate model proceeding claims is limited to qualified institutions does little to eliminate this risk because eligible consumer associations may well team up with law firms and third-party funders to pursue consumer claims. In fact, certain consumer associations have already announced their interest in cooperating with law firms and third-party funders in the pursuit of model proceedings against consumer-facing companies.

Another reason consumer-facing companies have an increased litigation risk is the fact that the Act limits the amount in dispute to a maximum of €250,000. As the court fees to be advanced by the plaintiff are derived from the amount in dispute, this relatively modest amount lowers the initial cost burden for the plaintiff.

One practical deficiency of the Act is that it does not give the defendant any bargaining power in settlement negotiations. If the defendant wants to make a settlement offer, it must offer enough money to pass the settlement review by the court. However, even if the court accepts the settlement, any consumer can still opt out of the settlement to wait for the next model proceedings claim or to raise an individual claim attempting to obtain a better offer. This may well initiate an upward spiral forcing the defendant consumer-facing company to offer an ever-increasing amount of money to the plaintiffs.

Because of this deficiency and the assumption that the questions raised in model proceedings are deemed to be of fundamental significance, there is an increased probability that judgments under the Act will be appealed on points of law to the Federal Supreme Court (BGH), which will lead to long and arduous proceedings.

Two Key Takeaways

  1. Under the new German class action-style legislation for consumer claims, we expect that qualified institutions may team up with law firms specialized in class action claims and litigation funding companies to initiate model proceedings against consumer-facing companies.
  2. Proceedings initiated under the Act will be of extended duration, while settlements may well be structurally difficult.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions