1 Legal and judicial framework
1.1 Which legislative and regulatory provisions govern the recognition and enforcement of foreign judgments in your jurisdiction?
Under German law, the recognition of foreign judgments is governed in particular by Section 328 of the German Code of Civil Procedure (Zivilprozessordnung), while the enforcement of foreign judgments is governed by Sections 722 and 723 of the Code of Civil Procedure.
Section 328 and Sections 722 and 723 of the Code of Civil Procedure apply only to the extent that no specific instrument, such as a regulation or convention, is applicable.
1.2 Which bilateral and multilateral instruments on the recognition and enforcement of foreign judgments have effect in your jurisdiction?
The following EU regulations apply (among others), as Germany is an EU member state and has not opted out from them or restricted their application:
- EU Regulation 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast);
- EU Regulation 1346/2015 on insolvency proceedings (recast);
- EU Regulation 1896/2006 creating a European order for payment procedure;
- EU Regulation 805/2004 creating a European enforcement order for uncontested claims; and
- EU Regulation 655/2014 establishing a European account preservation order procedure to facilitate cross-border debt recovery in civil and commercial matters
Germany is also a signatory to the following bilateral and multilateral conventions:
- the Lugano Convention 2007 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters;
- the Treaty of 19 July 1966 between Germany and Tunisia on legal protection, legal assistance and the recognition and enforcement of foreign judicial decisions in civil and commercial matters and on commercial arbitration;
- the Treaty of 20 July 1977 between Germany and Israel on the mutual recognition and enforcement of judgments in civil and commercial matters; and
- the Hague Convention on the Recognition and Enforcement of Decisions Relating to Maintenance Obligations 1973.
1.3 Which courts have jurisdiction to hear applications for the recognition and enforcement of foreign judgments?
According to Section 722 II of the Code of Civil Procedure, a foreign judgment creditor must sue at the place where the defendant is located in Germany. Alternatively, the lawsuit may be brought in the district of the court where the defendant's assets are located (Section 23 of the Code of Civil Procedure). Subject-matter jurisdiction is assessed based on the amount in dispute in the enforcement proceedings. The district courts (Amtsgerichte) are competent (Section 23(1) of the Courts Constitution Act (Gerichtsverfassungsgesetz)), unless the amount in dispute exceeds €5,000. In the latter case, the regional courts (Landgerichte) have subject-matter jurisdiction (Section 23(1), 71 I of the Courts Constitution Act).
2 Requirements for enforceability
2.1 What types of judgments may be recognised and enforced in your jurisdiction? Are any types of judgments specifically precluded from enforcement?
The term "decision" in sect. 328 I of the Code of Civil Procedure is defined as any type of final binding decision of substantive nature issued by a foreign court in civil matters which may include commercial, labour and employment, as well as competition law matters.
In order to classify a foreign judgment as a decision in civil matters, a German court will assess the subject matter of the foreign judgment. The German courts base this assessment on the German lex fori and therefore on the legal notion of the subject matter in dispute. The name, function or type attributed to a foreign body under its own laws is not relevant to this assessment.
Declaratory judgments, judgments on a change of legal right or status, and judgments dismissing an action cannot be recognised and enforced, to the extent that they do not have enforceable content.
Judgments in family matters are not decisions in civil matters and do not fall within the scope of Section 328 of the Code of Civil Procedure. These judgments are recognised and enforced according to Sections 107 et seqq. of the Act on Proceedings in Family Matters and in Matters of Non-contentious Jurisdiction (Gesetz über das Verfahren in Familiensachen und in den Angelegenheiten der freiwilligen Gerichtsbarkeit).
Judgments must, in principle, be distinguished from court settlements and enforceable public deeds. The latter two generally do not constitute decisions for the purposes of Section 328 of the Code of Civil Procedure, unless the foreign court reviews and controls the legality of such acts.
Further, interim measures and court orders on the taking or securing of evidence are not final and binding decisions.
2.2 Must a foreign judgment be final and binding before it can be enforced?
Yes. See question 2.1.
2.3 Is a foreign judgment enforceable if it is subject to appeal in the foreign jurisdiction?
In principle, the foreign judgment must have attained legal validity in order to be enforceable (Section 723 II sentence 1 of the Code of Civil Procedure). Whether a foreign judgment has attained such legal validity will be determined by the law of the country in which the foreign judgment was rendered. Under German law, a judgment will attain formal legal validity (formelle Rechtskraft) if the deadline for legal remedies has expired (cf Section 705 of the Code of Civil Procedure).
2.4 What is the limitation period for making an application for recognition and enforcement?
German law does not provide for a statute of limitation period to initiate legal actions to obtain an enforcement judgment. However, Section 197 I No 3 of the German Civil Code (Bürgerliches Gesetzbuch) stipulates that claims which have been declared final by way of judgment, court settlement or arbitral award become time-barred after 30 years.
3 Recognition and enforcement process
3.1 Is recognition of a foreign judgment a separate process from enforcement and does it have separate legal effects?
German law distinguishes between recognition (Section 328 of the Code of Civil Procedure) and enforcement (Sections 722 and 723 of the Code of Civil Procedure).
Recognition: Recognition of a foreign judgment is granted automatically (ie, ipso iure). The exact scope of the legal effects of recognition in Germany is in dispute. The majority of scholars argue that a foreign judgment will have the same legal effects as in the foreign jurisdiction.
Therefore, every public authority, notary or court in Germany must respect the foreign judgment and act in accordance with its effects without any prior recognition procedure. However, a foreign judgment will not have more effects than a German judgment in Germany.
Enforcement: ‘Enforcement' is the compulsory execution of a decision by means of German enforcement measures. The enforcement of a foreign judgment in Germany is admissible only if a German court has issued an enforcement judgment in favour of the foreign judgment creditor (exequatur proceedings).
This enforcement judgment will serve as the basis for compulsory execution in Germany if the foreign judgment debtor does not fulfil the judgment.
3.2 What is the formal process for recognition and enforcement?
As recognition of a foreign judgment is granted ipso iure (see question 3.1):
- the Code of Civil Procedure does not stipulate any recognition procedure; and
- any party may file a positive or negative declaratory action (Section 256 I of the Code of Civil Procedure) with the competent court and request it to declare that the foreign judgment meets (or does not meet) the requirements set out in Section 328 I of the Code of Civil Procedure.
The Code of Civil Procedure does not stipulate a specific enforcement procedure. Therefore, the general procedural rules of the Code of Civil Procedure apply, as follows:
- The foreign judgment creditor must bring a lawsuit (eg, an application to declare the foreign judgment enforceable) against the foreign judgment debtor before the competent German courts;
- Once the court has notified the foreign judgment debtor of the application, followed by potentially one or two rounds of submissions, the court may hold an oral hearing (Section 128 I of the Code of Civil Procedure); and
- The verdict declaring the foreign judgment enforceable is rendered according to the general rules of the Code of Civil Procedure applicable to all other verdicts.
The requirements which the plaintiff must fulfil in order to have the foreign judgment declared enforceable are stipulated in Sections 722 and 723 of the Code of Civil Procedure.
3.3 What documents are required in support of an application for recognition and enforcement?
When filing an application, the plaintiff must supply a duly certified copy of the foreign judgment. Additionally, the German court may request authentication of the foreign judgment by a consular officer, as a foreign judgment – unlike German judgments – is not deemed to be authentic (Section 438 I of the Code of Civil Procedure).
If the country in which the foreign judgment was rendered is a contractual party to the Hague Convention on Abolishing the Requirement of Legislation for Foreign Public Documents of 1961, the plaintiff must request the respective foreign competent authority to issue an apostille and supply the German court therewith.
German courts can also order the plaintiff to supply a certified translation of the judgment. Therefore, it is advisable that the plaintiff submits a translation – at least of the operative part of the judgment – together with the application for enforcement.
3.4 What fees are payable for recognition and enforcement?
Contrary to the general rule that court fees depend on the amount of the dispute, court costs for exequatur proceedings generally amount to €240. In addition, costs for counsel are payable (see question 9.1).
3.5 Is the applicant required to provide security for costs?
According to Section 110 I of the Code of Civil Procedure, applicants that do not have their habitual place of residence in a member state of the European Union or a signatory state of the Agreement on the European Economic Area shall provide security for costs of the proceedings if the defendant so requests. This obligation is subject to five exceptions (Section 110 II of the Code of Civil Procedure), which include the following:
- if security for costs cannot be requested according to an applicable international treaty; or
- if the costs of the proceedings will be covered by the applicant's real estate assets located in Germany.
3.6 How long does it usually take to obtain a declaration of enforceability?
As the Code of Civil Procedure does not stipulate a specific enforcement procedure, the general procedural rules of the code apply. The enforcement procedure is not ex parte and will not end with a summary judgment. Usually, after one or two rounds of submissions, the court may hold an oral hearing to decide on the application to declare the judgment enforceable (Section 128 I of the Code of Civil Procedure). As the prohibition of révision au fond applies, the merits of the case will not be re-litigated. Nonetheless, depending on the specifics of the case and whether and to what extent the defendant (ie, the foreign judgment debtor) defends the application, it can take from several months to more than one year to obtain the declaration.
3.7 Can the applicant seek injunctive relief while the process is ongoing?
Yes. However, the conditions to obtain an asset freezing order are not unique if enforcement proceedings regarding a foreign judgment are ongoing. The general conditions under the Code of Civil Procedure for injunctive relief must be fulfilled. An applicant (ie, the foreign judgment creditor) may apply for an asset freezing order (Arrestbefehl) if, for example, there is a risk that the assets which shall be seized following enforcement of the foreign judgment could be dissipated.
4.1 On what grounds can the defendant challenge recognition and enforcement of a foreign judgment?
According to Section 723 II sentence 2 of the Code of Civil Procedure, in connection with Section 328 of the code, recognition and enforcement of a foreign judgment is excluded if:
- The foreign court was not internationally competent to decide the dispute (Section 328 I No 1 of the Code of Civil Procedure). The German courts must ascertain this requirement ex officio. The requirement is fulfilled if the foreign court would have jurisdiction to hear the matter had it applied German procedural law.
- The defendant could not properly defend its case as it was not duly and/or timely notified of the foreign court proceedings brought against it (Section 328 I No 2 of the Code of Civil Procedure). The defendant must invoke the fact that it was not duly and/or timely notified in the enforcement proceedings.
- The foreign judgment is irreconcilable with a German or earlier foreign judgment between the same parties dealing with the same subject matter in dispute (Sect 328 I No 3 of the Code of Civil Procedure).
- Enforcement violates German public policy (Section 328 I No 4 of the Code of Civil Procedure).
- Reciprocity is not granted by the state in which the foreign judgment was rendered. A German court must assess the actual recognition and enforcement practices of the foreign state vis-á-vis judgments issued in Germany under similar circumstances (Section 328 I No 5 of the Code of Civil Procedure). However, even if reciprocity is not guaranteed, the judgment can be recognised and enforced if it concerns a non-pecuniary claim and if, under German law, the German courts would not have had jurisdiction (Section 328 II of the Code of Civil Procedure).
The grounds for refusal listed in Section 328 I of the Code of Civil Procedure are exhaustive.
4.2 What is the limitation period for filing a challenge?
See question 2.4.
4.3 Can the defendant seek injunctive relief to prevent enforcement while a challenge is pending?
No answer submitted for this question.
5 Court analysis and decision
5.1 Will the court review service of process in the initial proceedings?
Yes. Enforcement of a foreign judgment is excluded if the defendant:
- was unable to properly defend its case; or
- was not duly and/or timely notified of the foreign court proceedings brought against it so as to enable it to properly defend its case (Section 328 I No 2 of the Code of Civil Procedure).
The defendant should invoke in the enforcement proceedings the lack of having been duly and/or timely notified.
5.2 Will the court review the jurisdiction of the foreign court in the initial proceedings?
According to Section 328 I No 1 of the Code of Civil Procedure, recognition is excluded if the foreign court did not have international jurisdiction. Local jurisdiction is irrelevant. The international jurisdiction of the court of origin is assessed according to German law. It is therefore not necessary to examine whether the court of origin correctly applied its local law, but only whether the court of origin should have assumed its international jurisdiction if it had applied German procedural law.
5.3 Will the court review the foreign judgment for compliance with applicable law and public policy?
The prohibition of the so-called ‘révision au fond' of a foreign judgment applies (Section 723 I of the Code of Civil Procedure). Therefore, a court in enforcement proceedings will not assess whether a foreign court correctly applied the law governing the merits of the case.
However, the courts in enforcement proceedings will assess whether a foreign judgment violates a conflicting local law, which qualifies as ordre public. If so, enforcement of the foreign judgment will be denied.
Such a violation requires that enforcement of the judgment be manifestly irreconcilable with fundamental principles of German law, especially with fundamental rights. German courts interpret the notion of public policy restrictively. Examples of potential violations of public policy include the following:
- punitive damages – if the amount of damages awarded in a foreign judgment excessively outweighs the compensating function of damages under German law; or
- if the judgment was obtained by fraud.
Contrary thereto, pre-trial discovery (a concept which is not recognised in German court proceedings), the absence of written grounds in a judgment or a party's exclusion from proceedings due to contempt of court does not necessarily constitute a violation of public policy.
5.4 Will the court review the merits of the foreign judgment?
See question 5.3.
5.5 How will the court proceed if the foreign judgment conflicts with a previous judgment in relation to the same dispute between the same parties?
If two foreign judgments are rendered between the same parties in relation to the same dispute, the earlier foreign judgment will take precedence over the later judgment (Section 328 I No 3 of the Code of Civil Procedure).
A German judgment will always take precedence over a foreign judgment, even if the foreign lis pendens would have had to be taken into account in the domestic German proceedings.
A foreign judgment will not be declared enforceable if the foreign proceedings should have been inadmissible due to an earlier lis pendens in German domestic proceedings, but were ignored by the foreign court.
5.6 Are there any other grounds on which the court may refuse to recognise and enforce the foreign judgment?
See question 4.1. for a complete list of grounds on the basis of which recognition and enforcement of a foreign judgment will be refused.
5.7 Is partial recognition and enforcement possible?
In principle, yes – if, for example, the operative part of the foreign judgment can be split.
5.8 How will the court deal with cost issues (eg, interest, court costs, currency issues)?
Admissibility and the nature of the performance or enforcement in domestic currency are governed by domestic law. If performance is due in foreign currency, the sums will not be converted. Nonetheless, the debtor may satisfy the creditor by payment in euros in accordance with Section 244 I of the Civil Code. However, if the parties have agreed that the liabilities must be paid in a particular foreign currency, the debtor cannot pay in euros. Further, under German law, the payment of interest is a matter of substance (not of procedure). The debtor must pay interest if it has been specifically awarded in the foreign judgment.
6.1 Can decisions in relation to the recognition and enforcement of foreign judgments be appealed?
The defendant can initiate an appeal (Berufung) against an enforcement judgment on both factual and legal issues (Sections 511 et seqq. of the Code of Civil Procedure). Further, the defendant can file an appeal on points of law against the decision in the appeal proceedings (Sections 542 et seqq. of the Code of Civil Procedure).
6.2 Can the applicant seek injunctive relief while the appeal is pending?
See question 3.7.
7 Enforcing the foreign judgment
7.1 Once a declaration of enforceability has been granted, how can the foreign judgment be enforced?
Prior to selecting a specific enforcement measure, the judgment creditor must officially serve the judgment debtor with a copy of the judgment certifying its enforceability. The enforcement measures available to a judgment creditor under German law depend on the nature of the judgment and the nature of the assets of the judgment debtor in Germany. They comprise the following:
- seizure of the judgment debtor's movable assets by a bailiff (Sections 803 et seqq. of the Code of Civil Procedure);
- seizure of claims/bank accounts by way of court order (Sections 828 et seqq. of the Code of Civil Procedure);
- seizure of the judgment debtor's immovable assets by way of foreclosure, registration of a force mortgage or compulsory administration (Section 866 I of the Code of Civil Procedure); and
- measures to obtain restitution of specific things and to forcibly induce certain actions or omissions (Sections 883 et seqq. of the Code of Civil Procedure).
7.2 Can the foreign judgment be enforced against third parties?
In principle, the question of whether a third party is bound by a judgment is governed by the law of the foreign country whose court issued the judgment. A foreign judgment's binding legal effect against third parties will typically be recognised in Germany if the third party is, for example, the legal successor of the party to the foreign judgment.
8 Trends and predictions
8.1 How would you describe the current enforcement landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
In the coming months and years, accession by the European Union and/or Germany to the 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters will be the most likely source of significant changes to the German recognition and enforcement framework.
Brexit may also have implications on the enforcement of, for example, English judgments in Germany. Therefore, forum selection clauses in favour of English courts should be carefully reconsidered. Likewise, as the German courts in enforcement proceedings assess whether the foreign court had jurisdiction to hear the dispute, exorbitant jurisdiction will be considered (critically).
9 Tips and traps
9.1 What are your top tips for smooth recognition and enforcement of foreign judgments, and what potential sticking points would you highlight?
Judgments usually exceed a value of €5,000. In such cases the regional courts (Landgerichte) are competent to decide on enforcement of the foreign judgment. Under German law, clients must be represented by counsel in proceedings before the regional courts. Therefore, foreign judgment creditors must retain counsel.
Contrary to the general rule that court fees depend on the amount of the dispute, court costs for exequatur proceedings amount to just €240. However, the fees of counsel may well be higher, as they are often based on pre-agreed hourly rates. Unlike in other jurisdictions, contingency fees are prohibited under German law.
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.