GERMANY Law and Practice Contributed by: Thomas Lennarz, Peter Wende and Christian Piroutek, CMS
and evidentiary requirements for affected consumers or small businesses. This allows the court to shape the subsequent implementation phase in a binding manner. Courts also must approve any settlement reached by the parties to ensure it adequately protects the col- lective interests of the participants who have opted in. Where no settlement is reached, the court issues a final redress judgment ordering implementation pro- ceedings, appoints an administrator ( Sachwalter ), and oversees the creation and management of an imple- mentation fund from which compensation is distrib- uted. The court retains supervisory authority until the conclusion of the implementation process and issues the final cost order. 3.7 Length and Timetable for Proceedings The duration of collective redress proceedings in Ger- many is highly dependent on the complexity of the case. In the model declaratory action, the informa- tion published in the claim register to date shows that proceedings often last several years. The high-profile model declaratory action against Volkswagen AG over the diesel emissions case was filed in November 2018 and resolved by settlement in April 2020, after approximately 18 months of proceedings. As the redress action is still in its early stages, reliable average durations are not yet available. It is expected that overall proceedings will nevertheless be lengthy, given the two-stage structure (basic redress judgment followed by implementation proceedings). The imple- mentation proceedings alone, including the adminis- trator’s verification of claims and distribution of funds, is expected to take considerable time. As regards timetabling, German courts have discre- tion in structuring proceedings. In both the model declaratory action and the redress action, courts set procedural deadlines, including those for the exchange of pleadings, the submission of evidence, and the scheduling of hearings. Participation by con- sumers and small businesses is tied to registration in the official claim register, which generally closes three weeks after the conclusion of the oral hearing in the relevant case. In the redress action, the court also determines schedules for the court-appointed admin-
istrator during the implementation phase to ensure timely processing and distribution of compensation. Despite these procedural tools, the overall duration of proceedings remains case-specific and may vary considerably depending on the scale and complexity of the dispute. 3.8 Mechanisms for Changes to Length/ Timetable/Disposal of Proceedings In Germany, collective redress mechanisms follow the general principles of German civil procedure, which do not provide for fast-track or summary disposal in the sense familiar in common law jurisdictions. 3.9 Funding and Costs In Germany, the general rule on costs in civil litiga- tion is the “loser pays” principle, which applies to col- lective redress mechanisms as well. In general, the unsuccessful party must bear the court fees as well as the statutory legal fees of the successful party. If the action is only partially successful, costs are appor- tioned accordingly. This principle applies equally to the model declaratory action and the redress action, with the qualified entity (rather than the individual con- sumers) formally standing as the claimant. For model declaratory actions, participating consum- ers face no direct cost risk. They do not pay court fees or the opposing party’s costs, as they are not parties to the proceedings in their own right. Their only investment is the act of registration in the public claim register, which is free of charge. However, if they later bring individual follow-up proceedings to claim damages or other forms of relief, they are subject to the usual cost rules of German civil procedure. In the redress action, the court ultimately decides on costs in its final redress judgment, and implementation costs (such as the remuneration of the administrator) are usually financed from the implementation fund cre- ated to distribute compensation. Third-party funding is generally allowed, but subject to certain safeguards. Qualified entities must disclose the source of funds used for a representative action, including any agreements with third-party funders, even if funding is secured after filing. In addition, rep- resentative actions are considered inadmissible if the funder is a competitor or dependent on the defendant,
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