GERMANY Law and Practice Contributed by: Thomas Lennarz, Peter Wende and Christian Piroutek, CMS
3.12 Settlement and ADR Mechanisms In Germany, both the model declaratory action and the redress action contain mechanisms that allow for settlement and alternative resolution of dispute, but the scope and effect differ. In the model declaratory action, settlements are explicitly encouraged. Once the higher regional court has admitted the action, the parties may reach a col- lective settlement at any stage of the proceedings. Such a settlement must be submitted to the court for approval. The court assesses whether, in light of the facts of the case and the interests of the affect- ed consumers, the proposed settlement represents a reasonable solution to the dispute. Otherwise, the court will reject the settlement. If approved, the set- tlement is binding on all registered claimants, unless they exercise their statutory right to opt out within a period of one month after the settlement terms have been published in the claims register. The settlement mechanism is important in practice because the mod- el declaratory action itself does not provide damages or other relief, so a settlement may offer consumers more immediate compensation without the need for follow-on individual proceedings. The redress action also embeds settlements into its procedure. After issuing a basic redress judgment, which establishes liability in principle and sets eligi- bility criteria, the court will invite the parties to submit a settlement proposal. As with the model declaratory action, any settlement must be approved by the court to ensure adequate consumer protection. If no settle- ment can be reached, the court proceeds to a final redress judgment and orders implementation pro- ceedings under the supervision of an administrator. 3.13 Judgments and Enforcement of Judgments In Germany, the nature, binding effect and enforce- ability of judgments in collective redress proceedings
has been promised more than 10% of the awarded sum or performance, or is likely to influence the litiga-
tion in a way that harms consumers. 3.10 Disclosure and Privilege
German civil procedure, including collective redress mechanisms such as the model declaratory action and the redress action, does not recognise broad discovery or disclosure obligations. Instead, the prin- ciple of party presentation ( Beibringungsgrundsatz ) applies: each party must present the facts and evi- dence it relies upon. Courts do not engage in active evidence-gathering on their own initiative and there is no general duty to disclose adverse documents. That said, the Code of Civil Procedure contains some narrow disclosure-style instruments. Under Section 142 of the Code of Civil Procedure, courts may instruct one of the parties or a third party to produce records or documents, as well as any other materials that are in its possession and to which one of the parties has made reference. However, this mechanism is applied rather narrowly in practice and does not resemble common law discovery or disclosure mechanisms. As regards privilege, German law protects attorney– client communications through professional secrecy obligations under the Federal Lawyers’ Act ( Bun- desrechtsanwaltsordnung , or BRAO). Attorneys may not provide information concerning matters related to their mandates unless their client has expressly released them from this duty of confidentiality. In court proceedings, attorneys have the right to refuse testi- mony where their testimony would concern facts to which the confidentiality obligation refers. 3.11 Remedies Whereas the model declaratory action is limited to establishing general factual and legal issues and therefore does not itself provide for enforceable rem- edies, the redress action introduced under the Con- sumer Rights Enforcement Act allows for direct relief to be obtained on behalf of consumers and small busi- nesses. Specifically, the qualified entity may pursue claims for monetary damages, but also non-monetary remedies such as repair of defective goods, termina- tion of contracts, price reductions, or reimbursement of the purchase price.
depend on the type of action pursued. Enforcement of Judgments in the Model Declaratory Action Procedure
In the model declaratory action, the higher regional court delivers a declaratory judgment. This judgment establishes general legal or factual issues (such as
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