GERMANY Law and Practice Contributed by: Patricia Nacimiento, Catrice Gayer, Lara Panosch and Theo Pauthonier, Herbert Smith Freehills Kramer LLP
11. Review of an Award 11.1 Grounds for Appeal
If the procedural rules (eg, institutional rules) chosen by the parties require objections, such as a breach of the right to be heard, to be raised promptly and in writing during the proceedings, failure to do so pre - cludes reliance on that ground at the annulment stage (Section 1027 ZPO). Applications to set aside an award must be filed within three months of receipt of the award, unless the par - ties have agreed otherwise (Section 1059 (3) ZPO). However, even if this deadline lapses, parties may still raise objections under Article V(1) of the New York Convention during enforcement proceedings. Finally, a party that unconditionally satisfies an arbi - tral award forfeits its right to challenge it. Whether a payment is deemed unconditional must be assessed from the creditor’s perspective, taking into account the parties’ communications prior to payment. 11.2 Excluding/Expanding the Scope of Appeal Under German arbitration law, the right to seek annul - ment of an arbitral award cannot be waived entirely or in advance. Parties may only waive specific grounds for setting aside – excluding those listed in Section 1059 (2) No. 2 ZPO (public policy and lack of arbitra - bility) – and only after the award has been rendered. 11.3 Standard of Judicial Review In set-aside proceedings, the court may not review the merits of an award beyond the ground of violation of ordre public (prohibition of the révision au fond ). Its review is limited to the grounds listed in Section 1059 (2), which mirror those found in Article V of the New York Convention (see 11.1 Grounds for Appeal ).
Section 1059 (2) ZPO provides an exhaustive cata - logue of grounds on the basis of which an arbitral award may be annulled. These grounds, which mirror those found in Article V of the New York Convention, include: • lack of capacity of a party to conclude the arbitra - tion agreement or invalidity of the agreement under the applicable law (Section 1059 (2) No. 1 (a)); • failure to provide proper notice of the proceedings or denial of the opportunity to assert defence (Sec - tion 1059 (2) No. 1 (b)); • the award addressing matters beyond the scope of the arbitration agreement, although the setting aside may be limited to the incriminated parts of the award if these are separable (Section 1059 (2) No. 1 (c)); • procedural irregularities or improper constitution of the arbitral tribunal that likely affected the outcome (Section 1059 (2) No. 1 (d)); • non-arbitrability of the subject matter under Ger - man law (Section 1059 (2) No. 2 (a)); and • violation of German public policy ( ordre public ) (Section 1059 (2) No. 2 (b)). German courts interpret these grounds narrowly, and successful annulment applications remain rare, reflecting the German jurisdiction’s pro-arbitration stance. Two categories of grounds need to be distinguished: the grounds under Section 1059 (2) No. 1 have to be invoked by a party in its application for annulment, whereas grounds under No. 2 – if there are indications – will be addressed by the courts ex officio. Core principles of German competition law, such as the prohibition of abuse of dominance or anti-com - petitive agreements, form part of public policy and are hence a ground addressed by the court ex officio. The Federal Court of Justice (27 September 2022, KZB 75/21) opined that if violations of competition law are alleged in the annulment stage, the prohibition of the révision au fond does not apply.
12. Enforcement of an Award 12.1 New York Convention
Germany is a contracting state to the New York Con - vention and has adopted its provisions without reser - vation. Specifically, Germany has not entered either the commercial or reciprocity reservations permitted under Article I(3) of the Convention. Pursuant to Sec - tion 1061 (1) of the Code of Civil Procedure, the rec -
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