GERMANY Law and Practice Contributed by: Patricia Nacimiento, Catrice Gayer, Lara Panosch and Theo Pauthonier, Herbert Smith Freehills Kramer LLP
does not preclude that both the arbitration agreement and the main contract may be affected by the same underlying defect. In particular, if there is a lack of consent to the main contract (eg, if one of the parties signed the contract following threats), this will gener - ally extend to the arbitration clause contained within it.
member arbitral tribunal, each party appoints its own arbitrator, and the two party-appointed arbitrators then appoint the presiding arbitrator. Should a party fail to appoint its own arbitrator and subsequently fail to do so within one month of a request by the other party, the other party may request the court to make the appointment. If the party- appointed arbitrators fail to agree on the chairperson within one month of their appointment, or if the parties fail to agree on a sole arbitrator, the court will make the appointment upon request of a party. According to Section 1035 (4) ZPO, if the parties have agreed on a procedure for appointing arbitrators and one party fails to act as required, or if the parties or co- arbitrators cannot reach an agreement, the competent court may be called upon to make the appointment. This ensures that the arbitration process is not stalled due to procedural deadlock. For multiparty arbitrations, the current version of the German Arbitration Act does not provide for any spe - cific rules. The Draft Bill (see 2.2 Changes to National Law ) proposes that where parties aligned on one side of the dispute fail to reach consensus on a joint arbi - trator, the competent court will assume responsibility for the appointment. 4.3 Court Intervention In Germany, courts may intervene in the selection of arbitrators, but only under specific conditions and within the framework set out in the ZPO, particu - larly in Sections 1034 and 1036. This intervention is designed to support, not override, party autonomy, which remains a core principle of German arbitration law. The courts will intervene to appoint arbitrators where the parties and/or the co-arbitrators fail to do so (Sec - tion 1035 (3) to (5) ZPO, see also 4.2 Default Proce- dures ). Furthermore, Section 1037 ZPO allows a party to request court assistance if a challenge to an arbitra - tor has been rejected by the arbitral tribunal itself. In such cases, the court will make a final and binding decision on the challenge.
4. The Arbitral Tribunal 4.1 Limits on Selection
Parties are allowed to freely determine the number of arbitrators, the method of their appointment, and the qualifications they should possess. In domestic arbi - tration proceedings especially, it is not uncommon for professionals such as engineers, accountants or other subject-matter experts to be selected as arbitrators, depending on the technical nature of the dispute. However, this freedom is subject to safeguards. The most significant limitation concerns the impartiality and independence of arbitrators. They are under a continuing duty to disclose any circumstances that may give rise to justifiable doubts in this regard. While there are no statutory nationality requirements, par - ties remain free to impose such conditions contrac - tually. Under Section 1036 (2) ZPO, an arbitrator may be challenged if circumstances exist that give rise to justifiable doubts regarding their impartiality or inde - pendence. Beyond this, party autonomy may be restricted by public policy considerations. Any appointment mech - anism that violates fundamental principles of fairness or procedural equality will be deemed invalid. Sec - tion 1034 (2) ZPO introduces a corrective mechanism where the arbitration agreement grants one party a dominant role in the appointment process – such as the exclusive right to nominate the sole or presiding arbitrator. In such cases, the disadvantaged party may, within two weeks of becoming aware of the arbitral tribunal’s composition, request the competent court to intervene and appoint a substitute arbitrator. 4.2 Default Procedures If there is no agreement between the parties on the appointment procedure, Section 1035 (3) ZPO pro - vides a standard procedure. In the case of a three-
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