GERMANY Law and Practice Contributed by: Patricia Nacimiento, Catrice Gayer, Lara Panosch and Theo Pauthonier, Herbert Smith Freehills Kramer LLP
Courts will also intervene where the appointment mechanism violates fundamental principles of fair - ness or procedural equality (see also 4.1 Limits on Selection ). 4.4 Challenge and Removal of Arbitrators With regard to challenges, a two-tier system applies: • A party can file a challenge with the arbitral tribunal (Section 1037 (1) to (2) ZPO). • If the challenge is dismissed by the arbitral tribunal, the challenging party may apply to the competent higher regional court to decide on the challenge. Otherwise, the challenging party is generally pre - cluded from invoking the improper constitution of the arbitral tribunal in post-award proceedings. The higher regional court is not bound by the decision of the arbi - tral tribunal or of a third party (such as an institution or an appointing authority). The parties cannot waive recourse to the courts. Pursuant to Section 1036 (2) ZPO, an arbitrator may only be disqualified if circumstances exist that give rise to justified doubts as to their impartiality or inde - pendence, or if they do not meet the requirements agreed between the parties. 4.5 Arbitrator Requirements German arbitration law and the DIS Arbitration Rules do not further qualify the independence and impartial - ity requirements contained in Section 1036 (1) ZPO and Section 9.1 DIS Arbitration Rules. Whether these requirements are fulfilled by a challenged arbitrator is assessed on a case-by-case basis. The International Bar Association (IBA) Guidelines on Conflicts of Interest in International Arbitration, last updated in 2024 (“IBA Guidelines”), are widely known and used in Germany. Some courts tend to apply the standard applicable to state judges in order to assess whether facts give rise to justifiable doubts as to an arbitrator’s impartiality and independence. In this respect, courts also tend to consider the princi - ples laid down in the IBA Guidelines. Despite that, the courts do not explicitly refer to, orstress that they are not bound by, the IBA Guidelines.
The DIS Arbitration Rules follow an objective approach; ie, the disclosures shall include any facts or circum - stances that could cause a reasonable person in the position of a party to have doubts as to the arbitra - tor’s impartiality and independence (Section 9.4 DIS Arbitration Rules). This disclosure obligation remains for the entire duration of the arbitration (Section 9.6 DIS Arbitration Rules).
5. Jurisdiction 5.1 Challenges to Jurisdiction
An arbitral tribunal’s authority to rule on its own juris - diction ( Kompetenz - Kompetenz principle) is recog - nised under German law, as codified in Section 1040 (1), first sentence ZPO. While arbitral tribunals may render preliminary decisions affirming their jurisdic - tion, such determinations do not bind the courts. Any attempt by the parties to confer final and binding effect on an arbitral tribunal’s jurisdictional ruling is invalid. However, this does not, in principle, affect the validity of the arbitration agreement itself. 5.2 Circumstances for Court Intervention Before the arbitral tribunal is constituted, a party may apply to the competent court for a declaration on the admissibility or inadmissibility of arbitration proceed - ings, in accordance with Sections 1032 (2) and 1062 (1)2 ZPO. Once the arbitral tribunal has been formed, this procedural route is no longer available. This is a special procedure not mirrored in the UNCITRAL Model Law and also applies if the seat of arbitration is outside of Germany (Section 1025 (2) ZPO). In three recent decisions dated 27 July 2023 (I ZB 43/22, I ZB 74/22 and I ZB 75/22), the Federal Court of Justice ruled that a determination of the inadmis - sibility of arbitration proceedings pursuant to Section 1032 (2) ZPO is also permissible for intra-EU arbitra - tion proceedings under the ICSID Convention. The effectiveness of EU law ( effet utile ) prevails over Article 41 (1) of the ICSID Convention, which states that the tribunal shall determine its competence. This enables the enforcement of the European Court of Justice’s case law on intra-EU arbitration clauses ( Achmea judgment) already at the level of admissibility. On 23
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