GERMANY Law and Practice Contributed by: Patricia Nacimiento, Catrice Gayer, Lara Panosch and Theo Pauthonier, Herbert Smith Freehills Kramer LLP
9.3 Asset Tracing and Recovery State assets can be identified prior to and within enforcement proceedings. Prior to enforcement proceedings, creditors can access a public register which offers data on specific asset types. • The land registers ( Grundbücher ) provide owner- ship and encumbrance details for real estate. • The motor vehicle register ( Fahrzeugregister ) lists registered keepers of vehicles. • Vessel and aircraft registers ( Schiffsregister and Luftfahrzeugrolle , respectively) contain ownership and third-party rights information for ships and planes. • Intellectual property rights can be traced through the German Patent and Trade Mark Office ( Deutsches Patent- und Markenamt ), which main- tains registers for patents, trade marks, utility models and designs. • In respect of German corporations, ownership is reported in the commercial register ( Handelsregis- ter ), insolvency in the insolvency register ( Insolven- zregister ) and for specific forms, financial reports are published in the company registry ( Unterneh- mensregister ). At the enforcement stage, the debtor is obligated to disclose all relevant financial information and assets to a court-appointed enforcement officer under Section 802 lit. c ZPO. This disclosure must be confirmed by statutory declaration (in lieu of an oath) and covers all assets unless specifically exempted from enforce- ment. Enforcement is limited to commercial assets of the state (acta jure gestionis). See 9.1 Enforcement Pro- cedure . To prevent asset dissipation, creditors may also seek freezing orders. These can be issued by state courts under Sections 916 and following of the ZPO, or by arbitral tribunals under Section 1041 ZPO if the arbi- tration is seated in Germany.
Piercing the corporate veil in Germany is a limited exception to the rule of limited shareholder liability established by the German Federal Court of Justice – eg, in the Trihotel case of 2007. A shareholder in Ger- many can generally rely on the corporate veil unless they themselves engaged in wrongful conduct such as commingling assets, intentionally undercapitalis- ing to defraud, using the company as a facade for illicit dealings, or stripping the company’s assets. In those exceptional cases, courts will “see through” the entity and hold the individual accountable, often cit- ing that the legal personality cannot be a vehicle for fraud based on inter alia Section 826 BGB (intentional abuse). The principle also applies in the context of groups of companies in exceptional circumstances. Generally, each company within a corporate group is treated as a separate legal entity with its own rights and liabilities. The pretence of a right in a corporate group ( Rechtsscheinhaftung im Konzern ) constitutes an exception. Pretence occurs in cases of de facto domination and asset shifting as well as the blurring of corporate group boundaries ( Sphärenvermischung ) – eg, when the same individual manages the parent and subsidiary. In addition, in stock corporation (AG) groups, German law provides for formal control agree- ments ( Beherrschungs- und Gewinnabführungsver- trag ), which stipulate the parent’s liability for losses of the subsidiary. On a separate yet related note, piercing the corporate veil does not apply to the extension of an arbitration agreement. On 9 March 2023, the German Federal Court of Justice (I ZB 33/22) confirmed the decision of the Higher Regional Court of Koblenz to refuse recog- nition and enforcement of an arbitral award issued in Russia. Among others, the BGH held that the Arbitral Tribunal exceeded its personal jurisdiction by extend- ing an arbitration agreement to a de facto group of companies.
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