GERMANY Law and Practice Contributed by: Patricia Nacimiento, Catrice Gayer, Lara Panosch and Theo Pauthonier, Herbert Smith Freehills Kramer LLP
1. Overview 1.1 National Position
its provisions without reservation. Specifically, Ger- many has not entered into either the commercial or reciprocity reservations permitted under Article I(3) of the Convention. Pursuant to Section 1061 (1) of the Code of Civil Procedure, the recognition and enforce- ment of foreign arbitral awards in Germany are gov- erned directly by the Convention. Germany is a party to the European Convention on International Commercial Arbitration (ECICA), a regional treaty aimed at facilitating arbitral procedure among European states. Its most important feature is the supplementation of the NY Convention. However, it has little relevance in practice as its scope is narrow. It solely applies for example if all parties to the arbitra- tion agreement are based in contracting states and both the state of origin and enforcement are ECICA members. Germany was among the early supporters and sign- ees of the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the “ICSID Convention”), which was rati- fied on 18 April 1969. For awards rendered under the ICSID Convention, an autonomous and far-reaching regime to enforcement applies under the German Law on the Convention of 18 March 1965 on the Settle- ment of Investment Disputes ( InvStreitÜbkG ). Article 2 (4) InvStreitÜbkG provides that an application for a declaration of the admissibility of enforcement of an ICSID award may only be refused if the award has been annulled under Articles 51 or 52 ICSID Conven- tion. Germany further signed the UNCITRAL Convention on Transparency in Treaty-Based Investor-State Arbitra- tion (the “Mauritius Convention”) on 17 March 2015, which seeks to render investment arbitrations under legacy BITs more transparent. The ratification proce- dure by the EU is ongoing (see also 7.2 Confidentiality and Transparency ). On 5 May 2020, Germany joined 22 other EU countries in signing the Agreement for the Termination of Bilat- eral Investment Treaties between the Member States of the EU, which entered into force on 29 August 2020 (see also 1.1 National Position ).
Germany has historically adopted a favourable stance toward investment arbitration. Notably, it concluded the world’s first bilateral investment treaty (BIT) with Pakistan in 1959 and is on the podium of states that have concluded the most such treaties. This long- standing commitment reflects Germany’s consistent recognition of the legal and economic significance of investment treaties. Germany’s approach has evolved in response to developments within the European Union’s legal framework, particularly following the judgment of the Court of Justice of the European Union (CJEU) in Slovak Republic v Achmea B.V. (Case C-284/16, Achmea ), which held that investor–state arbitration clauses in intra-EU BITs are incompatible with EU law. In alignment with this jurisprudence and sub- sequent EU policy, Germany, alongside the majority of EU member states, signed the Agreement for the Termination of Bilateral Investment Treaties Between the Member States of the European Union on 5 May 2020. This plurilateral termination treaty implements the Achmea decision by collectively cancelling the arbitration clauses (and other substantive provisions) of intra-EU BITs. Germany formally withdrew from the Energy Charter Treaty (ECT), which took effect on 21 December 2023, citing concerns over the compatibility of the ECT’s investor–state dispute settlement provisions with EU law and climate policy objectives. The Federal Government of Germany supports the European Commission’s efforts to establish a reformed multilateral framework for investment protection and dispute resolution, consistent with the EU’s evolving legal and policy landscape. BITs concluded by Germany with third (non-EU) coun- tries remain in force and continue to have full legal effect. 1.2 Arbitration Conventions Germany is a contracting state to the 1958 New York Convention (the “NY Convention”) and has adopted
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