GERMANY Law and Practice Contributed by: Patricia Nacimiento, Catrice Gayer, Lara Panosch and Theo Pauthonier, Herbert Smith Freehills Kramer LLP
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 when German lex arbitri is applicable. In the case of a three-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 multi-party arbitrations, the current version of the German Arbitration Act does not provide for any specific rules. On 26 June 2024, the German Federal Ministry of Justice introduced a legislative proposal proposing to reform the national arbitration frame- work (the “Draft Bill”). It provides that where multiple parties on the same side of the dispute fail to reach consensus on a joint arbitrator, the competent court will appoint their common arbitrator in their stead. The Draft Bill aims to modernise procedural rules and align more closely with international standards and was progressing through the legislative process. How- ever, the reform efforts were interrupted due to the dissolution of parliament following early elections in February 2025. As a result, the bill is not expected to be enacted in the immediate future. 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 (Section 1035 (3)-(5) ZPO, see also 4.2 Default Pro- cedures ). 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. 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)-(2) ZPO); and • 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 preclud- ed from invoking the improper constitution of the arbi- tral tribunal in post-award proceedings that the arbitral tribunal was not properly constituted. The court is not bound by the decision of the arbitral 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 German Arbitration Institute’s 2018 Arbitration Rules (DIS and the “DIS Arbitration Rules” respectively) do not further qualify the independence and impartiality requirements con- tained in Section 1036 (1) ZPO and Section 9.1 DIS
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